Edgar Filing: DAXOR CORP

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

Quarterly Report Under Section 13 or 15(d) of the
Securities Act of 1934

FOR QUARTER ENDED SEPTEMBER 30, 2008
Commission File Number 0-12248

DAXOR CORPORATION
(Exact Name as Specified in its Charter)


New York		13-2682108
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer 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 o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12-b-2 of the Exchange Act:


Large Accelerated Filer o		Accelerated Filer o		Non-accelerated Filer x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.


CLASS		4,302,218 OUTSTANDING AT October 31, 2008

COMMON STOCK PAR VALUE: $.01 per share

DAXOR CORPORATION AND SUBSIDIARY

TABLE OF CONTENTS


PART I.	FINANCIAL INFORMATION
	Item 1.	FINANCIAL STATEMENTS (Unaudited)
		Index to Financial Statements
		Condensed Consolidated Balance Sheets at September 30, 2008 (Unaudited) and December 31, 2007 - (Audited)	F-1
		Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2008 and 2007 – (Unaudited)	F-2-3
		Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2008 and 2007 – (Unaudited)	F-4
		Notes to Condensed Consolidated Financial Statements – (Unaudited)	F-5-20
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3-10
	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	11-13
	Item 4.	Controls and Procedures	13

PART II.	OTHER INFORMATION
	Item 1.	Legal Proceedings	13
	Item 1A.	Risk Factors	13
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	13
	Item 3.	Defaults Upon Senior Securities	13
	Item 4.	Submission of Matters to a Vote of Security Holders	13
	Item 5.	Other Information	13
	Item 6.	Exhibits	14

-1-

DAXOR CORPORATION AND SUBSIDIARY


PART I	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
	Index to Financial Statements
	Condensed Consolidated Balance Sheets at September 30, 2008 (Unaudited) and December 31, 2007 (Audited)	F-1
	Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2008 and 2007 – (Unaudited)	F-2-3
	Notes to Condensed Consolidated Financial Statements – (Unaudited)	F-5-20

-2-

DAXOR CORPORATION AND SUBSIDIARY`
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

DAXOR CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS


	UNAUDITED September 30, 2008			AUDITED December 31, 2007


ASSETS

CURRENT ASSETS
Cash and cash equivalents	$	4,036,181		$	2,029,834
Receivable from broker (held in money market accounts)		8,175,317			10,495,417
Available-for-sale securities, at fair value		66,888,238			74,919,193
Securities sold, not received, at fair value		9,523,511			12,404,409
Accounts receivable, net of allowance for doubtful accounts of $57,645 in 2008 and $57,655 in 2007		303,283			214,334
Inventory		419,307			255,834
Prepaid expenses and other current assets		322,249			145,827

Total Current Assets		89,668,086			100,464,848

Property and equipment, net		2,056,226			2,058,494
Other assets		37,158			37,158


Total Assets	$	91,761,470		$	102,560,500


LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES
Accounts payable and accrued liabilities	$	465,958		$	498,212
Loans payable		2,264,318			3,314,303
Income taxes payable		2,724,014			1,295,668
Mortgage payable, current portion		39,563			37,313
Put and call options, at fair value		10,805,915			5,972,632
Securities borrowed, at fair value		12,925,461			20,362,259
Deferred revenue		46,304			7,417
Deferred income taxes		8,460,850			15,726,213

Total Current Liabilities		37,732,383			47,214,017

LONG TERM LIABILITIES

Mortgage payable, less current portion		400,672			430,598


Total Liabilities		38,133,055			47,644,615


COMMITMENTS AND CONTINGENICES

STOCKHOLDERS’ EQUITY
Common stock, $.01 par value, Authorized - 10,000,000 shares Issued – 5,316,550 shares Outstanding – 4,318,618 and 4,468,618 shares at September 30, 2008 and December 31, 2007, respectively		53,165			53,165
Additional paid in capital		10,649,960			10,594,161
Accumulated other comprehensive income		15,713,008			29,205,823
Retained earnings		37,632,559			23,487,371
Treasury stock, at cost, 997,932 and 847,932 shares of Treasury stock at September 30, 2008 and December 31, 2007, respectively		(10,420,277	)		(8,424,635	)

Total Stockholders’ Equity		53,628,415			54,915,885

Total Liabilities and Stockholders’ Equity	$	91,761,470		$	102,560,500

See accompanying notes to unaudited condensed consolidated financial statements.

F-1

DAXOR CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS [UNAUDITED]
FOR THE THREE MONTHS ENDED


	September 30, 2008			September 30, 2007


REVENUES:

Operating Revenues – equipment sales and related services	$	349,961		$	246,263
Operating Revenues – cryobanking and related services		101,292			103,284


Total Revenues		451,253			349,547


Cost of Sales:

Cost of equipment sales and related services		188,484			210,215
Cost of cryobanking and related services		11,117			10,035


Total Cost of Sales		199,601			220,250


Gross Profit		251,652			129,297


OPERATING EXPENSES:

Research and development expenses:

Research and development-equipment sales and related services		560,914			600,201
Research and development-cryobanking and related services		40,843			36,497


Total Research and Development Expenses		601,757			636,698


Selling, General & Administrative Expenses:

Selling, general, and administrative- equipment sales and related services		702,626			888,897
Selling, general, and administrative- cryobanking and related services		168,992			172,541


Total Selling, General & Administrative Expenses		871,618			1,061,438


Total Operating Expenses		1,473,375			1,698,136


Loss from Operations		(1,221,723	)		(1,568,839	)


Other income (expenses):

Dividend income-investment portfolio		750,909			711,578
Realized gains on sale of securities, net		9,787,106			6,110,405
Mark to market of short positions		(532,300	)		(3,251,811	)
Other revenues		3,270			2,725
Interest expense, net of interest income of $922 and $922		(32,936	)		(34,976	)
Administrative expense relating to portfolio investments		(27,984	)		(13,479	)


Total Other Income, net		9,948,065			3,524,442


Income before income taxes	$	8,726,342		$	1,955,603

Income tax expense		2,325,000			—


Net income	$	6,401,342		$	1,955,603


Weighted average number of shares outstanding - basic		4,324,885			4,578,485


Net income per common equivalent share - basic	$	1.48		$	0.43


Weighted average number of shares outstanding - diluted		4,346,885			4,578,485


Net income per common equivalent share - diluted	$	1.47		$	0.43


Dividends declared per common share	$	0.25			—

See accompanying notes to unaudited condensed consolidated financial statements.

F-2

DAXOR CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS [UNAUDITED]
FOR THE NINE MONTHS ENDED


	September 30, 2008			September 30, 2007


REVENUES:

Operating Revenues – equipment sales and related services	$	1,141,739		$	1,078,947
Operating Revenues – cryobanking and related services		287,014			321,800


Total Revenues		1,428,753			1,400,747


Cost of Sales:

Cost of equipment sales and related services		491,274			482,975
Cost of cryobanking and related services		34,843			33,835


Total Cost of Sales		526,117			516,810


Gross Profit		902,636			883,937


OPERATING EXPENSES:

Research and development expenses:

Research and development-equipment sales and related services		1,735,202			1,759,945
Research and development-cryobanking and related services		136,239			139,523


Total Research and Development Expenses		1,871,441			1,899,468


Selling, General & Administrative Expenses:

Selling, general, and administrative- equipment sales and related services		2,277,162			2,477,261
Selling, general, and administrative- cryobanking and related services		468,808			516,175


Total Selling, General & Administrative Expenses		2,745,970			2,993,436


Total Operating Expenses		4,617,411			4,892,904


Loss from Operations		(3,714,775	)		(4,008,967	)


Other income (expenses):

Dividend income-investment portfolio		1,933,410			1,942,178
Realized gains on sale of securities, net		18,262,577			9,551,357
Mark to market of short positions		1,610,482			79,021
Other revenues		9,055			8,356
Interest expense, net of interest income of $32,083 and $11,916		(78,003	)		(179,033	)
Administrative expense relating to portfolio investments		(70,554	)		(37,400	)


Total Other Income, net		21,666,967			11,364,479


Income before income taxes	$	17,952,192		$	7,355,512

Income tax expense		2,725,000			—


Net income	$	15,227,192		$	7,355,512


Weighted average number of shares outstanding - basic		4,369,440			4,591,563


Net income per common equivalent share - basic	$	3.49		$	1.60


Weighted average number of shares outstanding - diluted		4,440,140			4,591,563


Net income per common equivalent share - diluted	$	3.43		$	1.60


Dividends declared per common share	$	0.25			—

See accompanying notes to unaudited condensed consolidated financial statements.

