10-Q/A 1 d63020_10-qa.txt AMENDMENT SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------- FORM 10-Q/A Quarterly Report Under Section 13 or 15(d) of the Securities Act of 1934 FOR QUARTER ENDED JUNE 30, 2004 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, 2004 -------------------------------------------------------------------------------- COMMON STOCK PAR VALUE: $.O1 per share 4,609,826 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS PAGE Consolidated Balance Sheets as at June 30, 2004 and December 31, 2003 F-1 Consolidated Statements of Income for the Three and Six Months ended June 30, 2004 and 2003 F-2 Consolidated Statement of Cash Flows for the Six Months ended June 30, 2004 and 2003 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 ITEM 3. Quantitative and Qualitative Disclosures About Market Risk 4 ITEM 4. Controls and Procedures 4 PART II. OTHER INFORMATION ITEM 1. Legal Proceedings 4 ITEM 2. Submission of Matters to a Vote of Security Holders ITEM 3. Exhibits and Reports on Form 8-k 5 Signatures Exhibit Index 6-8 DAXOR CORPORATION FINANCIAL STATEMENTS DAXOR CORPORATION CONSOLIDATED BALANCE SHEETS
June 30, December 31, 2004 2003 ---- ---- Unreviewed Unaudited ---------- --------- ASSETS CURRENT ASSETS Cash $ 20,028 $ 3,324 Marketable Securities at Fair Value June 30,2004 and December 31, 2003. (Note 1) 48,537,767 47,399,159 Accounts receivable 223,897 137,008 Other current assets 376,748 388,400 ------------ ------------ Total Current Assets 49,158,440 47,927,891 EQUIPMENT AND IMPROVEMENTS Storage tanks 125,815 125,815 Leasehold improvements, furniture and equipment 948,362 931,468 Laboratory equipment 291,571 291,571 ------------ ------------ 1,365,748 1,348,854 Less: Accumulated depreciation and amortization 1,069,361 1,045,481 ------------ ------------ Net equipment and improvements 296,387 303,373 Other Assets 69,268 69,268 Total Assets $ 49,524,095 $ 48,300,532 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable and accrued liabilities $ 148,137 $ 183,052 Loans payable (Note 2) 4,039,865 2,502,106 Other Liabilities 559,531 667,123 Deferred Taxes (Note 1) 8,716,158 8,531,081 ------------ ------------ Total Liabilities 13,463,691 11,883,362 SHAREHOLDERS' EQUITY Common stock, par value $.01 per share: Authorized 10,000,000 shares: issued and outstanding shares 4,609,826 June 30, 2004 and 4,640,026 December 31, 2003 53,097 53,097 Additional Paid in capital 9,801,548 9,801,548 Net unrealized holding gains on available-for-sale securities (Note 1) 16,919,600 16,560,334 Retained earnings 14,928,270 15,169,967 Treasury stock (5,642,111) (5,167,776) ------------ ------------ Total Shareholders' Equity 36,060,404 36,417,170 Total Liabilities and Shareholders' Equity $ 49,524,095 $ 48,300,532 ============ ============
See accompanying notes to financial statements F-1 DAXOR CORPORATION CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30 JUNE 30 2004 2003 2004 2003 ---- ---- ---- ---- Unreviewed Unreviewed REVENUES: Operating revenues $ 254,735 $ 290,411 $ 662,983 $ 509,094 Other revenues 3,643 5,143 7,286 8,286 Dividend income 473,231 430,752 966,800 910,641 Gains (losses) on sale of securities 201,630 45,361 426,696 81,263 Total Revenues 933,239 771,667 2,063,765 1,509,284 ----------- ----------- ----------- ----------- COSTS AND EXPENSES Operations of Laboratories & Cost of Production 335,886 343,683 717,048 680,942 Selling, General, and Administrative 846,226 656,468 1,537,378 1,295,354 Interest expense, net of interest income 12,533 19,075 31,976 33,582 ----------- ----------- ----------- ----------- Total Costs and Expenses 1,194,645 1,019,226 2,286,402 2,009,878 ----------- ----------- ----------- ----------- Net Income (Loss) Before Income Taxes (261,406) (247,559) (222,637) (500,594) Provision for income taxes 55 95 19,060 21,645 ----------- ----------- ----------- ----------- Net Income (Loss) $ (261,461) $ (247,654) $ (241,697) $ (522,239) =========== =========== =========== =========== Weighted Average Number of Shares Outstanding 4,612,993 4,645,631 4,623,326 4,651,108 Net Income or (Loss) per Common Equivalent Share $ (0.05) $ (0.05) $ (0.05) $ (0.11) =========== =========== =========== ===========
See accompanying notes to financial statements F-2 DAXOR CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED
