SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
FOR THE FISCAL YEAR ENDED COMMISSION FILE NUMBER
December 31, 2000 0-12248
Daxor Corporation
(Exact name of Registrant as specified in its charter)
New York 13-2682108
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
350 Fifth Avenue
Suite 7120
New York, New York 10118
(Address of principal executive offices) (Zip Code)
Registrant's telephone number: (212) 244-0555
Securities registered pursuant to Section 12(b) of the Act:
Common Shares, $.01 par value
(Title of Class)
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether Registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to such filing requirements for
the past 90 days.
Yes [X] No [_]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-X is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
form 10-K. [_]
As at March 9, 2001, the aggregate market value of the voting stock held by
non-affiliates of the Registrant was $ 21,645,253. The market value of Common
Stock of the Registrant, par value $.01 per share, was computed by reference to
the closing price of one share on such date, as reported by the American Stock
Exchange, which was $14.35.
The number of shares outstanding of the Registrant's Common Stock, par value
$.01 per share, as of March 9, 2001: 4,664,909 shares.
Documents incorporated by reference: The information required by Part III is
incorporated by reference from the proxy statement for the 2001 Annual Meeting
of Shareholders.
PART I.
Item 1. Business
Daxor Corporation is a medical device manufacturing Corporation with additional
biotech services. The company was originally founded for cryobanking services.
For the past 10 years, its major focus has been on the development of a rapid,
accurate instrument to measure human blood volume. The company developed an
instrument called the BVA-100 which is used in conjunction with a single use
diagnostic injection and collection kit. The company maintains a website,
www.daxor.com which describes its operations.
In mid-1998, the company achieved marketing clearance from the FDA for the
instrument. In 1999, the company received clearance for it's specialized single
use injection kit known as Volumex. In 1999, the company initiated beta testing
for the Blood Volume Analyzer at Hospitals in the New York Metropolitan region.
In the year 2000, the Company initiated marketing efforts outside of the New
York region. Test results from hospital sites indicated that the Blood Volume
Analyzer was accurate and provided information that was important in a wide
variety of acute and chronic medical and surgical situations. The Company
acquired a manufacturing facility for the injection kit components in Rochester,
N.Y. The Blood Volume Analyzer is manufactured for the Company by an Original
Equipment Manufacturer (OEM). The Company established its own small scale
manufacturing facility in Oakridge, Tennessee for research and development
purposes. This will also provide flexibility to meet potential increased market
demand. The injection kit filling is performed by an FDA licensed
radiopharmaceutical manufacturer. The Company has received United States,
European Common Market, and Japanese patents for its Blood Volume Analyzer.
Blood volume measurement has been available for more than 50 years in formats
which required as much as three to six hours of technician time with variable
degrees of accuracy. Because of the time required, certain technical shortcuts
were used which reduced the accuracy of the measurement. An additional problem
was the difficulty of calculating an accurate expected normal blood volume for a
specific individual. Normal blood volume has been shown to vary in relation to
the degree of deviation from ideal weight. A leaner individual has a higher
blood volume percentage of body weight as compared to an obese individual. The
computations for an individuals normal expected blood volume were complex and
time consuming. The Blood Volume Analyzer automated these computations. The
basic requirements for a blood volume analyzer analysis is accurate measurement
of the blood volume for a patient and an accurate calculation of the expected
normal blood volume for that specific individual. The BVA-100 Blood Volume
Analyzer provides blood volume measurement with an accuracy of approximately
98%. Preliminary results can be available within 20 minutes and final results
within 35 to 45 minutes.
Measurement of blood volume is achieved by the use of an indicator or tracer
which is injected into a patient which is then followed by the collection of
timed blood samples. The volume of blood in a patient is inversely proportional
to the dilution of the tracer. The measurement while relatively simple in
principle, has been difficult to perform accurately and rapidly because of the
high degree of precision required in each step. The standard techniques require
the hospital or user to prepare an exactly matching set of standards and tracer
injectate with precise and complete injection of the tracer. Because of the
difficulty in achieving this type of precision blood volume measurements are
performed in only a small minority of hospitals in the United States. The
standard tests used to diagnose anemia, the hemoglobin or the hematocrit,
measure only the thickness and not the volume of an individual's blood. These
surrogate or proxy tests are well known to be misleading in many situations
where blood volume is abnormal. In acute situations, such as during surgical
blood loss or after trauma, it may take 24 to 72 hours for the hematocrit to
accurately or reasonably reflect the degree of blood loss. Patients may have
delayed transfusions because the full degree of blood loss is not
reflected by these proxy tests. Delayed transfusions or fluid replacement may
result in serious complications.
Pulmonary Artery Catheterization (PAC) which involves the insertion of a
catheter into a vein through the right chambers of the heart has frequently been
used as a surrogate technique to evaluate blood volume in critically ill
patients. Pulmonary Artery Catheterization (PAC) measures pressure directly but
not volume. In 1999, the Lutheran Medical Center (New York) presented its
research on the first comparison of PAC with direct blood volume measurements in
patients. Their findings confirmed that PAC could be inaccurate and misleading
in patients who had significant blood volume deficits. Hypovolemia or low blood
volume can be particularly dangerous during surgery and may lead to sudden
severe drops in blood pressure. Such a drop in blood pressure, also known as
shock, is associated with strokes, heart attacks or even sudden death.
The Company has received preliminary reports on the use of the blood volume
analyzer in septic or toxic shock. Septic shock is associated with death rates
as high as 40-70%. Lutheran Medical Center using the BVA-100 reported
preliminary results in 40 patients diagnosed with septic shock who were found to
have unanticipated low blood volume. The patients who were treated with fluids
and blood to restore their blood volume, to normal levels had a markedly reduced
death rate. These findings if verified on a larger scale would be very important
for marketing the Blood Volume Analyzer. A primary goal of the Company is to
have the Blood Volume Analyzer become a standard of care within hospitals as
part of the decision-making process for administration of blood and intravenous
therapy. If these preliminary findings in the treatment of septic shock are
verified, it could be expected to have a significant impact on hospital demand
for obtaining a Blood Volume Analyzer. Septic shock is a common daily occurrence
in all hospitals. Major pharmaceutical companies have attempted to find
pharmaceutical agents that will reverse shock. To date, these tests have been
unsuccessful. A recent report on patients in septic shock indicated a slight
improvement in patients who were treated with an experimental drug. It was
reported that the anticipated cost of this drug would be $5000 per treatment. If
additional studies confirm that correction of blood volume should be the primary
focus on treating septic shock, then blood volume would become an integral part
of the therapy for septic shock. The cost of a diagnostic kit is approximately
$260.00. The combined cost of blood volume measurement and fluid and/or blood
replacement would be significantly lower than the anticipated cost of the
experimental septic shock drug.