F-3

DAXOR CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS [UNAUDITED]
FOR THE NINE MONTHS ENDED


	September 30, 2008			September 30, 2007

CASH FLOWS FROM OPERATING ACTIVITIES:	$	15,227,192		$	7,355,512
Net income

Adjustment to reconcile net income to net cash used in operating activities:
Depreciation		234,923			161,640
Provision for doubtful accounts		(10	)		15,000
Non-cash compensation expense associated with employee stock compensation plans		55,799			23,065
Gain on sale of fixed assets		(213,814	)		(151,016	)
Gains on sale of investments		(18,262,577	)		(9,551,357	)
Mark to market adjustments on options & short sales		(1,610,482	)		(79,021	)

Change in operating assets and liabilities:
Increase in accounts receivable		(88,939	)		(26,223	)
(Increase) Decrease in prepaid expenses & other current assets		(176,422	)		8,784
Increase in inventory		(163,473	)		(32,287	)
Increase in other assets		—			(263,637	)
(Decrease) Increase in accounts payable and accrued liabilities		(32,254	)		179,864
Increase in income taxes payable		1,428,346			—
Increase in deferred revenue		38,887			7,161


Net cash used in operating activities		(3,562,824	)		(2,352,515	)


CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment		(278,840	)		(1,173,929	)
Proceeds from sale of fixed assets		260,000			195,500
Decrease in securities sold, not received at fair market value		2,880,898			1,843,018
Decrease in securities borrowed, at fair market value		(7,436,798	)		(3,890,347	)
Purchases of put and call options		(260,384	)		(708,650	)
Sales of put and call options		23,984,659			13,305,465
Acquisition of available for sale securities		(45,196,181	)		(16,084,725	)
Proceeds from sale of available for sale securities		33,451,024			16,957,844

Net cash provided by investing activities		7,404,378			10,444,176


CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from margin loan payable		56,133,124			26,052,876
Repayment of margin loan payable		(53,373,009	)		(35,387,191	)
Repayment of bank loan		(1,690,000	)		(1,400,000	)
Proceeds from bank loan		200,000			—
Payment of dividends to stockholders		(1,082,004	)		—
Purchase of treasury stock		(1,995,642	)		(670,597	)
Proceeds from sale of treasury stock		—			12,160
Proceeds from mortgage payable		—			500,000
Repayment of mortgage payable		(27,676	)		(23,140	)


Net cash used in financing activities		(1,835,207	)		(10,915,892	)


Net increase (decrease) in cash and cash equivalents		2,006,347			(2,824,231	)
Cash and cash equivalents at beginning of period		2,029,834			2,838,927


Cash and cash equivalents at end of period	$	4,036,181		$	14,696


Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest	$	110,086		$	190,948
Income taxes	$	1,316,044		$	—

See accompanying notes to unaudited condensed consolidated financial statements.

F-4

DAXOR CORPORATION AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2008 and 2007 (Continued)
(Unaudited)

(1) BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

BUSINESS

Daxor Corporation is a medical device manufacturing company that offers additional biotech services, such as cryobanking, through its wholly owned subsidiary, Scientific Medical Systems Corp. The Company provides long-term frozen blood and semen storage services to enable individuals to store their own blood and semen. The main focus of Daxor Corporation has been the development of an instrument that rapidly and accurately measures human blood volume. This instrument is used in conjunction with a single use diagnostic injection and collection kit.

SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements reflect all adjustments of a normal recurring nature, which are, in the opinion of management, necessary for a fair statement of the financial position and results of operations for the interim periods presented. The condensed consolidated financial statements are unaudited and are subject to such year-end adjustments as may be considered appropriate and should be read in conjunction with the historical consolidated financial statements of Daxor Corporation for the years ended December 31, 2007, 2006 and 2005, included in Daxor Corporation’s Annual Report on Form 10-K for the fiscal year ended December 31, 2007. The December 31, 2007 condensed consolidated balance sheet data was derived from audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America. Operating results for the three and nine month periods ended September 30, 2008 are not necessarily indicative of the results that may be expected for the year December 31, 2008.

These condensed 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.

Principles of Consolidation

The condensed consolidated financial statements include the accounts of Daxor Corporation and Scientific Medical Systems Corp, a wholly-owned subsidiary. All inter-company transactions and balances have been eliminated in consolidation.

Segment Reporting

The Company has two operating segments: Equipment Sales and Related Services, and Cryobanking and Related Services.

The Equipment Sales and Related Services segment comprises the Blood Volume Analyzer equipment and related activity. This includes equipment sales, equipment rentals, equipment delivery fees, BVA-100 kit sales and service contract revenues.

The Cryobanking and Related Services segment is comprised of activity relating to the storage of blood and semen, and related laboratory services and handling fees.

Although not deemed an operating segment, the Company reports a third business segment; Investment activity. This segment reports the activity of the Company’s investment portfolio. This includes all earnings, gains and losses, and expenses relating to these investments.

Use of Estimates

In order to prepare financial statements that conform to the requirements of US GAAP, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the dates of the financial statements and the results of operations during the reporting periods. Actual results may differ from these estimates.

Reclassifications

Reclassifications occurred to certain prior year amounts in order to conform to the current year classifications. The reclassifications have no effect on the reported net income.

F-5

DAXOR CORPORATION AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2008 and 2007 (Continued)
(Unaudited)

Cash and Cash Equivalents

Cash and cash equivalents include time deposits and short term investments with original maturities of three months or less. Normally, these short term investments consist of U.S. Treasury Bills. At September 30, 2008 and September 30, 2007, there were $3,990,154 of short term investments and $0 respectively, included as cash equivalents.

Fair Value of Financial Instruments

The carrying amounts of financial instruments, including cash and cash equivalents, accounts receivable and payable, accrued liabilities deferred option premiums and short term debt (loans payable and short positions on securities) approximate fair value because of their short maturities. The carrying amount of the mortgage payable is estimated to approximate fair value as the mortgage was closed in 2007 at a current interest rate.

Available-for-Sale Securities

Available-for-sale securities represent investments in debt and equity securities (primarily common and preferred stock of electric utility companies) that management has determined meet the definition of available-for-sale under SFAS No. 115 - Accounting for Certain Investments in Debt and Equity Securities. Accordingly, these investments are stated at fair market value and all unrealized holding gains or losses are recorded in the Stockholders’ Equity section as Accumulated Other Comprehensive Income (Loss). Conversely, all realized gains, losses and earnings are recorded in the Statement of Operations under Other Income (Expense).

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

Historical cost is used by the Company to determine all gains and losses, and fair market value is obtained by readily available market quotes on all securities.

Put and Call Options at fair value

As part of the company’s investment strategy, put and call options are sold on various stocks the company is willing to buy or sell. The premiums received are deferred until such time as they are exercised or expire. In accordance with SFAS No. 133 - Accounting for Derivative Instruments and Hedging Activities, these options are marked to market for each reporting period using readily available market quotes, and this fair value adjustment is recorded as a gain or loss in the Statement of Operations.

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

Receivable from Broker

The Receivable from Broker represents cash proceeds from sales of securities and dividends. These proceeds are kept in dividend bearing money market accounts.

Securities borrowed at fair value

When a call option that has been sold short is exercised, this creates a short position in the related common stock. The recorded cost of these short positions is the amount received on the sale of the stock plus the proceeds received from the underlying call option. These positions are shown on the Balance Sheet as “Securities borrowed at fair value” and the carrying value is reduced or increased at the end of each quarter by the mark to market adjustment which is recorded in accordance with SFAS No. 115 – Accounting for Certain Investments in Debt and Equity Securities.

Securities sold, not yet received at fair value

Some of the financial institutions who hold our securities do not increase our account with the cash proceeds on the sale of a short stock. In lieu of cash, our account receives a credit for the proceeds of the short sale. Cash is added to or subtracted from our account weekly based on the market value of our short positions. These securities are recorded by the Company as received but not delivered and are valued at their quoted market price.

F-6

DAXOR CORPORATION AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2008 and 2007 (Continued)
(Unaudited)

Investment Goals, Strategies and Policies

The Company’s investment goals are capital preservation and maintaining returns on capital with a high degree of safety. These goals are accomplished through the following strategies and policies:


1.	The Company maintains a diversified securities portfolio comprised primarily of dividend bearing electric utility common and preferred stocks. The Company also sells covered calls on portions of its portfolio and also sells puts on stocks it is willing to own. It also sells uncovered calls and will periodically have net short positions of up to 15% of the value of its portfolio. The Company’s net short position may temporarily rise to 20% of the Company’s portfolio without any specific action because of changes in valuation, but should not exceed this amount. The Company’s investment policy is to maintain a minimum of 85% of its portfolio in electric utilities. Investments in utilities are primarily in electric companies. Investments in non-utility stocks will not exceed 15% of the portfolio.

2.	Investment in speculative issues, including short sales, maximum of 15%.

3.	Limited use of options to increase yearly investment income.

	a.	The use of “Call” Options. Covered options can be sold up to a maximum of 20% of the value of the portfolio. This provides extra income in addition to dividends received from the company’s investments. The risk of this strategy is that investments which the company may have preferred to retain can be called away. Therefore, a limitation of 20% is placed on the amount of stock on which options can be written. The amount of the portfolio on which options are actually written is usually between 3-10% of the portfolio. The historical turnover of the portfolio is such that the average holding period is in excess of five years for available for sale securities.

	b.	The use of “Put” options. Put options are written on stocks which the company is willing to purchase. While the company does not have a high rate of turnover in its portfolio, there is some turnover; for example, due to preferred stocks being called back by the issuing company, or stocks being called away because call options have been written. If the stock does not go below the put exercise price, the company records the proceeds from the sale as income. If the put is exercised, the cost basis is reduced by the proceeds received from the sale of the put option. There may be occasions where the cost basis of the stock is lower than the market price at the time the option is exercised.

	c.	Speculative Short Sales/Short Options. The company normally limits its speculative transactions to no more than 15% of the value of the portfolio. The company may sell uncovered calls on certain stocks. If the stock price does not rise to the price of the calls, the option is not exercised, and the company records the proceeds from the sale of the call as income. If the call is exercised, the company will have a short position in the related stock. The company then has the choice of covering the short position or selling a put against it. If the put is exercised, the short position is covered. The company’s current accounting policy is to mark to the market at the end of each quarter any short positions, and include it in the income statement. While the company may have so-called speculative positions equal to 15% of its accounts, in actual practice the net short stock positions usually account for less than 10% of the assets of the company.

4.	In the event of a merger, the Company will elect to receive shares in the new company. In the event of a cash only offer, the Company will receive cash and be forced to sell it stock.

Accounts Receivable

Accounts receivable are reviewed by the Company at the end of each reporting period to determine the collectability based upon the aging of the balances and the history of the customer. As of September 30, 2008, the Company determined that a reserve of $57,645 should be placed against the outstanding receivable balance of $360,928. As of December 31, 2007, the Company determined that a reserve of $57,655 should be placed against the outstanding receivable balance of $271,989.

F-7

DAXOR CORPORATION AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2008 and 2007 (Continued)
(Unaudited)

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.