JUNE 30, JUNE 30, 2004 2003 ---- ---- Unreviewed ---------- CASH FLOWS FROM OPERATING ACTIVITIES Net income or (loss) $(241,697) $(522,239) --------- --------- Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation & Amortization 23,880 24,466 (Gain) loss on sale of investments (426,696) (81,263) Basis of leased equipment sold 45,000 Change in assets and liabilities: (Increase) decrease in accounts receivable (86,889) 19,019 (Increase) decrease in other current assets 11,652 (24,607) Increase (decrease) in accounts payable, accrued and other liabilities net of "short sales" (34,915) (4,644) --------- --------- Total adjustments (512,968) (22,029) --------- --------- Net cash provided by or (used in) operating activities (754,665) (544,268) --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Payment for purchase of equipment and improvements (16,894) (27,150) Net cash provided or (used) in purchase and sale of investments (831,035) (670,892) Net proceeds (repayments) of loans from brokers used to purchase investments 937,759 999,262 Proceeds from "short sales" not closed 555,874 240,945 --------- --------- Net cash provided by or (used in) investing activities 645,704 542,165 --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Receipt / (repayment) of bank loan 600,000 200,000 Payment for purchase of treasury stock (474,335) (181,136) Proceeds from sale of treasury stock -- 30,736 --------- --------- Net cash provided by or (used in) financing activities 125,665 49,600 --------- --------- Net increase (decrease) in cash and cash equivalents 16,704 47,497 Cash and cash equivalents at beginning of year 3,324 13,035 --------- --------- Cash and cash equivalents at end of period $ 20,028 $ 60,532 ========= =========
See accompanying notes to financial statements F-3 DAXOR CORPORATION NOTES TO FINANCIAL STATEMENTS SIX MONTHS ENDED JUNE 30, 2004 AND 2003 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, 2004, and December 31, 2003, the results of operations for the three and six months ended June 30, 2004 and 2003 and cash flows for the six months ended June 30, 2004 and 2003. (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, 2004 and December 31, 2003 being increased approximately 111.94% and 112.48% respectively over its historical cost. A corresponding change 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, 2004 (Unreviewed) Type of Unrealized Unrealized security Cost Fair Value holding gains holding losses -------- ---- ---------- ------------- -------------- Equity $22,826,107 $48,509,492 $26,002,538 $319,153 Debt 75,902 28,275 2,470 50,097 ---------------------------------------------------------------------- Total $22,902,009 $48,537,767 $26,005,008 $369,250 =========== =========== =========== ======== December 31, 2003 (Unaudited) Type of Unrealized Unrealized security Cost Fair Value holding gains holding losses -------- ---- ---------- ------------- -------------- Equity $22,271,842 $47,368,871 $25,407,422 $310,393 Debt 35,902 30,288 2,170 7,784 ----------------------------------------------------------------------- Total $22,307,744 $47,399,159 $25,409,592 $318,177 =========== =========== =========== ========
At June 30, 2004 the securities held by the Company had a market value of $48,537,767 and a cost basis of $22,902,009 resulting in a net unrealized gain of $25,635,758 or 111.94% of cost. At December 31, 2003, the securities held by the Company had a market value of $47,399,159 and a cost basis of $22,307,744 resulting in a net unrealized gain of $25,091,415 or 112.48% of cost. At June 30, 2004 and December 31, 2003 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, 2004 and December 31, 2003, the Company had loans outstanding aggregating $1,500,000 and $900,000 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 3%. Short term margin debt due to brokers, secured by the Company's marketable securities, totaled $2,539,865 at June 30, 2004 and $1,602,106 at December 31, 2003. F-5 MANAGEMENT'S DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS AND FINANCIAL CONDITION ITEM 2. RESULTS OF OPERATIONS Three months ended June 30, 2004 as compared with three months ended June 30, 2003. For the three months ended June 30, 2004 total revenues were $933,239, up from $771,667 in 2003. Operating revenues were $254,735 in 2004 down from $290,411 in 2003. Dividend income was $473,231 with a net interest expense of $12,533 in 2004, as compared to dividend income of $430,752 with a net interest expense of $19,075 in 2003. In 2004, the Company had a net loss before income taxes of $(261,406) versus a net loss before income taxes of $(247,559) in 2003. Total costs and expenses in 2004 increased to $1,194,645 vs. $1,019,226 in 2003. This was related to increased marketing efforts and research and development expenses. Operating revenues decreased by 12% from the comparable quarter in 2003. The Company anticipates that sales of the BVA-100 Blood Volume Analyzers and kits will be the major source of income for the Company. The Company plans to continue expanding its sales and marketing force, which currently consists of 12 salesmen and 4 support personnel. Six months ended June 30, 2004 as compared with six months ended June 30, 2003. For the six months ended June 30, 