The provision of this type of data in the opinion of the Company will provide
critical information in a timely fashion not only in surgery but in other
conditions such as heart failure and kidney failure. The Company believes that,
if its blood volume measurement equipment were available in a hospital, it would
be feasible for the hospital to routinely perform a blood volume test on every
patient for whom a blood transfusion appeared to be indicated. There are over 4
million patients who receive blood transfusions every year.
The largest potential use for the Blood Volume Analyzer, is for evaluation and
treatment of outpatients medical problems. Many disease conditions result in
alterations of blood volume which may have serious consequences for the patient.
A recent Mayo Clinic study estimated that there are 50 million Americans who
have hypertension. Hypertension is caused primarily by two variables. There is
either too much blood (hypervolemia) or fluid retention within the circulation
or too much vasoconstriction (tightening of the blood vessels). Diuretics are
one major category of drugs used to treat hypertension. Diuretics cause the
kidney to excrete salt and water and thereby decreasing the blood volume and
lowering the blood pressure. A second major category of medications is
vasodilators. These drugs relax the blood vessels, or vasoconstriction, and
lower the blood pressure. Within each of these two major categories are drugs
which work by different mechanisms but they all essentially fall into one of
these two main therapeutic categories, diuretics or vasodilators. Treatment is
often a trial and error approach because neither
vasoconstriction or blood volume is actually measured in a patient (with rare
exception). One of the most serious complications of hypertension is loss of
kidney function (renal failure) which may require a patient to undergo permanent
renal dialysis. Over the past year, the company has received reports on patients
treated for hypertension with diuretics, who have a low blood volume. The
physicians treating these patients reduced or removed the diuretic therapy.
African-Americans have been reported to have significantly higher rates of
strokes, and kidney failure as compared to whites for comparable levels of
elevated blood pressure. Diuretic therapy would be expected to be beneficial for
patients whose elevated blood pressure is caused by an expanded blood volume and
would be expected to be harmful for patients whose high blood pressure is
accompanied by low blood volume. At the present time, there is inadequate data
to determine whether African Americans as a group are more likely to be
individuals treated with diuretics. It is well known that diuretics can cause
blood volume to decrease to the point of causing disruption of kidney function.
The kidney is particularly vulnerable to low blood volume. Kidney failure is a
common complication of severe low blood volume. Medications which cause low
blood volume, may contribute to premature renal failure. The measurement of
blood volume in the treatment of hypertension may help prevent these types of
complications. By measuring the blood volume within the patient, the physician
can make a more rational or scientific choice in regard to the medical therapy
to be administered.
It is estimated that there are 5 millions individuals that are treated annually
for congestive heart failure. The January 2000 issue of the American College of
Cardiology reported on a series of patients treated for congestive heart failure
who had low blood volume and were decompensated. Over-treatment of congestive
heart failure is very difficult to detect and symptoms of over-treatment can be
confused with the primary disease itself. It is estimated that $38 billion is
spent annually on treatment for congestive heart failure. Congestive heart
failure is the number one reason for admission to hospitals in the US for
patients over 65 years of age. $23 billion is spent annually on hospital
treatment of congestive heart failure patients. Three thousand patients annually
receive heart transplants. The overwhelming majority of patients treated for
heart failure must be treated medically with a varied combination of drugs. The
Blood Volume Analyzer is currently undergoing testing for utilization in
optimizing the treatment for congestive heart failure patients. Results of this
testing from the Heart Failure Center of Columbia Presbyterian Medical Center
has been submitted for publication.
Syncope or sudden loss of consciousness is a major cause for hospitalization in
the United States. Patients who experience syncope may suffer severe injuries.
Some patients may experience light headedness without complete loss of
consciousness. Evaluation of such patients includes neurological and
cardiovascular testing, but usually does not include a blood volume measurement.
Low blood volume can predispose to syncope. Patients with this condition are
frequently treated with different types of drugs without precise knowledge of
the underlying cause of the syncope. In March 2000, the Cardiovascular
Department of the Cleveland Clinic obtained a BVA-100 Blood Volume Analyzer for
the Syncope Section. Preliminary results on over 200 patients in the Cleveland
Clinic have demonstrated that a significant percentage of such patients have
moderate to severe hypovolemia (low blood Volume) which would not have been
diagnosed by the standard test. This scientific data is currently under review
for publication. The Cleveland Clinic Cardiovascular Department is ranked number
one in the United States according to the annual US News World Report Survey on
US Hospitals. The Hospital itself is ranked number 4 overall out of more than
6200 hospitals in the country.
According to the Journal of Clinical Geriatrics, one out of every three elderly
patients has a condition known as orthostatic hypotension. Orthostatic
hypotension is a condition whereby when a person arises from a sitting or
reclining position, the blood pressure drops. A sudden drop in blood pressure
may cause dizziness or even loss of consciousness. One in eight elderly
Americans experiences a hip fracture. It is unknown how many of these hip
fractures are caused by patients
having a transient drop in blood pressure. A blood volume measurement can help
differentiate the cause of orthostatic hypotension. Some patients with low blood
volume caused by either low red cell volume or low plasma volume can be treated
with medications. Patients who have a normal blood volume with orthostatic
hypotension have a condition related to autonomic dysfunction or ineffective
control of the constriction of small blood vessels. A medication is also
available for this condition. Anemia or low red cell volume is a common
occurrence in patient's undergoing drug therapy for AIDS, or patients undergoing
chemotherapy for cancer. Epogen and Procrit which are manufactured by the Amgen
Corporation, can provide therapy for such conditions. Procrit is distributed by
the Ortho Division of Johnson & Johnson. The standard surrogate tests, the
hematocrit and hemoglobin may not reflect the full degree of decreased red blood
cell volume in such patients. A blood volume measurement can detect low blood
volume in such patients which may be contributing to a profound feeling of
weakness common in such conditions. Blood volume measurement can detect patients
who have unrecognized low blood volume.
The chronic fatigue syndrome is a condition said to affect approximately one
million Americans, particularly patients with low blood pressure. Low blood
volume has been reported to be a factor in such conditions. The ability to
measure blood volume with a high degree of precision and accuracy may identify
patients who have low blood volume and are not optimally treated at the present
time. Examples of other conditions with blood volume derangement are renal
(kidney) failure and syncope (fainting). Measurement of blood volume permits
more precise therapy.
There are several manufacturers which include Northfield Laboratories, Biopure,
and Hemosol Corporation which are testing blood substitutes. These substitutes
can be used for surgical procedures instead of donor transfusions. These
artificial blood substitutes have the advantage of a long shelf life and the
capability of being sterilized. They have the disadvantage of a shortened
half-life in the body after transfusion. There have been recent reports in the
New England Journal of Medicine that as many as 60% of patients undergoing
Cardiac Bypass Surgery (CABG) experience some degree of measurable permanent
brain damage such as memory loss. Under current transfusion practices, patients
may undergo major surgery with half the concentration of the normal red cells.
The practice of undertransfusion is widespread. In the Journal Transfusion, Dr.