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets generally consist of prepayments for future services and corporate capital base/personal holding taxes. Prepayments are expensed when the services are received or as the prepaid capital base/personal holding taxes are offset by the related tax liability. All prepaid expenses and taxes are expensed within one year of the Balance Sheet date and are thus classified as Current Assets.

Property and Equipment

Property and Equipment is stated at cost and consists of BVA equipment loaned on a trial basis, laboratory and office equipment, furniture and fixtures, and leasehold improvements. These assets are depreciated under the straight-line method, over their estimated useful lives, which range from 5 to 39 years.

Amounts spent to repair or maintain these assets arising out of the normal course of business are expensed in the period 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.

In accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, management reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Currently, management does not believe there is any impairment of any long-lived assets.

Revenue Recognition

The Company recognizes operational revenues from several sources. The first source is the sale of equipment, the Blood Volume Analyzer, to customers. The second source is the sale and associated shipping revenues of single-use radioactive doses (Volumex) that are injected into the patient and measured by the Blood Volume Analyzer. The third source of revenue is service contracts on the Blood Volume Analyzer, after it has been sold to a customer. The fourth source of revenue is the storage fees associated with cryobanked blood and semen specimens. The fifth is lab revenues from laboratory services, and the sixth is revenue from donor semen sales.

The Company currently offers three different methods of purchasing the Blood Volume Analyzer equipment. A customer may purchase the equipment directly, lease the equipment, or rent the equipment on a month-to-month basis. The revenues generated by a direct sale or a monthly rental are recognized as revenue in the period in which the sale or rental occurs. If a customer selects the “lease” option, the Company refers the customer to a third party leasing company with whom it has established a relationship. If the lease is approved by the independent leasing company, the Company receives 100% of the sales proceeds from the leasing company and recognizes 100% of the revenue. The leasing company then deals directly with the customer with regard to lease payments and any related collections.

The sales of the single-use radioactive doses (Volumex) that are used in conjunction with the Blood Volume Analyzer are recognized as revenue in the period in which the sale occurs.

Service contracts are recorded by the Company as deferred revenue and are amortized into income in the period in which they are earned. Effective January 1, 2006, the company began to offer service contracts priced on annual basis which are billed quarterly and revenue is earned in the same calendar quarter that it is billed.

As at September 30, 2008 and December 31, 2007, deferred revenue pertaining to the kit sales and historical service contracts was $46,246 and $7,417 respectively. Deferred revenue related to the storage fees was $58 and $0, respectively. The total deferred revenues were $46,304 and $7,417 respectively.

The storage fees associated with the cryobanked blood and semen samples are recognized as income in the period for which the fee applies. Although the Company historically offered annual storage fee contracts, effective October 1, 2005, the Company only offers storage term contracts of three months or less.

F-8

DAXOR CORPORATION AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2008 and 2007 (Continued)
(Unaudited)

Income Taxes

The Company accounts for income taxes under the provisions of SFAS No. 109 - Accounting for Income Taxes. This pronouncement requires recognition of deferred tax assets and liabilities for the estimated future tax consequences of events attributable to differences between the amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using tax rates in effect for the year in which the differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of changes in tax rates is recognized in the statement of operations in the period in which the enactment rate changes. Deferred tax assets and liabilities are reduced through the establishment of a valuation allowance at such time as, based on available evidence, it is more likely than not that the deferred tax assets will not be realized.

Comprehensive Income (Loss)

The Company reports components of comprehensive income under the requirements of SFAS No. 130 - Reporting Comprehensive Income. This statement establishes rules for the reporting of comprehensive income and requires certain transactions to be presented as separate components of stockholders’ equity. The Company currently reports the unrealized holding gains and losses on available-for-sale securities, net of deferred taxes, as accumulated other comprehensive income (loss).

Product Warrantees and Related Liabilities

When a Blood Volume Analyzer has been sold to a customer, the Company offers a one year warranty on the product, which covers all mechanical failures. This one year warranty is effective on the date of sale of the unit. All major components of the equipment are purchased and warranted by the original third party manufacturers. After the one year period expires, customers may purchase a service contract through the Company, which is usually offered in one-year increments. To date, the Company has not experienced any major mechanical failures on any equipment sold. In addition, the majority of the potential liability would revert to the original manufacturer. Due to this history, a liability has not been recorded with respect to product or warranty liability.

Advertising Costs

Advertising expenditures relating to the advertising and marketing of the Company’s products and services are expensed in the period incurred. Advertising Expense for the three months ended September 30, 2008 and 2007 amounted to $3,330 and $8,944. Advertising expense for the nine months ended September 30, 2008 and 2007 amounted to $10,588 and $15,844.

Earnings Per Share

The Company computes earnings per share in accordance with SFAS No. 128, Earnings per Share. Basic earnings per common share is computed by dividing income or loss available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per common share are based on the average number of common shares outstanding during each period, adjusted for the effects of outstanding stock options.

For the three and nine months ended September 30, 2008 and 2007, stock options were included in the computation of diluted earnings per common share. The number of weighted average stock options included in the computation of diluted income per common share for the three months ended September 30, 2008 and 2007 was 22,000 and 0, respectively and for the nine months ended September 30, 2008 and 2007 was 70,700 and 0, respectively.

Outstanding stock options with an exercise price above market are excluded from the Company’s diluted computation as their effect would be anti-dilutive for the three and nine months ended September 30, 2008 and 2007. There were approximately 90,000 and 70,000 stock options with an exercise price above the average market price excluded from the computation, during the three months ended September 30, 2008 and 2007, respectively and approximately 41,000 and 70,000 excluded from the nine months ended September 30, 2008 and 2007.

Leased Employees

The Company has entered into an agreement with ADP Total Source, whereby the Company leases its employees from ADP. The agreement requires the Company to reimburse ADP for all employee wages, related taxes, employee benefit costs and human resource fees.

The Company records these payments using the same classifications for which the reimbursement is made (i.e. wage reimbursements are recorded as wage expense).

Stock Based Compensation

In December 2004, the FASB issued SFAS No. 123R - Share-Based Payment: An Amendment of FASB Statements No. 123, (“SFAS 123R”) which requires companies to recognize in the income statement the grant-date fair value of stock options and other equity-based compensation issued to employees. SFAS 123R is effective for financial statements issued for annual reporting periods that begin after June 15, 2005. In adopting SFAS No. 123R, the Company used the modified prospective transition method, as of January 1, 2006, the first day of the Company’s fiscal year 2006.

F-9

DAXOR CORPORATION AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2008 and 2007 (Continued)
(Unaudited)

Under the modified prospective transition method, awards that are granted, modified or settled after the date of adoption will be measured and accounted for in accordance with SFAS 123R. Compensation cost for awards granted prior to, but not vested, as of the date SFAS 123R is adopted would be based on the grant date attributes originally used to value those awards for pro forma purposes under SFAS 123. The Company’s condensed consolidated financial statements as of and for the three and nine months ended September 30, 2008, reflect the impact of SFAS No. 123R. In accordance with the modified prospective transition method, the Company’s consolidated financial statements for periods prior to January 1, 2006 have not been restated to reflect, and do not include, the impact of SFAS 123R.

SFAS 123R also requires the tax benefits associated with these share-based payments to be classified as financing activities in the Condensed Consolidated Statements of Cash Flows, rather than as operating cash flows as required under previous regulations.

At September 30, 2008, the Company has one stock-based compensation plan, the 2004 Stock Option Plan. This Plan allows for the issuance of a maximum of 200,000 shares of common stock or 5% of the outstanding balance of shares of the Company on the date of grant, whichever is greater. Under the provisions of the Option Plan, the exercise price of any stock options issued is a minimum of 110% of the closing market price of the Company’s stock on the grant date of the option.

At September 30, 2008, there is a total unvested stock-based compensation expense of $ 25,432 and a total weighted average remaining term of 0.69 years. Total share-based compensation expense recognized in the Statement of Operations aggregated $17,436 for the three months ended September 30, 2008 and $9,362 for the three months ended September 30, 2007. The share-based compensation for the nine months ended September 30, 2008 and 2007 was $55,799 and $23,065 respectively.

To calculate the option-based compensation under SFAS 123R, the Company used the Black-Scholes option-pricing model, which it had previously used for the valuation of option-based awards for its pro-forma information required under SFAS 123 for periods prior to fiscal 2006. The Company’s determination of fair value of option-based awards on the date of grant using the Black-Scholes model is affected by the Company’s stock price as well as assumptions regarding a number of subjective variables. These variables include, but are not limited to, the Company’s expected stock price volatility over the term of the awards, risk-free interest rate, and the expected life of the options. The risk-free interest rate is based on a treasury instrument whose term is consistent with the expected life of the stock options. The expected volatility, holding period, and forfeitures of options are based on historical experience.

The following table represents stock option activity for the nine months ended September 30, 2008:


	Number of Shares			Exercise Price		Remaining Contract Life

Outstanding options at beginning of period		90,000		$	18.93		2.60 Yrs.
Granted		26,600		$	12.75		—
Canceled		(4,500	)	$	19.42		—

Outstanding options at end of period		112,100		$	17.45		2.49 Yrs.

Outstanding exercisable at end of period		65,500		$	19.39		1.22 Yrs.

(2) DIVIDENDS

On July 14, 2008, the Company declared a dividend of $0.25 per share which was paid on August 27, 2008 to shareholders of record on July 28, 2008. The Company had last paid a dividend to its shareholders during the year ended December 31, 1996.

Payment of cash dividends is within the discretion of the Company’s board of directors and is dependent on earnings, operations, capital requirements, general financial condition of the Company, and general business conditions. It is the intention of the Company to maintain a quarterly dividend policy if net profits are available to maintain the dividend.

The board of directors has voted and declared an additional dividend of $0.25 per share. This dividend was declared on October 15, 2008 and will be paid to shareholders on November 26, 2008 to shareholders of record on November 4, 2008.

