10-Q/A 1 d63369_10-q.txt AMENDMENT TO FORM 10-Q 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 4,608,826 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS (Unaudited) PAGE Condensed Consolidated Balance Sheets as at June 30, 2004 and December 31, 2003 F-1 Condensed Consolidated Statements of Operations for the three and six Months ended June 30, 2004 and 2003 F-2 Condensed Consolidated Statement of Cash Flows for the six months ended June 30, 2004 and 2003 F-3 Notes to Condensed Consolidated Financial Statements F-4-5 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 3-4 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 Item 1. Financial Statements (Unaudited) Index to Financial Statements Condensed Consolidated Balance Sheets as at June 30, 2004 and December 31, 2003 F-1 Condensed Consolidated Statements of Operations for the Three and Six Months ended June 30, 2004 and 2003 F-2 Condensed Consolidated Statement of Cash Flows for the Six Months ended June 30, 2004 and 2003 F-3 Notes to Condensed Consolidated Financial Statements F-4 to 5 DAXOR CORPORATION CONDENSED CONSOLIDATED FINANCIAL STATEMENTS DAXOR CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS [UNAUDITED]
June 30, December 31, 2004 2003 ------------ ------------ ASSETS CURRENT ASSETS Cash $ 20,028 $ 3,324 Available-for-sale securities 48,537,767 47,399,159 Accounts receivable 223,897 137,008 Inventory 146,185 146,185 Prepaid and other current assets 230,563 242,215 ------------ ------------ Total Current Assets 49,158,440 47,927,891 PROPERTY AND EQUIPMENT Machinery and equipment 744,362 727,689 Furniture and fixtures 325,856 325,635 Leasehold improvements 295,530 295,530 ------------ ------------ 1,365,748 1,348,854 Less: Accumulated depreciation and amortization 1,069,361 1,045,481 ------------ ------------ Property and equipment, net 296,387 303,373 Other Assets 69,268 69,268 ------------ ------------ Total Assets $ 49,524,095 $ 48,300,532 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable and accrued liabilities $ 148,137 $ 183,052 Loans payable 4,039,865 2,502,106 Other Liabilities 559,531 667,123 Deferred Taxes 8,716,158 8,531,081 ------------ ------------ Total Liabilities 13,463,691 11,883,362 STOCKHOLDERS' EQUITY Common stock, $.01 par value Authorized - 10,000,000 shares Issued - 5,309,750 shares Outstanding - 4,608,826 June 30, 2004 and 4,639,026 shares, respectively 53,097 53,097 Additional Paid in capital 9,801,548 9,801,548 Unrealized holding gains on available-for-sale securities, net of tax 16,919,600 16,560,334 Retained earnings 14,928,270 15,169,967 Treasury stock, at cost, 700,924 and 670,724 Shares, respectively (5,642,111) (5,167,776) ------------ ------------ Total Stockholders' Equity 36,060,404 36,417,170 ------------ ------------ Total Liabilities and Stockholders' Equity $ 49,524,095 $ 48,300,532 ============ ============
See accompanying notes to condensed consolidated financial statements F-1 DAXOR CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30 JUNE 30 2004 2003 2004 2003 ----------- ----------- ----------- ----------- REVENUES: Operating revenues $ 254,735 $ 290,411 $ 662,983 $ 509,094 ----------- ----------- ----------- ----------- Total Operating Revenues 254,735 290,411 662,983 509,094 ----------- ----------- ----------- ----------- COSTS AND EXPENSES Operations of Laboratories & Cost of Production 335,886 343,683 717,048 680,942 Selling, General, and Administrative 846,281 656,563 1,556,438 1,316,999 ----------- ----------- ----------- ----------- Total Costs and Expenses 1,182,167 1,000,246 2,273,486 1,997,941 ----------- ----------- ----------- ----------- Loss from operations (927,432) (709,835) (1,610,503) (1,488,847) Other income (expense): Dividend income 473,231 430,752 966,800 910,641 Gains (losses) on sale of securities 201,630 45,361 426,696 81,263 Other revenues 3,643 5,143 7,286 8,286 Interest expense, net (12,533) (19,075) (31,976) (33,582) ----------- ----------- ----------- ----------- Total other income 665,971 462,181 1,368,806 966,608 ----------- ----------- ----------- ----------- Net Loss Before Income Taxes (261,461) (247,654) (241,697) (522,239) Provision for income taxes 0 0 0 0 ----------- ----------- ----------- ----------- Net Loss $ (261,461) $ (247,654) $ (241,697) $ (522,239) =========== =========== =========== =========== Weighted Average Number of Shares Outstanding 4,632,659 4,645,631 4,622,326 4,651,108 Net Loss per Common Equivalent Share $ (0.06) $ (0.05) $ (0.05) $ (0.11) =========== =========== =========== ===========
See accompanying notes to condensed consolidated financial statements F-2 DAXOR CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) FOR THE SIX MONTHS ENDED JUNE 30, JUNE 30, 2004 2003 --------- --------- CASH FLOWS FROM OPERATING ACTIVITIES Net loss $(241,697) $(522,239) --------- --------- Adjustments to reconcile net loss to net cash used in operating activities: Depreciation & Amortization 23,880 24,466 Gain on sale of investments (426,696) (81,263) Change in assets and liabilities: (Increase) decrease in accounts receivable (86,889) 19,019 (Increase) decrease in other current assets 11,652 (24,607) Decrease in accounts payable, accrued and other liabilities net of "short sales" (34,915) (4,644) --------- --------- Total adjustments (512,968) (67,029) --------- --------- Net cash used in operating activities (754,665) (589,268) --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property and Equipment (16,894) (27,150) Proceeds from sale of equipment, net 45,000 Purchases of investments, net (831,035) (670,892) Net proceeds 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 investing activities 645,704 587,165 --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from bank loan 600,000 200,000 Purchase of treasury stock (474,335) (181,136) Proceeds from sale of treasury stock -- 30,736 --------- --------- Net cash provided by financing activities 125,665 49,600 --------- --------- Net increase 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 condensed consolidated financial statements F-3 DAXOR CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) SIX