Robert Valeri, a senior researcher of the Boston Naval Hospital estimated that
there may be as many as 40,000 heart attacks per one million operations due to
undertransfusions. The Company is attempting to initiate a cooperative program
which will involve the use of blood volume measurement combined with the use of
blood substitutes during surgery. The Company believes that it can provide a
significant advantage to companies testing blood substitutes without precise
knowledge of a patients actual blood volume. Patients who have initial low blood
volume at the initiation of surgery may respond very differently from a patient
with a normal blood volume treated with a blood substitute. The Company also has
initiated discussions with representatives of both Johnson & Johnson and Amgen
for sponsorship of studies utilizing blood volume measurements combined with
products which stimulate increased red cell production. The current guidelines
for the use of these products is based on hemoglobin and hematocrit
measurements. These tests, however, may be very misleading in regard to the
total amount of red cells a patient has in his/her body. A patient who has a low
blood volume that is undetected may have an artificially elevated hematocrit.
Such a patient may experience severe fatigue and other symptoms which could be
improved by appropriate treatment. It is only with the use of a blood volume
measurement that the lower red cell volume could be detected and treated. Blood
volume measurement which could detect low blood volume in patients with cancer,
kidney disease, heart failure could significantly increase the justification and
use of these blood stimulants.
In 1998, the medication Viagra, produced by Pfizer for erectile dysfunction was
associated with sudden death in a limited number of cases in patients who used
vasodilators such as Nitrates. Unrecognized low blood volume was suspected as a
possible factor in some of these cases. The company is currently conducting a
small
study on blood volume measurements on potential Viagra users who might benefit
from a blood volume measurement prior to Viagra use.
The Company believes that the most significant market for its blood volume
measurement equipment consists of approximately 8,500 hospitals and Radiology
Imaging Centers in the United States. The Company believes that there is an
additional international market of 10 to 14,000 potential users of its BVA-100.
Blood volume measurement is an approved test with six separate CPT codes.
Reimbursement has been received from a number of insurance companies for
measurement of blood volume using the BVA-100. Reimbursement is particularly
important for hospitals because hospitals may receive reimbursement and income
from non-hospitalized patients who undergo blood volume measurement.
SCIENTIFIC MEDICAL SYSTEMS SUBSIDIARY (wholly owned by Daxor)
BLOOD BANKING
The Company's frozen blood bank is the only blood bank in New York that allows
people to store their own blood for up to ten years. In 1985, the Company
established the first facility in the United States for long-term autologous
(self-storage) blood banking. The blood banking industry is a group of
for-profit and not-for-profit corporations whose total revenue is estimated to
exceed six billion dollars.
Utilizing cryobiology technology, frozen blood has been shown to be capable of
being stored for up to 20 years. The present donor system of blood transfusions
presents risks to those individuals receiving blood. This is a risk which can be
avoided by utilizing one's previously stored blood. There are approximately
15-18 million blood transfusions administered annually to 4 million patients.
Compounding the risks of infection and other complications, is the frequent
withholding of blood from severely anemic patients by their physicians because
of these known risks of transfusion. It is a common medical practice to replace
the first three pints of lost blood with three pints of sterile water or their
equivalent. This problem has not been brought to public attention, but is widely
known among physicians who have treated patients who have lost blood. The number
of patients who suffer major complications, including sudden death, from
under-transfusion is unknown but significant. Patients who have decreased blood
volume are termed 'Hypovolemic'. The Blood volume Analyzer has the potential to
detect such individuals before complications from under-transfusion occurs.
Physicians who fear the complications of transfusion with potentially
contaminated blood do not have these concerns when patients use autologous blood
(self-storage).
The Company believes that an educational process will be required to establish
the desirability of autologous blood storage and to overcome opposition to any
change in the current blood banking system from established tax-exempt
(non-profit) and profit-making entities. The company believes that it can work
with some voluntary blood banks to establish joint marketing of long term frozen
personal blood storage programs.
Blood Banking services are provided by a broad spectrum of organizations.
Approximately one-half of the blood supply used for transfusions is supplied by
the American Red Cross and its affiliates. The other portion is supplied by
various other tax-exempt and for-profit organizations. Some hospitals operate
their own donor services, but require the services of outside vendors such as
the Red Cross for adequate supplies of blood products. At the present time there
are no other organizations providing long-term personal frozen blood storage in
the Northeastern United States. It is the company's intentions to form alliances
with other short-term donor blood banks to expand frozen personal blood storage
services. The
Company views personal blood storage as a supplement to and not as a competition
to other existing blood donor services.
Idant (Division of Scientific Medical Systems, subsidiary of Daxor Corporation)
Semen (Sperm) Banking
Idant, in 1985, was the first semen bank to institute an AIDS quarantine period
for frozen semen. Viruses such as HIV and hepatitis B or C may be undetectable
for up to 6 months in infected individuals. By freezing the semen of donors and
re-testing the donor 6 months later the risk of hepatitis or AIDS can be
virtually eliminated. In 1989, New York State and a number of other states
enacted laws requiring sperm banks to freeze and quarantine sperm for a minimum
of six months with donors being tested at the beginning and at the end of the
six-month period. By storing semen from a large cross-section of sperm donors,
Idant can closely match the physical characteristics of the sperm donor. The
Company maintains a complete physical description of each donor on file and
matches multiple physical characteristics and additional special characteristics
sought by the family to those of the sterile father. The Company also provides,
on request, special screening for rare hereditary recessive genetic traits. The
increased likelihood of a child who resembles his recipient father can make the
child, who results from artificial insemination, much more psychologically
acceptable to the father.
Storage of Sperm for Personal Use
Idant pioneered both the technology and the commercial application of long-term
preservation of human sperm for use in artificial insemination. The division has
provided frozen semen services to physicians worldwide. Idant holds
approximately 50,000 human semen units in long-term storage at its central New
York City facility. The Company was the first semen bank in the state of New
York, out of more than 50 licensed banks, to be accredited by the American
Association of Tissue Banks. The Company's sperm bank facilities contain stored
sperm, which should remain viable for many years. Semen stored for 23 years, at
minus 321 degrees, has shown minimal change (the Company has had documented
normal births from semen stored 16 years). The Company's facilities are used by
men who, for a variety of reasons, anticipate impairment of their ability to
father children and by men who have been found to be marginally fertile. These
men may now be able to have children by use of techniques that increase their
fertility by treating their sperm to artificially inseminate their partners. The
facilities are also used by men who plan to undergo sterilization by vasectomy,
but who believe that they might desire children in the future. Artificial
insemination using stored sperm is much more effective and less expensive than
present techniques of vasectomy reversal. In addition, patients with a variety
of diseases, including many types of cancer, store semen prior to undergoing
treatment by chemotherapy or radiation. By utilizing cryogenic preservation
facilities, these patients, who are frequently in their teens or twenties, will
be able to father their own children after cancer treatment, despite the high
risk of sterility and birth defects associated with treatments. The Company
receives referrals for these services from multiple sources, primarily
physicians.