F-10

DAXOR CORPORATION AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2008 and 2007 (Continued)
(Unaudited)

The Company expects that these distributions will be treated for Federal Income Tax purposes as dividend income. However, this determination cannot be made until shortly after December 31, 2008. It is possible, though not expected, that all or a portion of the distribution will be treated as a return of capital. This will be determined once results from operations are available for the year ending December 31, 2008.

If any portions of the distributions are classified as dividends for Federal Income Tax Purposes, it will reduce the Company’s undistributed personal holding company income which will in turn reduce the liability for personal holding company taxes.

(3) AVAILABLE-FOR-SALE 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 of September 30, 2008 of approximately 56.59% of its historical cost. At December 31, 2007 the carrying value was 149.84% over its historical cost of the company’s available for sale securities.

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:


	September 30, 2008

Type of security	Cost		Fair Value		Unrealized Holding gains		Unrealized holding losses

Equity	$	42,648,610	$	66,874,238	$	33,751,680	$	(9,526,052	)
Debt		65,770		14,000		—		(51,770	)

Total	$	42,714,380	$	66,888,238	$	33,751,680	$	(9,577,822	)


	December 31, 2007

Type of security	Cost		Fair Value		Unrealized holding gains		Unrealized holding losses

Equity	$	29,802,511	$	74,572,643	$	47,224,495	$	(2,454,363	)
Debt		184,646		346,550		161,904		—

Total	$	29,987,157	$	74,919,193	$	47,386,399	$	(2,454,363	)

At September 30, 2008 the securities held by the Company had a market value of $66,888,238 and a cost basis of $42,714,380 resulting in a net unrealized gain of $24,173,858 or 56.59% of cost.

At December 31, 2007, the securities held by the Company had a market value of $74,919,193 and a cost basis of $29,987,157 resulting in a net unrealized gain of $44,932,036 or 149.84% of cost.

At September 30, 2008 and December 31, 2007, marketable securities primarily consist of preferred and common stocks of utility companies, and are valued at fair value. Debt securities consist of corporate bonds and notes at September 30, 2008 and these items have a cost of $65,770 and are scheduled to mature at various dates through May 2048.

F-11

DAXOR CORPORATION AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2008 and 2007 (Continued)
(Unaudited)

(4) SEGMENT ANALYSIS

The Company has two operating segments: the sale of blood volume analysis equipment and related services, and cryobanking services which encompasses blood and semen storage and related services. In addition, the Company reports an additional segment, Investment Activity, although it is not deemed to be an operating segment.

The following table summarizes the results of each segment described above for the three months ended September 30, 2008.


	September 30, 2008

	Equipment Sales & Related Services			Cryobanking & Related Services			Investment Activity			Total


Revenues	$	349,961		$	101,292		$	—		$	451,253

Expenses
Cost of sales		188,484			11,117			—			199,601
Research and development expenses		560,914			40,843			—			601,757
Selling, general and administrative expenses		702,626			168,992			—			871,618

Total Expenses		1,452,024			220,952						1,672,976

Operating loss		(1,102,063	)		(119,660	)		—			(1,221,723	)


Investment income, net
Dividends		—			—			750,909			750,909
Gain on sales of securities, net		—			—			9,787,106			9,787,106
Mark to market of short positions		—			—			(532,300	)		(532,300	)
Administrative expenses relating to portfolio investments		—			—			(27,984	)		(27,984	)

Total Investment income, net		—			—			9,977,731			9,977,731


Interest expense, net		(8,428	)		—			(24,508	)		(32,936	)
Other income		2,870			400			—			3,270


Income (loss) before income taxes		(1,107,621	)		(119,260	)		9,953,223			8,726,342
Income tax expense		—			—			2,325,000			2,325,000


Net income (loss)	$	(1,107,621	)	$	(119,260	)	$	7,628,223		$	6,401,342


Total assets	$	6,958,732		$	215,672		$	84,587,066		$	91,761,470

F-12

DAXOR CORPORATION AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2008 and 2007 (Continued)
(Unaudited)

The following table summarizes the results of each segment described above for the three months ended September 30, 2007.


	September 30, 2007

	Equipment Sales & Related Services			Cryobanking & Related Services			Investment Activity			Total


Revenues	$	246,263		$	103,284		$	—		$	349,547

Expenses
Cost of sales		210,215			10,035			—			220,250
Research and development expenses		600,201			36,497			—			636,698
Selling, general and administrative expenses		888,897			172,541			—			1,061,438

Total Expenses		1,699,313			219,073						1,918,386

Operating loss		(1,453,050	)		(115,789	)		—			(1,568,839	)


Investment income
Dividends		—			—			711,578			711,578
Gain on sales of securities, net		—			—			6,110,405			6,110,405
Mark to market of short positions		—			—			(3,251,811	)		(3,251,811	)
Administrative expenses relating to portfolio investments		—			—			(13,479	)		(13,479	)

Total Investment income, net		—			—			3,556,693			3,556,693


Interest expense, net		(9,111	)		—			(25,865	)		(34,976	)
Other income (expense)		2,755			(30	)		—			2,725


Income (loss) before income taxes		(1,459,406	)		(115,819	)		3,530,828			1,955,603
Income tax expense		—			—			—			—


Net income (loss)	$	(1,459,406	)	$	(115,819	)	$	3,530,828		$	1,955,603


Total assets	$	2,649,253		$	135,548		$	79,989,890		$	82,774,691

F-13

DAXOR CORPORATION AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2008 and 2007 (Continued)
(Unaudited)

The following table summarizes the results of each segment described above for the nine months ended September 30, 2008.


	September 30, 2008

	Equipment Sales & Related Services			Cryobanking & Related Services			Investment Activity			Total


Revenues	$	1,141,739		$	287,014		$	—		$	1,428,753

Expenses
Cost of sales		491,274			34,843			—			526,117
Research and development expenses		1,735,202			136,239			—			1,871,441
Selling, general and administrative expenses		2,277,162			468,808			—			2,745,970

Total Expenses		4,503,638			639,890						5,143,528

Operating loss		(3,361,899	)		(352,876	)		—			(3,714,775	)


Investment income
Dividends		—			—			1,933,410			1,933,410
Gain on sales of securities, net		—			—			18,262,577			18,262,577
Mark to market of short positions		—			—			1,610,482			1,610,482
Administrative expenses relating to portfolio investments		—			—			(70,554	)		(70,554	)

Total Investment income, net		—			—			21,735,915			21,735,915


Interest expense, net		(25,716	)		—			(52,287	)		(78,003	)
Other income		8,609			446			—			9,055


Income (loss) before income taxes		(3,379,006	)		(352,430	)		21,683,628			17,952,192
Income tax expense		—			—			2,725,000			2,725,000


Net income (loss)	$	(3,379,006	)	$	(352,430	)	$	18,958,628		$	15,227,192


Total assets	$	6,958,732		$	215,672		$	84,587,066		$	91,761,470

F-14

DAXOR CORPORATION AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2008 and 2007 (Continued)
(Unaudited)

The following table summarizes the results of each segment described above for the nine months ended September 30, 2007.


	September 30, 2007

	Equipment Sales & Related Services			Cryobanking & Related Services			Investment Activity			Total


Revenues	$	1,078,947		$	321,800		$	—		$	1,400,747

Expenses
Cost of sales		482,975			33,835			—			516,810
Research and development expenses		1,759,945			139,523			—			1,899,468
Selling, general and administrative expenses		2,477,261			516,175			—			2,993,436

Total Expenses		4,720,181			689,533						5,409,714

Operating loss		(3,641,234	)		(367,733	)		—			(4,008,967	)


Investment income
Dividends		—			—			1,942,178			1,942,178
Gain on sales of securities, net		—			—			9,551,357			9,551,357
Mark to market of short positions		—			—			79,021			79,021
Administrative expenses relating to portfolio investments		—			—			(37,400	)		(37,400	)

Total Investment income, net		—			—			11,535,156			11,535,156


Interest expense, net		(24,320	)		—			(154,713	)		(179,033	)
Other income		8,266			90			—			8,356


Income (loss) before income taxes		(3,657,288	)		(367,643	)		11,380,443			7,355,512
Income tax expense		—			—			—			—


Net income (loss)	$	(3,657,288	)	$	(367,643	)	$	11,380,443		$	7,355,512


Total assets	$	2,649,253		$	135,548		$	79,989,890		$	82,774,691

F-15

DAXOR CORPORATION AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2008 and 2007 (Continued)
(Unaudited)

(5) PROPERTY AND EQUIPMENT

Property and equipment as at September 30, 2008 and December 31, 2007 consists of:


	September 30, 2008			December 31, 2007

Machinery and equipment	$	1,372,524		$	1,161,413
BVA Equipment on trial		748,000			782,000
Land and Land Improvements		196,991			196,991
Buildings		598,422			598,422
Furniture and fixtures		364,732			352,972
Leasehold improvements		611,565			591,866

Total Cost	$	3,892,234		$	3,683,664
Accumulated depreciation and amortization		(1,836,008	)		(1,625,170	)

Property and equipment, net	$	2,056,226		$	2,058,494

Depreciation expense for the three months ended September 30, 2008 and September 30, 2007 was respectively $ 78,870 and $51,466.

Depreciation expense for the nine months ended September 30, 2008 and September 30, 2007 was respectively $ 234,923 and $161,640.

On January 3, 2007, Daxor closed on the purchase of 3.5 acres of land at 107 and 109 Meco Lane, Oak Ridge, Tennessee that contains two separate 10,000 square foot buildings. The buildings were constructed in 2004 and each structure is a single story steel frame with metal shell and roof constructed on a concrete slab. The total purchase price for the land and buildings including closing costs was $784,064.

The build out of the buildings in Oak Ridge commenced in the beginning of July of 2007 after the Company received the necessary state and local permits and licenses and the company moved in to the new buildings during the first week of October 2007.