2004, total revenues were $2,063,765 up from $1,509,284 in 2003. Operating revenues were $662,983 up from $509,094 in 2003. Selling and administrative expenses were $1,537,378 in 2004, vs. $1,295,354 in 2003. The increased expenses were related to the employment of additional sales and marketing personnel. In 2004, Dividend income was $966,800 with a net interest expense of $31,976 as compared to the dividend income of $910,641 with a net interest expense of $33,582 in 2003. In 2004, the Company had $426,696 in capital gains vs. $81,263 in 2003. In 2004, the Company had a net loss before income taxes of ($222,637) versus a net loss before income taxes of ($500,594) in 2003. LIQUIDITY AND CAPITAL RESOURCES At June 30, 2004 the Company had total assets of $49,524,095 with shareholders' equity of $36,060,404. The Company has a net pre-taxed unrealized gain of $25,635,758 and $16,919,600 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 $48,537,767 with short-term loans of $ 4,039,865 with 4,609,826 shares outstanding. The Company has the current liabilities of $13,463,691. Included in these liabilities are deferred taxes of $8,716,158. These deferred taxes would occur if the Company chose to sell its entire portfolio. Current liabilities minus these deferred taxes equals $4,747,533. 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. 3 The Company sells, as well as offers to lease or rent the BVA-100 as part of the overall marketing plan. The Company also loans the instrument for a limited time period, however, facilities evaluating the instrument must pay for the kits. Daxor Capital was established through a relationship with De Lage Landen (DLL). The significance of this relationship is as sales through leases increases, Daxor will not have to diminish its capital outlay for equipment as DLL will fund the net present value of the lease upon installation of the equipment. In an effort to obtain the best rates for our clients, the Company will also work with other independent leasing firms. The Company is evaluating blood volume instrumentation management programs for hospitals. Under such a plan, the Company would provide equipment and personnel on a sub-contract basis. The Company will use its current financial reserves primarily for developing and marketing the Blood Volume Analyzer. The Company is evaluating various options to expand blood banking services in conjunction with the use of the Blood Volume Analyzer. Additional information on the Company is available on our website www.daxor.com. Item 3. Quantitative and Qualitative Disclosures About Market Risk The Company is currently not exposed to any risk from currency fluctuations. The company's investment portfolio is a major source of revenue. The market value of this portfolio is related to fluctuations with the electric utility industry. Between 5% and 10% of the Company's portfolio are non-utilities. The Company will sell puts on stocks that it is willing to own. The Company neither sells naked calls nor engages in derivative transactions. Fluctuations in the value of these holdings for the past 5 years are reflected and closely correlated with changes in the total assets of the Company. Item 4. Controls and Procedures The Company's Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of our disclosure controls and procedures as defined by the Securities and Exchange Commission (SEC), as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are effective in timely alerting them to information required to be included in our periodic Securities and Exchange Commission filings. There was no significant change in our internal control over financial reporting that occurred during the quarter ended June 30, 2004, that materially affected or is reasonably likely to materially affect, the Corporation's internal control over financial reporting. Part II OTHER INFORMATION Item 1. Legal Proceedings The Company has pending two claims incurred in the normal course of business, which, in the opinion of management, as well as the advice of outside legal counsel, there is no merit to these claims nor will they have a material effect on the financial statements. Item 2. Submission of Matters to a Vote of Security Holders At the Company's Annual Meeting of Shareholders held June 24, 2004, the 2004 Stock Option Plan was approved and the following directors were elected: Joseph Feldschuh, MD Robert Willens James Lombard Martin Wolpoff Stephen Valentine 4 Item 3. 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, 2004 By: /s/ JOSEPH FELDSCHUH, M.D. ------------------------------ JOSEPH FELDSCHUH, M.D., President and Chief Executive Officer DATE: August 11, 2004 By: /s/ STEPHEN FELDSCHUH ------------------------- STEPHEN FELDSCHUH Vice President of Operations And Chief Financial Officer 5