The Company uses a customized carousel canister system in its sperm bank storage
system. This permits retrieval of specimens from lower levels without removal of
upper specimens. Only a few other sperm banks in the U.S. are known to have such
a system. Most other banks use a "rack and cane" pull-up system, which requires
removal of upper specimens from the tank to retrieve specimens at lower levels.
In such a bank, a specimen may be exposed to a temperature change of -321oF (the
temperature of the liquid nitrogen) to room temperature of 78oF more than 100
times during its storage lifetime. This will result in a gradual degradation of
the specimen. In the Idant system the specimen remains under liquid nitrogen
almost continuously while in storage. The Company is aware of only one other
semen bank, which uses the carousel system for long term storage of semen. Idant
periodically
spot-checks its bank storage to test viability of selected specimens of stored
semen; results of these spot-checks have shown sperm samples held in excess of
23 years to have almost no loss in viability or change in condition.
Patent and Copyright Protection
The Company has received separate United States patents on its Blood Volume
Analyzer (BVA-100) and for its Volumex injection kit. These are the only US
patents ever issued for an instrument dedicated to the measurement of total
human blood volume for a specific individual. The Company received a European
patent covering 12 countries. The Company has received a Japanese patent for the
BVA-100. The Company received the first patent ever issued for an instrument in
Japan to measure human blood volume. The instrument is designed to work with an
injection kit manufactured by the Company. It is theoretically possible to use
the Blood Volume Analyzer without the kit by preparing the reagents used for the
test. However, the cost and time for such preparations would be uneconomical and
it is unlikely that a purchaser of the instrument would use it without
purchasing the reagent kit. This is the first U.S. patent ever issued for a
system, which permits a fixed quantitative amount of isotope to be injected for
diagnostic purposes. The injection system was specifically designed for use with
the BVA-100. However, it can be used for other diagnostic test purposes where a
precise complete quantitative injection of a diagnostic reagent is required. The
Company is currently investigating the filing of additional patents involving
the BVA-100 system.
Marketing
The Company is marketing its Blood Volume Analyzer either on a direct sale,
lease, or an instrument loaner basis to potential users. Users are expected to
be primarily hospitals, surgi-centers, and imaging centers (radiology). The
Company also has been demonstrating its equipment at major trade shows such as
Nuclear Medicine, Surgical Anesthesiology, and trauma conferences. The Company
is also in the process of developing a network of dealers as well as it's own
internal sales force. The Company recognized after the initial beta testing in
1999, that it was important to have the Blood Volume Analyzer at leading medical
institutions. Publications and reports from such institutions are particularly
important for acceptance by the general medical community. During the past 14
months, the following facilities acquired Blood Volume Analyzers, the Cleveland
Clinic, ranked number 4 in the United States, Vanderbilt Medical Center, and New
York Hospital Presbyterian Medical Center. The Mayo Clinic, ranked number 2, has
also acquired a Blood Volume Analyzer. In the past 2 months, the Johns Hopkins
Medical Center, ranked number one overall in the United States, and the National
Institutes of Health, the leading US government research agency, have signed
agreements to acquire a Blood Volume Analyzer. Hospitals and health facilities
are exceedingly cost conscious in regard to acquiring additional medical
technology. Blood volume measurement is an approved and reimbursable Medicare
test. The Company's marketing efforts are focused on documenting the beneficial
effects of blood volume measurement as well as developing cost benefit analysis
studies. Such studies are particularly important to HMO's which focus on
avoiding hospitalization when possible. Congestive heart failure for example,
affects over 5 million Americans and is the number cause of hospitalization in
the US. Blood volume derangements are an integral part of the disease process.
The Company believes that patients whose blood volume is known can be more
precisely and scientifically treated and have fewer hospitalizations. As these
studies become available, they will be incorporated into the marketing program
of the Company.
The Company has developed a website (http:// www.daxor.com), which contains
extensive detail about the BVA-100 blood volume analyzer as well as examples of
actual cases (with patient identities removed). The website permits rapid
communication between marketing personnel and potential users prior to an onsite
visit.
Competition
Blood Volume Analyzer
The medical technology market is intensely competitive. There are, however, no
competing instruments manufactured or marketed which perform rapid
semi-automated blood volume analysis, such as the BVA-100. The Company believes
that its receipt of a United States, European and Japanese patent for its Blood
Volume Analyzer provides significant protection against any future potential
competition in the blood volume analysis field. The receipt of the U.S. patent
for the injection kit system provides significant additional protection as the
Company believes that the kits will be a major source of revenue. The Company
believes that its main hindrance to market acceptability will be the need to
demonstrate that its blood volume measurement equipment is capable of producing
accurate data on a cost effective basis. Test kit costs will be modest relative
to the cost of the critical information derived from the test. A blood volume
measurement, for example in septic shock can literally mean the difference
between life and death in terms of the therapeutic approach to the patient.
Blood Banking
The Idant frozen blood bank is the only facility that provides long term
personal blood storage in the Northeastern United States.
Semen Banking
There are at least 300 sperm banks in the United States operated by either
commercial entities or by academic institutions. The Idant semen bank was the
first semen bank in the State of New York that was accredited by the American
Association of Tissue Banks. There are less than 10 semen banking organizations
in the United States that have achieved this accreditation. The Company has
developed a web site (http: // www.Idant.com), which will be helpful for
marketing purposes.
Regulation
The development, testing, production and marketing of medical devices is subject
to regulation by the FDA under the Federal Food, Drug and Cosmetic Act, and may
be subject to regulation by similar agencies in various states and foreign
countries. The governing statutes and regulations generally require
manufacturers to comply with regulatory requirements designed to assure the
safety and effectiveness of medical devices. The FDA clearance for marketing of
the Blood Volume Analyzer, BVA-100, and the associated quantitative injection
kit marks one of the most important milestones in the history of Daxor. The
products manufactured by and for the Company in regard to the BVA-100 are
subject to continuing FDA regulations and inspections.
The New York State Department of Health regulates the Company's Idant semen and
blood bank within New York State. The Idant Semen Bank and Blood Bank are
divisions of Scientific Medical Systems, which is wholly owned by the Daxor
Corporation. Scientific Medical Systems has its own separate directors. These
facilities are licensed and annually inspected by the New York State Department
of Health.
Employees
On March 19, 2001, the Company had 31 employees. None of the Company's employees
are covered by a collective bargaining agreement. The Company believes that its
employee relations are good.
Item 2. Properties
In February 1992, the Company signed a thirteen-year lease for a new facility at
the Empire State Building. The initial space was for 10,000 square feet, with
option provisions in the lease for up to 24,000 square feet. The company
currently occupies approximately 7,500 square feet. In 1998 the company signed a
lease for approximately 11,000 of manufacturing and office space in Rochester
New York. The lease was signed when Daxor acquired the assets of the Wellport
Corporation. Both leases contain CPI escalation clauses. The Rochester lease is
subject to renewal in October 2001. The Company is considering relocating some
of these facilities to Oakridge, Tennessee.