(6) LOANS AND MORTGAGE PAYABLE

LOANS PAYABLE

At September 30, 2008 and December 31, 2007, the Company has a bank note payable of $10,000 and $1,500,000 respectively which is classified as a current liability. The note is renewable on May 27, 2009 for a period of one year. The note bears interest at the Prime Rate less 1.50%. At September 30, 2008, this was 3.50%. The note is secured by certain marketable securities of the Company.

The interest expense on this note for the three months ended September 30, 2008 and September 30, 2007 was $ 206 and $18,249, respectively. The interest expense on this note for the nine months ended September 30, 2008 and September 30, 2007 was $28,277 and $68,278, respectively.

Short-term debt to brokers (margin debt), is secured by the Company’s marketable securities, and totaled $2,254,318 at September 30, 2008 and $ 1,814,303 at December 31, 2007.

MORTGAGE PAYABLE

Daxor financed the purchase of the land and buildings in Oak Ridge, Tennessee with a $500,000 10-year mortgage, with the first five years fixed at 7.49%. On January 2, 2012 there is a single payment of $301,972 for the remaining principal and interest on the mortgage. The Company has the option of making this payment or refinancing the mortgage for an additional five year term at a fixed rate of interest that would be set on January 2, 2012.

F-16

DAXOR CORPORATION AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2008 and 2007 (Continued)
(Unaudited)

The future payments of principal on the mortgage by twelve month period end are as follows:


09/30/09		09/30/10		09/30/11		Thereafter


$	39,563	$	42,630	$	45,935	$	312,107

At September 30, 2008, the remaining principal due on the mortgage for the land and buildings in Oak Ridge, Tennessee is $ 440,235. Of this amount, $39,563 is due before September 30, 2009 and the remaining $400,672 is due after that date.

(7) PUT AND CALL OPTIONS AT FAIR VALUE

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

The following summarizes the Company’s Put and Call Options as of September 30, 2008 and December 31, 2007:


Put and Call Options	Selling price		Fair Market value		Unrealized Gain

September 30, 2008		11,789,301		10,805,915		983,386
December 31, 2007		7,645,833		5,972,632		1,673,201

(8) SECURITIES BORROWED AT FAIR VALUE

At September 30, 2008 and December 31, 2007, the Company maintained short positions in certain marketable securities. The liability for short sales of securities is included in “Securities borrowed at fair market value” in the accompanying balance sheets. The cost basis of these positions or proceeds for these short sales were $14,524,617 and $18,712,876 at September 30, 2008 and December 31, 2007 respectively and had respective market values of $12,925,461 and $20,362,259, resulting in mark to market adjustments of $1,599,156 and ($1,649,383) at September 30, 2008 and December 31, 2007.

(9) STOCK OPTIONS

In June 2004, the Company created the 2004 Stock Option Plan in an effort to provide incentive to employees, officers, agents, consultants, and independent contractors through proprietary interest. The Board of Directors shall act as the Plan Administrator, and may issue these options at its discretion. The maximum number of shares that may be issued under this Plan is 200,000 or 5% of the Company’s outstanding shares, whichever is greater. Prior to June 2004, the Company issued options to various employees under the previous Stock Option Plan that was also administered by the Board of Directors. All issuances have varying vesting and expiration timelines. As at September 30, 2008 and 2007, 65,500 and 48,400 of the outstanding options were exercisable, respectively.

(10) CURRENT INCOME TAXES

Under FASB No. 109, the Company accrues income taxes in interim periods based upon its estimated annual effective tax rate.

The current income tax expense is comprised of the following:


Regular tax and Alternative Minimum Tax (AMT)	$	2,030,000
Personal Holding Company Tax (PHC)		675,000
State Franchise taxes		20,000

Total Current Income Tax Expense	$	2,725,000

F-17

DAXOR CORPORATION AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2008 and 2007 (Continued)
(Unaudited)

The Company’s current taxable income exceeds the net operating loss carry forward by approximately $5.8 million. The Company is considered a Personal Holding Company and is subject to tax on its undistributed PHC income which is approximately $4.5 million. State franchise taxes are based on the Company’s taxable net worth.

(11) DEFERRED INCOME TAXES

The deferred income tax liability at September 30, 2008 is a result of the differences in the recognition of gains and losses on marketable securities.

The deferred income tax liability for the unrealized gains on the Company’s marketable securities as of September 30, 2008 and December 31, 2007 were $8,460,850 and $15,726,213 respectively. The deferred tax liability that results from the marketable securities does not flow through the Statement of Operations due to the classification of the marketable securities as available-for-sale. Instead, any increase or decrease in the deferred tax liability is recorded as an adjustment to Accumulated Other Comprehensive Income which is in the Stockholders’ Equity section of the Balance Sheet.

As stated in footnote number 10, as of September 30, 2008 the Company’s current taxable income is expected to exceed their net operating loss carry forward by approximately $5.8 million dollars. Accordingly there is no deferred tax asset at this time attributable to a net operating loss.

At December 31, 2007 the Company had approximately $9.1 million in net operating loss available as a carry forward. These losses would give rise to deferred tax assets. However, a valuation allowance was recorded at December 31, 2007 for the entire deferred tax asset as a result of uncertainties regarding the realization of the asset due to the history of losses and the variability of operating results.

(12) CERTAIN CONCENTRATIONS AND CONTINGENCIES

Financial instruments which potentially subject the Company to concentrations of credit risk consist primarily of the common stock of marketable electric utilities. At September 30, 2008, stocks representing 96.10% of the market value of common stocks held by the Company were listed on either the New York Stock Exchange (NYSE) or the American Stock Exchange (AMEX). The Company maintains its investments in six different brokerage accounts, four at UBS, one at Merrill Lynch and one at JP Morgan Chase. The limits of the insurance which offered by the Securities Investor Protection Corporation (SIPC) is up to $100,000 for the total amount of cash on deposit and up to $500,000 for the total amount of securities held at Merrill Lynch and JP Morgan Chase. UBS provides supplemental insurance up to the face value of the securities in excess of the SIPC limit of $500,000.

Each of these brokerage houses is well known in the industry and management does not believe that these securities bear any risk of loss over and above the basic risk that a security bears through the normal activity of the securities markets. However, as at September 30, 2008 the fair market value of securities in excess of the SIPC insured limit is $24,788,389 and the cash on deposit in excess of the insured limit is $7,175,258.

For the nine months ended September 30, 2008, the sales of Blood Volume Kits accounted for 59.72% of the Company’s total consolidated sales. There were three customers (hospitals) that accounted for 47.55% of the Company’s sales of Blood Volume Kits. Management believes that the loss of any one customer would have an adverse effect on the Company’s consolidated business for a short period of time. All three of these hospitals have purchased their BVA-100 equipment. The Company has not had any situations in which a hospital, after having purchased a blood volume analyzer, discontinued purchasing Volumex kits. This suggests that, when more hospitals purchase equipment, they will continue with ongoing purchase of Volumex kits. The Company continues to seek new customers, so that any one hospital will represent a smaller percentage of overall sales.

As disclosed previously, the Centers for Medicare and Medicaid Services (CMS) implemented a significant policy change affecting the reimbursement for all diagnostic radiopharmaceutical products and contrast agents which was effective as of January 1, 2008. Diagnostic radiopharmaceuticals such as Daxor’s Volumex will not be separately reimbursable by Medicare for outpatient services. At this time, it is unclear if this policy change will also be implemented by private third party health insurance companies.

The Company’s Volumex syringes are filled by an FDA approved radio pharmaceutical manufacturer. This manufacturer is the only one approved by the FDA in the United States to manufacture Volumex for interstate commerce. If this manufacturer were to cease filling the Volumex syringes for Daxor before the Company had a chance to make alternative arrangements, the effect on Daxor’s business could be material.

F-18

DAXOR CORPORATION AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2008 and 2007 (Continued)
(Unaudited)

Since December 31, 2007, Daxor has not received any verbal or written communication from the staff of the Northeast Regional Office of the United States Securities and Exchange Commission regarding any unresolved issues. These unresolved issues were discussed in detail in the Forms 10-K for the years ended December 31, 2007 and 2006 as well as the 10-Q’s for 2007.

(13) RELATED PARTY TRANSACTIONS

The Company subleases a portion of its New York City office space to the President of the Company for five hours per week. This sublease agreement has no formal terms and is executed on a month to month basis.

The amount of rental income received from the President of the Company in the quarters ended September 30, 2008 and September 30, 2007 was $2,870 and $2,755.

The amount of rental income received from the President of the Company for the nine months ended September 30, 2008 and September 30, 2007 was $8,609 and $8,266.

Jonathan Feldschuh is the co-inventor of the BVA-100 Blood Volume Analyzer and is the son of Dr. Joseph Feldschuh. He is expected to provide a limited amount of consultative help in the filing of the additional patents in 2008.

(14) RESEARCH AND DEVELOPMENT COSTS

All research and development costs, as defined in SFAS No. 2 – Accounting for Research and Development Costs, are expensed in the period they are incurred.

The total Research and development costs for the three months ended September 30, 2008 and September 30, 2007 were $601,757 and $636,698, respectively.

The total Research and development costs for the nine months ended September 30, 2008 and September 30, 2007 were $1,871,441 and $1,899,468, respectively.

(15) RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In June 2006, The FASB issued Interpretation No. 48 “Accounting for Uncertainty in Income Taxes—an interpretation of FASB Statement No. 109” (“FIN 48”). This Interpretation clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with FASB Statement No. 109, “Accounting for Income Taxes.” FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. This Interpretation also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. This Interpretation is effective for fiscal years beginning after December 15, 2006. Earlier application of the provisions of this Interpretation is encouraged if the enterprise has not yet issued financial statements, including interim financial statements, in the period this Interpretation is adopted. Management does not expect that the application of this standard will have any effect on the Company’s results of operations or its financial condition.

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (“SFAS 157”), to define fair value, establish a framework for measuring fair value in accordance with generally accepted accounting principles (GAAP) and expand disclosures about fair value measurements. SFAS 157 requires quantitative disclosures using a tabular format in all periods (interim and annual) and qualitative disclosures about the valuation techniques used to measure fair value in all annual periods. SFAS 157 will be effective for the Company beginning January 1, 2008. The Company is currently evaluating the impact of adopting SFAS 157.