MONTHS ENDED JUNE 30, 2004 AND 2003 (1) BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements reflect all adjustments of a normal recurring nature, which are, in the opinion of management, necessary for a fair statementof the financial position and results of operations for the interim periods presented. The consolidated financial statements are unaudited and are subject to such year-end adjustments as may be considered appropriate and should be read in conjunction with the historical consolidated financial statements of Daxor Corporation years ended December 31, 2003, 2002 and 2001, included in Daxor Corporation's Annual Report on Form 10-K for the fiscal year ended December 31, 2003. Operating results for the six-month period ended June 30, 2004 are not necessarily indicative of the results that may be expected for the year ending December 31, 2004. These consolidated financial statements have been prepared in accordance with US GAAP and under the same accounting principles as the consolidated financial statements included in the Annual Report on Form 10-K. Certain information and footnote disclosures related thereto normally included in the financial statements prepared in accordance with US GAAP have been omitted in accordance with Rule 10-01 of Regulation S-X. (1) MARKETABLE SECURITIES Upon adoption of SFAS No. 115, Accounting for Certain Investments in Debt and Equity Securities, management has determined that the company's portfolio is best characterized as "Available-For-Sale". SFAS No. 115 requires these securities to be recorded at their fair market values, with the offsetting unrealized holding gains or losses being recorded as Comprehensive Income (Loss)in the Equity section of the Balance Sheet. The adoption of this pronouncement has resulted in an increase in the carrying value of the company's available-for-sale securities, as at June 30, 2004 and December 31, 2003, of approximately 111.94% and 112.48%,respectively, over its historical cost. In accordance with the provisions of SFAS No. 115, the adjustment in stockholders' equity has been made net of the tax effect had these gains been realized. The Company uses the historical cost method in the determination of its realized and unrealized gains and losses. The following tables summarize the Company's investments as of: June 30, 2004 ------------- 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 ----------------- 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. Debt securities, which consist of Bonds, are scheduled to mature in May 2003, April 2006 and May 2008. F-4 (3) INVENTORY Inventory is stated at the lower of cost or market, using the first-in, first-out method (FIFO), and consists primarily of finished goods. (4) OTHER ASSETS Included in Other Assets is an intangible asset (Customer List) that was being amortized over its estimated useful life of 15 years. The asset was recorded at its original cost of $35,000 and has accumulated amortization of $6,222 at June 30, 2004 and December 31, 2003, respectively. Amortization expense was $2,333 for the year ended December 31, 2003. In accordance with SFAS No. 142, Goodwill and Other Intangible Assets, management periodically reviews the asset's value for potential impairment. This review is currently underway for the current period and management has taken the position of suspending amortization of the asset until the review is completed. (3) LOANS PAYABLE As at June 30, 2004 and December 31, 2003, the Company has a note payable of $1,500,000 and $900,000, respectively, with a bank. The note matures each year, with an option to renew, and is classified as short term. The note balance is an aggregate of borrowings (loans) that renews as one note each year, but is subject to different interest rates depending on the individual amount of each borrowing. The loans bear interest at approximately 3.0% and are secured by certain marketable securities of the Company. 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. (4) Subsequent Events (Unaudited) Effective July 6, 2004, the Company instituted the Daxor Corporation 2004 Stock Option Plan. This Plan was created to provide incentive to employees, officers, agents, consultants and independent contractors of the Company by offering proprietary interest in the Company. The Company was involved in a dispute with its landlord in New York City. This dispute arose out of a rental rate dispute. In February 2005, the dispute was settled and the Company voluntarily agreed to pay the landlord approximately $45,000 in additional rent. This $45,000 liability was accrued for the purposes of this financial statement presentation and is listed in Accrued Expenses. (5) SELECTED FINANCIAL DATA (Unaudited) Selected Quarterly Financial Data
Quarter Ended Three Months Six Months ----------------------------------------------------------------- June 30, 2004 June 30, 2003 June 30, 2004 June 30, 2003 Total operating revenues $ 254,735 $ 290,411 $ 662,983 $ 509,094 Total revenue and other income $ 933,239 $ 771,667 $ 2,063,765 $ 1,509,284 Gross profit (loss) $ (927,432) $ (709,835) $(1,610,503) $(1,488,847) Net income (loss) $ (261,461) $ (247,654) $ (241,697) $ (522,239) Net income (loss) per share $ (.06) $ (.05) $ (.05) $ (.11)
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 and other income was $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 of $(261,461) versus a net loss of $(247,654) in 2003. Total costs and expenses in 2004 increased to $1,194,700 vs. $1,019,321 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 and other income was $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 $1,556,438 in 2004, vs. $1,316,999 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 of ($222,637) versus a net loss 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: April 15, 2005 By: /s/ JOSEPH FELDSCHUH, M.D. ------------------------------ JOSEPH FELDSCHUH, M.D., President and Chief Executive Officer DATE: April 15, 2005 By: /s/ STEPHEN FELDSCHUH ------------------------- STEPHEN FELDSCHUH Vice President of Operations And Chief Financial Officer 5