Item 3. Legal Proceedings
The Company had no litigation in 2000 and no pending lawsuits.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of the Company's shareholders during the
fourth quarter of 2000.
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
The common stock is traded on the American Stock Exchange under the symbol DXR.
1999
High Low
---- ---
First Quarter...................... 15 7/16 13 3/4
Second Quarter..................... 14 2/8 11 3/4
Third Quarter...................... 13 5/16 12 1/8
Fourth Quarter..................... 18 1/2 12
2000
High Low
---- ---
First Quarter...................... 30 5/8 13 7/8
Second Quarter..................... 20 3/4 10 2/8
Third Quarter...................... 16 2/8 10 2/8
Fourth Quarter..................... 13 3/8 10
On March 21,2001, the Company had approximately 222 holders of record of the
Common Stock. The Company believes there are approximately 1900 beneficial
holders.
The Company paid a single cash dividend, $.50, on the Common Stock in 1997. Any
future dividends will be dependent upon the Company's earnings, financial
condition and other relevant factors.
ITEM 6. SELECTED FINANCIAL DATA
The following table sets forth certain selected financial data with respect
to the Company and is qualified in its entirety by reference to the financial
statements and notes thereto, from which these data were derived, included
elsewhere in the report. Selected Operations Statement Data:
Ended December 31,
2000 1999 1998 1997 1996
------------ ------------ ------------ ------------ ------------
Operating revenues $ 635,868 $ 500,969 $ 324,192 $ 529,737 $ 717,308
Other revenues 109,920 74,407
Dividend income 1,842,583 1,856,119 1,942,759 2,138,755 2,132,173
Gains on sale of investments 57,399 469,595 362,487 144,681 16,354
------------ ------------ ------------ ------------ ------------
Total revenues 2,645,770 2,901,090 2,629,438 2,813,173 2,865,835
------------ ------------ ------------ ------------ ------------
Costs and expenses:
Operations of laboratories
& costs of production 1,052,000 833,751 961,031 628,729 819,722
Selling, general and
administrative 1,429,395 2,016,004 1,561,159 2,161,626 2,080,969
Interest expenses, net
of interest income 198,341 147,105 484,563 167,452 74,175
------------ ------------ ------------ ------------ ------------
Total costs and expenses 2,679,736 2,996,860 3,006,753 2,957,807 2,974,866
------------ ------------ ------------ ------------ ------------
Net loss before
income taxes (33,966) (95,770) (377,315) (144,634) (109,031)
Provision for income taxes 21,228 1,360 43,145 14,219 3,134
------------ ------------ ------------ ------------ ------------
Net loss ($ 55,194) ($ 97,130) ($ 420,460) ($ 158,853) ($ 112,165)
============ ============ ============ ============ ============
Weighted average number of
shares outstanding 4,675,826 4,721,492 4,762,542 4,696,876 4,722,709
------------ ------------ ------------ ------------ ------------
Net income per common
equivalent share ($ 0.01) ($ 0.02) ($ 0.09) ($ 0.03) ($ 0.02)
============ ============ ============ ============ ============
Selected Balance Sheet Data:
Year Ended December 31,
2000 1999 1998 1997 1996
------------ ------------ ------------ ------------ ------------
Working capital 38,309,247 28,869,309 34,837,930 32,501,404 31,306,579
Total assets 49,575,118 35,846,065 44,056,349 41,322,592 37,288,804
Total liabilities* 10,903,280 6,566,496 8,752,515 8,404,868 5,507,384
Shareholders' equity 38,671,838 29,279,569 35,303,834 32,917,724 31,781,420
Return on equity* 0.00% 0.00% 0.00% 0.00% 0.00%
* Return on equity is calculated by dividing the Company's net income for the
period by the shareholders' equity at the beginning of the period.
* Total liabilities include deferred taxes of $9,011,745 for unrealized
gains.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
GENERAL
Idant Laboratories subsidiary contributed 59%, 99% and 100% of operating
revenues in 2000, 1999 and 1998 respectively. The Companies operations in semen
banking and blood banking (laboratories) have received limited promotion. The
Company has taken steps to increase awareness of these services. The Company in
the year 2000 received its first revenue from the Blood Volume analyzer. The
potential market for the Blood Volume Analyzer is significantly larger than the
Company's current operations. The Company anticipates that proceeds from Daxor's
blood volume analyzer will be the primary source of revenue in the immediate
future. The company believes that the potential market for blood volume
measurement and analysis is between 15-20 million tests per year. Successful
penetration of even a small fraction of the market would significantly change
the company's structure. The Company intends to focus its major marketing
efforts on the Blood Volume Analyzer.
YEAR ENDED DECEMBER 31, 2000 AS COMPARED TO DECEMBER 31, 1999
Total revenues were $ 2,645,770 in 2000, down from the $2,901,090 reported in
1999. Dividend income earned on the Company's securities portfolio was
$1,842,583, a decrease from the $1,856,119 reported in 1999. Gains on the sale
of investments was $57,399 in 2000 as compared to $469,595 in 1999. Net income
before income taxes was a loss of $ 55,194 in 2000 vs. $97,130 in 1999.
YEAR ENDED DECEMBER 31, 1999 AS COMPARED TO DECEMBER 31, 1998
Total revenues were $2,901,090 in 1999, up from the $2,629,438 reported in 1998.
Dividend income earned on the Company's securities portfolio was $ 1,856,119, a
decrease from the $1,942,759 reported in 1998. Gains on the sale of investments
was $469,595 in 1999 as compared to $362,487 in 1998. Net income before income
taxes was a loss of $ 97,130 in 1999 vs. $420,460 in 1998.
LIQUIDITY AND CAPITAL RESOURCES
The Company's management has pursued a policy of maintaining sufficient
liquidity and capital resources in order to assure continued availability of
necessary funds for the viability and projected growth of all ongoing projects.
The Company continues to maintain its diversified securities portfolio comprised
primarily of electric utility preferred and common stocks. The income derived
from these investments has helped to offset the operating and marketing expenses
of developing the Blood Volume Analyzer. The Company has followed a conservative
policy of assuring adequate liquidity so that it can expand its marketing and
research development without the sudden necessity of raising additional capital.
The securities in the company's portfolio were selected to provide stability of
both income and capital.
At December 31, 2000, the Company's short-term debt was $1,775,363 vs.
$2,443,794 at 1999. At year-end 2000, shareholders' equity was $38,671,838. At
year-end 1999, the Company had shareholders' equity of $29,279,569. At December
31, 2000 the Company's security portfolio had a market value of $48,722,403 vs.
$34,867,286 in 1999.
In 1998 The Company purchased the assets of the Wellport Manufacturing Company.