In September 2006, the SEC staff issued Staff Accounting Bulletin (SAB) Topic 1M (SAB 108), “Financial Statements - Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements,” which is effective for the 2007 year. SAB 108 provides guidance on how prior year misstatements should be taken into consideration when quantifying misstatements in current year financial statements for the purpose of determining whether the financial statements are materially misstated. Under this guidance, companies should take into account both the effect of a misstatement on the current year balance sheet as well as the impact upon the current year income statement in assessing the materiality of a current year misstatement. Once a current year misstatement has been quantified, the guidance in SAB Topic 1M, “Financial Statements - Materiality,” (SAB 99) should be applied to determine whether the misstatement is material. The implementation of SAB 108 did not have any impact on the Company’s financial statements.

F-19

DAXOR CORPORATION AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2008 and 2007 (Continued)
(Unaudited)

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities (“SFAS 159”). SFAS 159 expands opportunities to use fair value measurements in financial reporting and permits entities to choose to measure many financial instruments and certain other items at fair value. SFAS 159 will be effective for the Company on January 1, 2008. The Company is currently evaluating the impact of adopting SFAS 159 on its financial statements.

In June 2007, the Emerging Issues Task Force (“EITF”) issued EITF 07-3, “Accounting for Nonrefundable Advance Payments for Goods or Services to Be Used in Future Research and Development Activities,” which provides guidance on the accounting for certain nonrefundable advance payments for goods or services that will be used or rendered for future research and development activities. This issue is effective prospectively for fiscal years beginning after December 15, 2007, or fiscal 2009 for the Company. We are still assessing the potential impact of adoption.

In December 2007, the Securities and Exchange Commission (“SEC”) issued Staff Accounting Bulletin No. 110 (“SAB 110”). SAB 110 amends and replaces Question 6 of Section D.2 of Topic 14, Share-Based Payment of the Staff Accounting Bulletin series. Question 6 of Section D.2 of Topic 14 expresses the views of the staff regarding the use of the “simplified” method in developing an estimate of expected term of “plain vanilla” share options and allows usage of the “simplified” method for share option grants prior to December 31, 2007. SAB 110 allows public companies which do not have historically sufficient experience to provide a reasonable estimate to continue use of the “simplified” method for estimating the expected term of “plain vanilla” share option grants after December 31, 2007. We currently use the “simplified” method to estimate the expected term for share option grants as we do not have enough historical experience to provide a reasonable estimate. We will continue to use the “simplified” method until we have enough historical experience to provide a reasonable estimate of expected term in accordance with SAB 110. SAB 110 is effective for the Company on January 1, 2008.

In December 2007, the FASB issued SFAS No. 141(R), “Business Combinations (revised 2007).” SFAS No. 141(R) applies the acquisition method of accounting for business combinations established in SFAS No. 141 to all acquisitions where the acquirer gains a controlling interest, regardless of whether consideration was exchanged. Consistent with SFAS No. 141, SFAS No. 141(R) requires the acquirer to fair value the assets and liabilities of the acquiree and record goodwill on bargain purchases, with main difference the application to all acquisitions where control is achieved. SFAS No. 141(R) is effective for financial statements issued for fiscal years beginning after December 15, 2008 and will be adopted by the Company in the first quarter of fiscal year 2009. The Company does not expect that the adoption of SFAS No. 141(R) will have a material impact on our financial condition or results of operation.

In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities—an amendment of FASB Statement No. 133”. The use and complexity of derivative instruments and hedging activities have increased significantly over the past several years. Constituents have expressed concerns that the existing disclosure requirements in FASB Statement No. 133, Accounting for Derivative Instruments and Hedging Activities, do not provide adequate information about how derivative and hedging activities affect an entity’s financial position, financial performance, and cash flows. Accordingly, this Statement requires enhanced disclosures about an entity’s derivative and hedging activities and thereby improves the transparency of financial reporting. This Statement is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. This Statement encourages, but does not require, comparative disclosures for earlier periods at initial adoption. The Company is currently evaluating the impact of the provisions of SFAS No. 161 on its financial position, results of operations and cash flows and does not believe the impact of the adoption will be material.

In June 2008, the FASB issued FSP No. EITF 03-6-1, “Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities” (“FSP EITF 03-6-1”). FSP EITF 03-6-1 concludes that unvested share-based payment awards that contain rights to receive nonforfeitable dividends or dividend equivalents are participating securities, and thus, should be included in the two-class method of computing earnings per share (“EPS”). FSP EITF 03-6-1 is effective for fiscal years beginning after December 15, 2008, and interim periods within those years. Early application of EITF 03-6-1 is prohibited. This FSP also requires that all prior-period EPS data be adjusted retrospectively. The Company is currently evaluating the impact FSP EITF 03-6-1 will have on its consolidated financial statements.

Management does not believe that any other recently issued, but not yet effective, accounting standard if currently adopted would have a material effect on the accompanying financial statements.

F-20

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

RECENT DEVELOPMENTS

The Centers for Medicare and Medicaid Services (CMS) implemented a significant policy change affecting the reimbursement for all diagnostic radiopharmaceutical products and contrast agents which became effective as of January 1, 2008. Diagnostic radiopharmaceuticals such as Daxor’s Volumex will not be separately reimbursable by Medicare for outpatient services. At this time, it is unclear if this policy change will also be implemented by private third party health insurance companies or non-hospital providers.

The previous reimbursement for hospital outpatients includes payment for both the cost of the procedure to perform a blood volume analysis (BVA) and the radiopharmaceutical (Daxor’s Volumex radiopharmaceutical). CMS’s new policy became effective as of January 1, 2008 and will only include the reimbursement for the procedure and would require the hospital to absorb the cost of the radiopharmaceutical. There will be an upward adjustment for the procedure code to include some of the costs of the radiopharmaceutical. However, this upward adjustment may not entirely cover the costs associated with the procedure and the radiopharmaceutical.

Many medical societies and major manufacturers of radiopharmaceuticals and contrast agents are currently engaged in an aggressive attempt to reverse this ruling. The Company has had similar issues in the past that have negatively impaired revenue from operations. This particular issue may have a similar impact. However, at the present time, the Company is unable to quantify what the effect of this ruling will be on revenue from operations for the year ending December 31, 2008.

RESULTS OF OPERATIONS

Three months ended September 30, 2008 as compared with three months ended September 30, 2007:

Operating Revenues and Expenses

For the three months ended September 30, 2008, consolidated operating revenues increased to $451,253 from $349,547 for the same period in 2007, an increase of $101,706 or 29.09%. This was mainly the result of one Blood Volume Analyzer being sold during the current quarter for $65,000 versus no Blood Volume Analyzers sold during the same period last year.

For the three months ended September 30, 2008, revenue from Blood volume kit sales increased by $28,423 or 12.73% to $251,697 from $223,274 for the same period in 2007. This can mainly be attributed to an increase in the number of kits sold from 644 in 2007 to 770 during the current period for an increase of 19.56%. There were 53 Blood Volume Analyzers placed at September 30, 2008 versus 55 at September 30, 2007. For the three months ended September 30, 2008, the Company provided 125 Volumex doses free of charge to facilities utilizing the BVA-100 for research versus 100 during the same period in 2007. Effective February 1, 2007, the Company raised prices by approximately 5% on Blood Volume Kits.

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The following table provides gross margin information on Equipment Sales & Related Services for the three months ended September 30, 2008 and 2007:


Equipment Sales And Related Serivces	Kit Sales Three Months Ended September 30, 2008			Equipment Sales and Other Three Months Ended September 30, 2008			Total Three Months Ended September 30, 2008			Total Three Months Ended September 30, 2007

Revenue	$	251,697		$	98,264		$	349,961		$	246,263
Cost of Goods Sold		120,478			68,006			188,484			210,215
Gross Profit	$	131,219		$	30,258		$	161,477		$	36,048
Gross Profit Percentage		52.13	%		30.79	%		46.14	%		14.64	%

There was one Blood Volume Analyzer sold during the quarter ended September 30, 2008 for a total of $65,000 versus none during the quarter ended September 30, 2007. The additional revenue of $33,264 for Equipment Sales and Other during the current quarter consists almost entirely of shipping charges and service contract revenue.

Total S G & A (selling, general and administrative) and R&D (Research and Development) costs for Equipment Sales and Related Services were $1,263,540 for the three months ended September 30, 2008 versus $ 1,489,098 for the same period in 2007, for a decrease of $225,558 or 15.15%. The main reason for this was decreased payroll and related costs of $157,181 for the three months ended September 30, 2008 as compared to the same period in 2007.

Research & Development expenses for Equipment Sales and Related Services were $560,914 for the three months ended September 30, 2008 vs. $600,201 for the same period in 2007 which is a decrease of $39,287 or 6.54%. Daxor is committed to making Blood Volume Analysis a standard of care in at least three different disease states. In order to achieve this goal, we are continuing to spend time and money in research and development to get the best product to the market. We are still working on the following three projects: 1) GFR: Glomerular Filtration Rate, 2) Total Body Albumin Analysis, and 3) Wipes tests for radiation contamination/detection. We are also progressing on the next version of the delivery device for the radioactive dose Volumex. The current version is the “Max-100” which has a patent. The next version, the “Max-200” will be without a needle and should afford the company extended protection with a second patent when it is completed.

Operating revenues for the cryobanking segment, which includes both blood banking and semen banking, decreased to $101,292 in 2008 from $103,284 in 2007, for a decrease of $1,992 or 1.92%. The main reason for this was a decrease in Semen Bank Storage fees and related items of $5,596 for the three months ended September 30, 2008 as compared to 2007.

Total S G & A (selling, general and administrative) and R&D (Research and Development) costs for the Cryobanking and related services segment were $209,835 for the three months ended September 30, 2008 vs. $209,038 for the same period in 2007, for an increase of $797.