This Company had previously manufactured the injection kit. The Company now
manufactures its own injection kit. The final filling and shipping of the kit is
performed by an FDA licensed radiopharmaceutical manufacturer. In the year 2000,
the Company leased additional space in Oakridge, Tennessee to manufacture its
own BVA-100 Blood Volume Analyzers. The Company has a separate contract with an
Original Equipment Manufacturer to manufacture additional Blood Volume
Analyzers. The Company is considering developing additional manufacturing
facilities for its kit system in Oakridge. This would involve transferring some
of its Rochester operations to Oakridge. The Company is reviewing options to
purchase some of the original equipment manufacturers who provide various parts
of the BVA-100 Blood Volume Analyzer system. The Company is also involved in
discussions with independent medical distributors to market the BVA-100. The
Company offers to lease or rent, as well as sell its Blood Volume Analyzer
(BVA-100) as part of an overall marketing plan. The Company will also loan an
instrument for evaluation purposes.
The Company is also developing with one of its clients, a blood volume
laboratory staffing program. Under such program, the Company may provide
management services as well as equipment services. With respect to blood
banking, the Company believes that it may be a valuable partner to companies
which produce blood substitutes as well as companies that produce blood
stimulants such as Epoetin Alfa. Blood volume measurement would enhance the
validation of these products. The Company will actively look to form such
marketing alliances.
Year-end 2000 finds the Company in a satisfactory financial position with
adequate funds available for its immediate anticipated needs.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities and
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereto duly authorized.
DAXOR CORPORATION
by: /s/ Joseph Feldschuh
----------------------------------
Joseph Feldschuh, M.D.
President and Chief
Executive Officer
Chairman of the Board
Dated: March 22, 2001
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Joseph Feldschuh President and Director March 22, 2001
------------------------ (Principal Executive Officer)
Joseph Feldschuh, M.D.
/s/ Ron Baldry Vice President March 22, 2001
------------------------
Ron Baldry
/s/ Octavia Atanasiu Corporate Treasurer March 22, 2001
------------------------ Accounting Supervisor
Octavia Atanasiu (Principal Financial Officer)
/s/ Virginia Fitzpatrick Corporate Secretary March 22, 2001
------------------------
Virginia Fitzpatrick
/s/ Stephen M. Moss Director March 22, 2001
------------------------
Stephen M. Moss, PhD
/s/ Bruce Hack Director March 22, 2001
------------------------
Bruce Hack
/s/ James Lombard Director March 22, 2001
------------------------
James Lombard
/s/ Martin Wolpoff Director March 22, 2001
------------------------
Martin Wolpoff
Board of Directors:
Name Title
Dr. Joseph Feldschuh Chairman, President, & CEO
Stephen Moss Director
James Lombard Director
Martin Wolpoff Director
Bruce Hack Director
Item 14(a) (1). Index to Financial Statements
The following statements and schedules of Daxor Corporation are submitted
herewith:
Page
----
Report of Independent Accountants F-1
Financial Statements as at December 31, 2000 and 1999
and for the three years ended December 31, 2000
Balance Sheets F-2
Statements of Income F-3
Statements of Shareholders' Equity F-3
Statements of Cash Flows F-4
Notes to Financial Statements F-5
Schedule I -- Marketable Securities -- Other Investments - Year ended
December 31, 2000 F-9
Schedule IX -- Short-term Borrowings -- Years ended December 31, 2000
1999, and 1998 F-9
Schedule X -- Supplementary Income Statement Information --
Years ended December 31, 2000, 1999, and 1998 F-9
All other schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are not required under the
related instructions, are inapplicable or the required information is set forth
in the financial statements filed herewith, including notes thereto, and
therefore have been omitted.
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Shareholders of Daxor Corporation:
We have audited the accompanying consolidated balance sheets of Daxor
Corporation as at December 31, 2000 and 1999, the related consolidated
statements of income, shareholders' equity and cash flows for each of the three
years in the period ended December 31, 2000. Our audits also included the
financial statement schedules listed in the Index at Item F-9.
These financial statements and financial statement schedules are the
responsibility of the Corporation's management. Our responsibility is to express
an opinion on these financial statements and financial statement schedules based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of Daxor Corporation as at December 31, 2000
and 1999, and the results of their operations and its cash flows for each of the
three years in the period ended December 31, 2000 in conformity with generally
accepted accounting principles. Also, in our opinion, such financial statement
schedules, when considered in relation to the basic financial statements taken
as a whole, present fairly in all material respects the information set forth
herein.
Frederick A. Kaden & Co.
Brentwood, New York
March 12, 2001
F-1
DAXOR CORPORATION
FINANCIAL STATEMENTS
================================================================================
CONSOLIDATED BALANCE SHEETS[UNAUDITED]
December 31, December 31,
2000 1999
------------ ------------
================================================================================
ASSETS
================================================================================
CURRENT ASSETS
Cash $ 18,439 $ 67,783
Marketable Securities at Fair Value
December 31,2000 and December 31,
1999. (Notes 1 and 2) 48,722,403 34,867,286
Accounts receivable 107,927 6,745
Other current assets 363,758 493,991
------------ ------------
Total Current Assets 49,212,527 35,435,805
EQUIPMENT AND IMPROVEMENTS
Storage tanks 125,815 125,815
Leasehold improvements, furniture
and equipment 836,813 825,794
Laboratory equipment 278,087 275,817
------------ ------------
1,240,715 1,227,426
Less: Accumulated depreciation and amortization 919,414 861,156
------------ ------------
Net equipment and improvements 321,301 366,270
Other Assets 41,290 43,990
Total Assets $ 49,575,118 $ 35,846,065
============ ============
================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
================================================================================
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 42,431 $ 127,341
Loans payable (Notes 1 and 2) 1,775,363 2,443,794
Other Liabilities 73,741 33,738
Deferred Taxes (Note 1) 9,011,745 3,961,623
------------ ------------
Total Liabilities 10,903,280 6,566,496
SHAREHOLDERS' EQUITY
Common stock, par value $.01 per share:
Authorized 10,000,000 shares: issued and
outstanding shares 4,664,909 December 31,
2000 and 4,692,909 December 31, 1999 53,097 53,097
Additional Paid in capital 9,798,232 9,798,232
Net unrealized holding gains
on available-for-sale securities (Note 1) 17,493,387 7,690,209
Retained earnings 16,140,652 16,195,846
Treasury stock (4,813,530) (4,457,815)
------------ ------------
Total Shareholders' Equity 38,671,838 29,279,569
Total Liabilities and Shareholders' Equity $ 49,575,118 $ 35,846,065
============ ============
See accompanying notes to financial statements
F-2
DAXOR CORPORATION
STATEMENTS OF INCOME
Year Ended December 31,
-----------------------
(Consolidated) (Consolidated)
2000 1999 1998
----------- ----------- -----------
Revenues:
-----------------------------------------------------------------------------------------------------
Operating revenues (Note 12) $ 635,868 $ 500,969 $ 324,192
Other revenues 109,920 74,407
Dividend income 1,842,583 1,856,119 1,942,759
Gains on sale of securities 57,399 469,595 362,487
----------- ----------- -----------
Total Revenues 2,645,770 2,901,090 2,629,438
----------- ----------- -----------
-----------------------------------------------------------------------------------------------------
Costs and expenses:
-----------------------------------------------------------------------------------------------------
Operations of Laboratories & Costs of Production 1,052,000 833,751 961,031
Selling, General, and Administrative 1,429,395 2,016,004 1,561,159
Interest expense, net of interest income 198,341 147,105 484,563
----------- ----------- -----------
Total costs and expenses 2,679,736 2,996,860 3,006,753
----------- ----------- -----------
Net Loss Before Income Taxes (33,966) (95,770) (377,315)
Provision for income taxes (Note 9) 21,228 1,360 43,145
----------- ----------- -----------
Net Loss $ (55,194) $ (97,130) $ (420,460)
----------- ----------- -----------
Weighted Average Number of Shares Outstanding 4,675,826 4,721,492 4,762,542
----------- ----------- -----------
Net Income per Common Equivalent Share $ (0.01) $ (0.02) $ (0.09)
----------- ----------- -----------
See accompanying notes to financial statements
=====================================================================================================
DAXOR CORPORATION
STATEMENTS OF SHAREHOLDER'S EQUITY
Three Years Ended December 31, 2000
-----------------------------------
Common stock Additional
Number Paid-in Retained Treasury
of Shares Amount Capital Earnings Stock
--------- ----------- ----------- ----------- ------------
-------------------------------------------------------------------------------------------------------------------
Balance at January 1, 1998 4,690,709 $ 53,097 $ 8,579,803 $16,713,436 $(3,475,782)
-------------------------------------------------------------------------------------------------------------------
Net loss for the year ended
December 31,1998 (420,460)
Purchase of Treasury Stock (38,000) (458,775)
Sale of Treasury Stock 100,000 1,218,429 (2,353,755) 276,521
----------- ----------- -----------
-------------------------------------------------------------------------------------------------------------------
Balance December 31,1998 4,752,709 53,097 9,798,232 16,292,976 (3,658,036)
-------------------------------------------------------------------------------------------------------------------
Net loss for the year ended
December 31, 1999 (97,130)
Purchase of Treasury Stock (59,800) (799,779)
-------------------------------------------------------------------------------------------------------------------
Balance December 31, 1999 4,692,909 53,097 9,798,232 16,195,846 (4,457,815)
-------------------------------------------------------------------------------------------------------------------
Net loss for the year ended
December 31, 2000 (55,194)
Purchase of Treasury Stock (28,000) (355,715)
--------- ----------- ----------- ----------- -----------
Balance December 31, 2000 4,664,909 $ 53,097 $ 9,798,232 $16,140,652 $ 4,813,530
-------------------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements
F-3
STATEMENTS OF CASH FLOWS
Year ended December 31,
(Consolidated)
2000 1999 1998
----------- ----------- -----------
Cash flows from operating activities:
-------------------------------------
Net income or (loss) $ (55,194) $ (97,130) $ (420,460)
----------- ----------- -----------
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation & Amortization 58,258 72,395 66,406
(Gain) loss on sale of investments (57,399) (469,595) (362,487)
(Gain) loss on sale of equipment (4,554)
Change in assets and liabilities:
(Increase) decrease in accounts receivable (101,182) 144,489 21,864
(Increase) decrease in accounts receivable-
Related Parties 75,979 28,371
(Increase) decrease in other current assets 130,233 (232,394) (46,507)
(Increase) decrease in tax refunds receivable -- 5,881 --
(Increase) decrease in other assets 2,700 (6,019) (6,155)
Increase (decrease) in accounts payable,accrued
expenses and other liabilities net of "short sales" (83,910) 39,747 (108,503)
Total adjustments (51,300) (374,071) (407,011)
----------- ----------- -----------
Net cash provided by operating activities (106,494) (471,201) (827,471)
----------- ----------- -----------
Cash flows from investing activities:
-------------------------------------
Payment for purchase of equipment and
improvements (13,289) (55,114) (109,835)
Proceeds from sale of equipment -- 48,936
Net cash provided or (used) in purchase
and sale of investments 1,027,001 843,604 357,737
Net proceeds (repayments) of loans from
brokers used to purchase investments (668,431) 393,245 (444,090)
Proceeds from "short sales" not closed 67,584 28,581 6,227
----------- ----------- -----------
Net cash provided by/(used in) investing activities 412,865 1,259,252 (189,961)
----------- ----------- -----------
Cash flows from financing activities
------------------------------------
Proceeds from sale of treasury stock 1,494,950
Payment for purchase of treasury stock (355,715) (799,779) (458,775)
----------- ----------- -----------
Net cash used in financing activities (355,715) (799,779) 1,036,175
----------- ----------- -----------
Net increase (decrease) in cash and
cash equivalents (49,344) (11,728) 18,743
Cash and cash equivalents at beginning of year 67,783 79,511 60,768
----------- ----------- -----------
Cash and cash equivalents at end of year $ 18,439 $ 67,783 $ 79,511
=========== =========== ===========
See accompanying notes to financial statements
----------------------------------------------
F-4
DAXOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The accompanying consolidated financial statements as at December 31, 2000
and 1999 and for the three years ended December 31, 2000 have been prepared in
conformity with principles of accounting applicable to a going concern. Daxor
Corporation operates in the medical services and technology industry.
The consolidated financial statements include the accounts of the Company
and its subsidiary. All significant intercompany transactions and balances have
been eliminated in consolidation.
(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 December 31, 2000 and December 31, 1999 being increased
approximately 119.30% and 50.19% respectively over its historical cost. A
corresponding increase in shareholders' equity has been effectuated. In
accordance with the provisions of FASB No. 115, the adjustment in shareholders'
equity to reflect the company's unrealized gains has been made net of the tax
effect had these gains been realized.
The following tables summarize the company's investments as of:
December 31, 2000
-----------------
Type of
------- Cost Fair Value Unrealized Unrealized
security ----------- ----------- holding gains holding losses
-------- ----------- ----------
Equity $22,202,412 $48,721,503 $27,425,484 $ 906,393
Debt 14,859 900 0 13,959
-------------------------------------------------------------------------------------
Total $22,217,271 $48,722,403 $27,425,484 $ 920,352
=========== =========== =========== ==========
December 31, 1999
-----------------
Type of
------- Cost Fair Value Unrealized Unrealized
security ----------- ----------- holding gains holding losses
-------- ----------- ----------
Equity $23,200,595 $34,866,386 $13,640,132 $1,974,341
Debt 14,859 900 0 13,959
-------------------------------------------------------------------------------------
Total $23,215,454 $34,867,286 $13,640,132 $1,988,300
=========== =========== =========== ==========
At December 31, 2000, the securities held by the Company had a market value
of $48,722,403 and a cost basis of $22,217,271 resulting in a net unrealized
gain of $26,505,132 or 119.30% of cost.