Consolidated Operating Expenses

The total consolidated operating expenses including cost of sales for the third quarter of 2008 were $1,672,976 versus $1,918,386 in 2007 for a decrease of $245,410.

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INVESTMENT PORTFOLIO

Dividend Income

Dividend income earned on the Company’s security portfolio for the three months ended September 30, 2008 was $750,909 versus $711,578 for the same period in 2007 for an increase of $39,331 or 5.53%.

Investment Gains

Gains on the sale of investments were $9,787,106 for the three months ended September 30, 2008 versus $6,110,405 for the same period in 2007 for an increase of $3,676,701 or 60.17%. For the current quarter, the Company had a loss from the marking to the market of short positions of stocks and put and call options of $ 532,300 versus a loss of $3,251,811 for the same period in 2007. Interest expense net of interest income was $32,936 for the three months ended September 30, 2008 versus $34,976 for the three months ended September 30, 2007. Administrative expenses relating to portfolio investments were $27,984 in 2008 versus $ 13,479 for the same period in 2007 for an increase of $14,505 or 107.61%. A detailed description of investment policies and historical records over the past 15 years was included in the recent 10-K filing for the year ended December 31, 2007.

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.

At September 30, 2008 the Company had total assets of $91,761,470 with stockholders’ equity of $53,628,415 as compared to total assets of $102,560,500 with stockholders’ equity of $54,915,885 at December 31, 2007. At September 30, 2008, the Company had a net unrealized gain on available for sale securities of $24,173,858 and a deferred tax liability of $8,460,850 for net unrealized capital gains on available-for-sale securities of $15,713,008. At December 31, 2007, the company had a net unrealized gain of $44,932,036 and a deferred tax liability of $15,726,213 for net unrealized capital gains on available-for-sale securities of $29,205,823. These amounts are included in the calculation of Total Stockholders’ Equity. At September 30 2008, the Company’s available for sale securities had a fair market value of $66,888,238 with short-term loans payable of $2,264,318 and a receivable due from brokers of $8,175,317. The Company has current liabilities of $37,732,383 which includes the deferred tax liability of $8,460,850 and the short term loans payable of $2,264,318. The deferred tax liability would be due if the Company chose to sell its entire portfolio. The Company’s investment portfolio has been a critical source of supplemental income to partially offset the continuing losses from operations. Without this income, the Company would have been in a precarious financial situation because of its operating losses over the past 15 years. The Company’s portfolio has maintained a net value above historical cost for each of the past 95 consecutive quarters.

The Company currently has adequate resources for the current level of marketing and research and development expenses for the BVA-100 Blood Volume Analyzer as well as capital to sustain its localized semen and blood banking services. The Company may not, at the present time, have adequate resources to expand its marketing force to all areas of the country. The Company is simultaneously expanding its research and development efforts to develop additional instrumentation for renal function testing, specifically glomerular filtration testing. The Company recently explored the potential for raising additional capital but the terms would have been disadvantageous to existing shareholders. The current primary focus is on the BVA-100 Blood Volume Analyzer with respect to expenditure of resources. 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 Board of Directors has voted to declare an additional dividend of $0.25 per share. A previous dividend of $0.25 per share was paid on August 27, 2008. The current dividend will be paid to shareholders of record on November 4, 2008. The payment date is November 26, 2008. The Company intends to maintain a policy of paying dividends on a quarterly basis if net income is available to maintain the dividend.

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RESULTS OF OPERATIONS

Nine months ended September 30, 2008 as compared with nine months ended September 30, 2007:

Operating Revenues and Expenses

For the nine months ended September 30, 2008, consolidated operating revenues increased to $1,428,753 from $1,400,747 for the same period in 2007, an increase of $28,006 or 1.99%. There were four Blood Volume Analyzers sold during the first nine months of 2008 for a total of $260,000 versus the sale of five Blood Volume Analyzers during the same period in 2007 for a total of $325,500.

For the nine months ended September 30, 2008, revenue from Blood volume kit sales increased by $112,201 or 16.48% to $792,894 from $680,693 for the same period in 2007. This can mainly be attributed to an increase in the number of kits sold from 2,409 in 2007 to 2,099 during the current period for an increase of 14.77%. There were 53 Blood Volume Analyzers placed at September 30, 2008 versus 55 at September 30, 2007. For the nine months ended September 30, 2008, the Company provided 398 Volumex doses free of charge to facilities utilizing the BVA-100 for research versus 298 during the same period in 2007. Effective February 1, 2007, the Company raised prices by approximately 5% on Blood Volume Kits.

The following table provides gross margin information on Equipment Sales & Related Services for the nine months ended September 30, 2008 and 2007:


Equipment Sales And Related Serivces	Kit Sales Nine Months Ended September 30, 2008			Equipment Sales and Other Nine Months Ended September 30, 2008			Total Nine Months Ended September 30, 2008			Total Nine Months Ended September 30, 2007

Revenue	$	792,894		$	348,845		$	1,141,739		$	1,078,947
Cost of Goods Sold		357,505			133,769			491,274			482,975
Gross Profit	$	435,389		$	215,076		$	650,465		$	595,972
Gross Profit Percentage		54.91	%		61.65	%		56.97	%		55.24	%

There were four Blood Volume Analyzers sold during the nine months ended September 30, 2008 for a total of $260,000 versus five during the nine months ended September 30, 2007 for a total of $325,500. The additional revenue of $88,845 for Equipment Sales and Other consists almost entirely of shipping charges and service contract revenue.

Total S G & A (selling, general and administrative) and R&D (Research and Development) costs for Equipment Sales and Related Services were $4,012,364 for the nine months ended September 30, 2008 versus $ 4,237,206 for the same period in 2007.

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Research & Development expenses for Equipment Sales and Related Services were $1,735,202 for the nine months ended September 30, 2008 vs. $1,759,945 for the same period in 2007 which is a decrease of $24,743 or 1.40%. Daxor is committed to making Blood Volume Analysis a standard of care in at least three different disease states. In order to achieve this goal, we are continuing to spend time and money in research and development to get the best product to the market. We are still working on the following three projects: 1) GFR: Glomerular Filtration Rate, 2) Total Body Albumin Analysis, and 3) Wipes tests for radiation contamination/detection. We are also progressing on the next version of the delivery device for the radioactive dose Volumex. The current version is the “Max-100” which has a patent. The next version, the “Max-200” will be without a needle and should afford the company extended protection with a second patent when it is completed.

Operating revenues for the cryobanking segment, which includes both blood banking and semen banking, decreased to $287,014 in 2008 from $321,800 in 2007, for a decrease of $34,786 or 10.81%. The main reason for this was a decrease in Semen Bank Storage fees and related items of $24,485 for the nine months ended September 30, 2008 as compared to 2007.

Total S G & A (selling, general and administrative) and R&D (Research and Development) costs for the Cryobanking and related services segment were $605,047 for the nine months ended September 30, 2008 vs. $655,698 for the same period in 2007, for a decrease of $50,651 or 7.72%. The main reason for this decrease was a reduction of $33,546 in payroll and related expenses for the nine months ended September 30, 2008 as compared to the same period in 2007.

Consolidated Operating Expenses

The total consolidated operating expenses including cost of sales for the nine months ended September 30, 2008 were $5,143,528 versus $5,409,714 for the same period in 2007 for a decrease of $266,186 or 4.92%. This decrease in operating expenses is mostly due to a decrease in payroll and related expenses of $189,110 for the nine months ended September 30, 2008 as compared to the same period in 2007.

INVESTMENT PORTFOLIO

Dividend Income

Dividend income earned on the Company’s security portfolio for the nine months ended September 30, 2008 was $1,933,410 versus $1,942,178 for the same period in 2007.

Investment Gains

Gains on the sale of investments were $18,262,577 for the nine months ended September 30, 2008 versus $9,551,357 for the same period in 2007 for an increase of $8,711,220 or 91.20%. For the current period, the Company had a gain from the marking to the market of short positions of stocks and put and call options of $1,610,482 versus a gain of $79,021 for the same period in 2007. Interest expense net of interest income was $78,003 for the nine months ended September 30, 2008 versus $179,033 for the nine months ended September 30, 2007 for a decrease of $101,030 or 56.43%. Administrative expenses relating to portfolio investments were $70,554 in 2008 versus $ 37,400 for the same period in 2007 for an increase of $33,154 or 88.65%. A detailed description of investment policies and historical records over the past 15 years was included in the recent 10-K filing for the year ended December 31, 2007.

CRITICAL ACCOUNTING POLICIES

The consolidated financial statements and accompanying footnotes included in this report have been prepared in accordance with accounting principles generally accepted in the United States with certain amounts based on management’s best estimates and judgments. To determine appropriate carrying values of assets and liabilities that are not readily available from other sources, management uses assumptions based on historical results and other factors that they believe are reasonable. Actual results could differ from those estimates.

-7-

The Company adopted SFAS No. 123R - Share-Based Payments, effective January 1, 2006, utilizing the “modified prospective” method. Under the “modified prospective” method, compensation cost is recognized for all share-based payments granted after the effective date and for all unvested awards granted prior to the effective date. Prior to adoption, the Company accounted for share-based payments under the recognition and measurement principles of Accounting Principles Board Opinion No. 25 - Accounting for Stock Issued to Employees, and related interpretations.

The Company recognized $17,436 and $9,362, respectively in total stock-based compensation expense during the three months ended September 30, 2008 and September 30, 2007.

The Company recognized $55,799 and $23,065, respectively in total stock-based compensation expense during the nine months ended September 30, 2008 and September 30, 2007.

Total unvested stock-based compensation expense was $25,432 at September 30, 2008 and had a total weighted average remaining term of 0.69 years. See Footnote #1 for more information on stock-based compensation.