At December 31, 1999, the securities held by the Company had a market value
of $34,867,286 and a cost basis of $23,215,454 resulting in a net unrealized
gain of $19,420,553 or 82.30% of cost.
At December 31, 2000 and December 31, 1999, marketable securities,
primarily consisting of preferred and common stocks of utility companies, are
valued at fair value.
(2) Loans Payable
As at December 31, 2000 and December 31, 1999, the Company had loans
outstanding aggregating $1,000,000 and $1,000,000 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 8.16%.
Short term margin debt due to brokers ,secured by the Companies marketable
securities, totaled $775,363 at December 31, 2000 and $1,443,794 at December 31,
1999.
(3) Accounts receivable
Accounts receivable are deemed to be fully collectible.
(4) Equipment and Improvements
Depreciation of equipment and improvements is taken using the straight line
method. For 2000, 1999 and 1998 the charges to income for depreciation using
this method were $58,258, $72,395 and $66,406 respectively.
The cost of maintenance and repairs is charged to expense as incurred. The
cost of betterments and additions are capitalized and depreciated over the life
of the asset. The cost of assets disposed of or determined to be non-revenue
producing, together with the related accumulated depreciation applicable
thereto, are eliminated from the accounts, and any gain or loss is recognized.
(5) Other Liabilities
At December 31, 2000 and December 31, 1999, the Company also maintained a
short position in certain marketable securities. These positions were sold for
$67,584 at December 31, 2000, and $28,581 at December 31, 1999, and had
respective market values of $43,287 and $53,275 resulting in an unrealized gain
of $24,297 at December 31, 2000 and an unrealized loss of $24,694 at December
31, 1999
(6) Commitments and Contingencies
(A) Operating Leases
Future minimum rental payments under non-cancelable operating lease are as
follows:
2001 $295,664
2002 $219,830
2003 $219,830
2004 $219,830
2004 $219,830
2005
Rent expense for all non-cancelable operating leases was $406,768,$378,372
and $273,433 for the years ended December 31, 2000, 1999 and 1998 respectively.
B) Contingent Liabilities
The Company is not aware of any contingent liabilities at year end.
(7) Research and Development Expenses
Research and development expenses were $213,464, $15,000 and $564,275 for
2000, 1999, and 1998 respectively. All research and development costs are
expensed in the year they occur.
(8) Interest Expense and Income
Interest expense was $200,741, $150,617, and $485,043 and interest income
was $2,400, $3,512, and $480 in 2000, 1999 and 1998 respectively.
(9) Income Taxes
The following is a reconciliation of the federal statutory tax rate of 34%
for 2000,1999 and 1998, with the provision for income taxes:
2000 1999 1998
------ ------ ------
Statutory tax rate 0 0 0
State and city taxes 21,228 1,360 43,145
------ ------ ------
Provision for income taxes 21,228 1,360 43,145
------ ------ ------
Effective federal tax rate 0% 0% 0%
------ ------ ------
(10) Shareholders' Equity
During 2000, the Company purchased 28,000 shares of its own stock at a cost
of $355,714.50.
(11) Subsidiaries
Daxor Corporation has formed a wholly owned subsidiary, Scientific Medical
Systems, Inc., which has taken over the operations of the sperm bank, blood bank
and laboratory in accordance with an agreement reached with the State of New
York. The results of operations have been consolidated in these financial
statements.
SCHEDULE I
MARKETABLE SECURITIES -- OTHER INVESTMENTS
The following tables summarize the company's investments as of:
December 31, 2000
-----------------
Type of Unrealized Unrealized
Security Cost Fair Value Holding gains holding losses
-------- ---- ---------- ------------- --------------
Equity $22,202,412 $48,721,503 $27,425,484 $ 906,393
------
Debt 14,859 900 0 13,959
---- -------------------------------------------------------------------------------------
Total $23,215,454 $34,867,286 $13,640,132 $1,988,300
----- =========== =========== =========== ==========
SCHEDULE IX
SHORT-TERM BORROWINGS
Years Ended December 31, 2000, 1999, 1998
--------------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E Column F
--------------------------------------------------------------------------------------------------------------
Category of Balance at Weighted average Maximum amount Average amount Weighted average
aggregate the end of interest rate at outstanding during outstanding interest rates
short-term period end of the period this period during the during the period
borrowings period
--------------------------------------------------------------------------------------------------------------
2000
--------------------------------------------------------------------------------------------------------------
Banks 1,000,000 8.16% 1,000,000 1,000,000 8.05%
--------------------------------------------------------------------------------------------------------------
Brokers 775,363 8.12% 1,443,794 1,089,312 7.71%
--------------------------------------------------------------------------------------------------------------
All Categories 1,775,363 8.14% 2,443,794 2,089,312 7.93%
--------------------------------------------------------------------------------------------------------------
1999
--------------------------------------------------------------------------------------------------------------
Banks 1,000,000 7.65% 1,000,000 1,000,000 7.65%
--------------------------------------------------------------------------------------------------------------
Brokers 1,443,794 7.47% 1,443,794 1,312,442 7.43%
--------------------------------------------------------------------------------------------------------------
All Categories 2,443,794 7.54% 2,443,794 2,443,794 7.51%
--------------------------------------------------------------------------------------------------------------
1998
--------------------------------------------------------------------------------------------------------------
Banks 1,000,000 7.75% 1,000,000 1,000,000 7.65%
--------------------------------------------------------------------------------------------------------------
Brokers 1,050,549 7.32% 1,267,365 1,262,341 7.29%
--------------------------------------------------------------------------------------------------------------
All Categories 2,050,549 7.47% 2,267,594 2,262,341 7.36%
--------------------------------------------------------------------------------------------------------------
The average borrowings were determined on the basis of the amounts outstanding
at each month-end. The weighted interest rate during the year was computed by
dividing actual interest expense in each year by average short-term borrowings
in such year.
SCHEDULE X
SUPPLEMENTARY INCOME STATEMENT INFORMATION
------------------------------------------------------------------------------------------------------------------
COLUMN A COLUMB B
------------------------------------------------------------------------------------------------------------------
Item Charged to costs and expenses
---- Year ended December 31,
-----------------------
2000 1999 1998
---- ---- ----
Maintenance and repairs $ * $ * $ *
Depreciation and amortization
of intangible assets pre-operating
costs and similar deferrals 58,258 72,395 66,406
Taxes, other than payroll and
income taxes * * *
Royalties --- --- ---
Advertising costs * * *
------------------------------------------------------------------------------------------------------------------
* less than 1% of total revenues for the year.
------------------------------------------------------------------------------------------------------------------