The following is a summary of the accounting policies that the Company has deemed critical for reporting purposes in Form 10-Q at September 30, 2008. However, a comprehensive discussion of the Company’s critical accounting policies and management estimates is included in Management’s Discussion and Analysis of Financial Condition and Results of Operations in the Company’s Annual Report on Form 10-K for the year ended December 31, 2007. There have been no significant changes in critical accounting policies or management estimates since the year ended December 31, 2007.

Available-for-Sale Securities

Available-for-sale securities represent investments in debt and equity securities (primarily common and preferred stock of utility companies) that management has determined meet the definition of available-for-sale securities under SFAS No. 115 - Accounting for Certain Investments in Debt and Equity Securities. Accordingly, these investments are stated at fair market value and all unrealized holding gains or losses are recorded in the Stockholders’ Equity section as Accumulated Other Comprehensive Income (Loss). Conversely, all realized gains, losses and earnings are recorded in the Statement of Operations under Other Income (Expense).

The company will also periodically engage in short selling of common stock. When this occurs, the short position is marked to the market and this adjustment is recorded in the Statement of Operations. Any gain or loss is recorded in the period presented.

Historical cost is used by the Company to determine all gains and losses, and fair market value is obtained by readily available market quotes on all securities.

The Company’s investment goals, strategies and policies are as follows:


	1.	The Company’s investment goals are capital preservation and maintaining returns on capital with a high degree of safety.

	2.	The Company maintains a diversified securities portfolio comprised primarily of electric utility common and preferred stocks. The Company also sells covered calls on portions of its portfolio and also sells puts on stocks it is willing to own. It also sells uncovered calls and may have net short positions in common stock up to 15% of the value of the portfolio. The Company’s net short position may temporarily rise to 15% of the Company’s portfolio without any specific action because of changes in valuation, but should not exceed this amount. The Company’s investment policy is to maintain a minimum of 85% of its portfolio in electric utilities. Investments in utilities are primarily in electric companies. Investments in non-utility stocks will not exceed 15% of the portfolio.

	3.	Investment in speculative issues, including short sales, maximum of 15%.

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4.	Limited use of options to increase yearly investment income.

	a.	The use of “Call” Options. Covered options can be sold up to a maximum of 20% of the value of the portfolio. This provides extra income in addition to dividends received from the company’s investments. The risk of this strategy is that investments may be called away, which the company may have preferred to retain. Therefore, a limitation of 20% is placed on the amount of stock on which options can be written. The amount of the portfolio on which options are actually written is usually between 3-10% of the portfolio. The historical turnover of the portfolio is such that the average holding period is in excess of 5 years for available for sale securities.

	b.	The use of “Put” options. Put options are written on stocks which the company is willing to purchase. While the company does not have a high rate of turnover in its portfolio, there is some turnover; for example, due to preferred stocks being called back by the issuing company, or stocks being called away because call options have been written. If the stock does not go below the put exercise price, the company records the proceeds from the sale as income. If the put is exercised, the cost basis is reduced by the proceeds received from the sale of the put option. There may be occasions where the cost basis of the stock is lower than the market price at the time the option is exercised.

	c.	Speculative Short Sales/Short Options. The company normally limits its speculative transactions to no more than 15% of the value of the portfolio. The company may sell uncovered calls on certain stocks. If the stock price does not rise to the price of the call, the option is not exercised and the company records the proceeds from the sale of the call as income. If the call is exercised, the company will have a short position in the related stock. The company then has the choice of covering the short position, or selling a put against it. If the put is exercised, then the short position is covered. The company’s current accounting policy is to mark to the market at the end of each quarter any short positions, and include it in the income statement. While the company may have so-called speculative positions equal to 15% of its accounts, in actual practice the net short stock positions usually account for less than 10% of the assets of the company.

5.	In the event of a merger, the Company will elect to receive shares in the new company. In the event of a cash only offer, the Company will receive cash and be forced to sell it stock.

The income derived from these investments has been essential to help offset the research, 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 and development without the sudden necessity of raising additional capital. The securities in the Company’s portfolio are selected to provide stability of both income and capital. The Company has been able to achieve financial stability because of these returns, which have covered a significant portion of the Company’s continuing losses from operations. The Company’s investment policy is reviewed at least once yearly by the Board of Directors and the Audit Committee. Individual investment decisions are made solely by Dr. Joseph Feldschuh, CEO, who devotes approximately 10 hours per week to this activity. He is assisted by a single part-time employee. No other member of the Company is involved in individual investment decisions.

Revenue Recognition

The Company recognizes operational revenues from several sources. The first source is the outright sale of equipment, the Blood Volume Analyzer, to customers. The second source is the sale and associated shipping revenues of single-use radioactive doses (Volumex) that are injected into the patient and measured by the Blood Volume Analyzer. The third source of revenue is service contracts on the Blood Volume Analyzer, after it has been sold to a customer. The fourth source of revenue is the storage fees associated with cryobanked blood and semen specimens. The fifth is lab revenues from laboratory services, and the sixth is revenue from semen sales.

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The Company currently offers three different methods of purchasing the Blood Volume Analyzer equipment. A customer may purchase the equipment directly, lease the equipment, or rent the equipment on a month-to-month basis. The revenues generated by a direct sale or a monthly rental are recognized as revenue in the period in which the sale or rental occurred. If a customer is to select the “lease” option, the Company refers its customer to a third party finance company with which it has established a relationship, and if the lease is approved, the Company receives 100% of the sales proceeds from the finance company and recognizes 100% of the revenue. The finance company then deals directly with the customer with regard to lease payments and related collections.

The sales of the single-use radioactive doses (Volumex) that are used in conjunction with the Blood Volume Analyzer are recognized as revenue in the period in which the sale occurred.

When Blood Volume Analyzer equipment has been sold to a customer, the Company offers a one year warranty on the product, which covers all mechanical failures. This one year warranty is effective on the date of sale of the equipment. After the one year period expires, customers may purchase a service contract through the Company, which is usually offered in one-year, three year or five year increments. These service contracts are billed quarterly and therefore the revenue is earned in the quarter invoiced.

Comprehensive Income (Loss)

Product Warrantees and Related Liabilities

The Company offers a one year warranty on the Blood Volume Analyzer equipment. This warranty is effective on the date of sale and covers all mechanical failures of the equipment. All major components of the equipment are purchased and warranted by the original third party manufacturers.

Once the initial one year warranty period has expired, customers may purchase annual service contracts for the equipment. These service contracts warranty the mechanical failures of the equipment that are not associated with normal wear-and-tear of the components.

To date, the Company has not experienced any major mechanical failures on any equipment sold. In addition, the majority of the potential liability would revert to the original manufacturer. Due to this favorable history, a liability has not been recorded with respect to product warranty liability.

Income Taxes

The Company accounts for income taxes under the provisions of SFAS No. 109 - Accounting for Income Taxes. This pronouncement requires recognition of deferred tax assets and liabilities for the estimated future tax consequences of events attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which the differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of changes in tax rates is recognized in the statement of operations in the period in which the enactment rate changes. Deferred tax assets and liabilities are reduced through the establishment of a valuation allowance at such time as, based on available evidence, it is more likely than not that the deferred tax assets will not be realized.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

The Securities and Exchange Commission’s rule related to market risk disclosure requires that we describe and quantify our potential losses from market risk sensitive instruments attributable to reasonably possible market changes. Market risk sensitive instruments include all financial or commodity instruments and other financial instruments that are sensitive to future changes in interest rates, currency exchange rates, commodity prices or other market factors.

We are not exposed to market risks from changes in foreign currency rates. The company maintains an investment portfolio primarily consisting of electric utility companies which are publicly traded common and preferred stock. These are categorized as available-for-sale securities.

In addition to receiving income from dividends, the company also has an investment policy of selling puts on stocks that it is willing to own. Such options usually have a maturity of less than 1 year. The company will also sell covered calls on securities within its investment portfolio. Covered calls involve stocks, which usually do not exceed 15% of the value of the company’s portfolio and have never exceeded 15% of the company’s portfolio value.

The company will, at times, sell naked or uncovered calls, as well as, engage in short sales as part of a strategy to mitigate risk. Such short sales are usually less than 15% of the company’s portfolio value.

Puts, calls and short sales, collectively referred to as short positions, are all marked to market for each reporting period and any gain or loss is recognized through the Statement of Operations and labeled as “Mark to market of short positions”.

The company’s investment strategy is reviewed at least once a year, and more frequently as needed, at board meetings. The company’s investing policy permits investment in non-electric utilities for up to 15% of the corporate portfolio value.

At September 30, 2008, unrealized gains were $33,751,680 and unrealized losses were ($9,577,822) on available for sale securities for a ratio of 3.52 to 1.

Certain utility preferred stocks have call provisions which may enable them to be called away from the company. The call price, in all instances, is higher than the company’s cost for the stock. The yields on such preferred stocks may be significantly higher than current available yields. Such stocks, therefore, could not be replaced with similar yields. At September 30, 2008, 3.01% of the market value of the company’s available for sale securities is made up of preferred stock.

At September 30, 2008, 96.97% of the market value of the company’s available for sale securities is made up of common stock. There is a risk that any of these stocks could be sold as the result of an involuntary tender offer and that the security could not be replaced with an investment offering a similar yield.

The company’s portfolio value is exposed to fluctuations in the general value of electric utilities. An increase of interest rates could affect the company in two ways; one would be to put downward pressure on the valuation of utility stocks as well as increase the company’s cost of borrowing.

Because of the size of the unrealized gains in the company’s portfolio, the company does not anticipate any changes which could reduce the value of the company’s utility portfolio below historical cost. Electric utilities operate in an environment of federal, state and local regulations, and they may disproportionately affect an individual utility. The company’s exposure to regulatory risk is mitigated due to the diversity of holdings consisting of 87 separate common and preferred stocks. As of September 30, 2008 there were three holdings of common stock which comprised 41.04% of the total market value of the available for sale investments.

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DAXOR CORPORATION
SUMMARY OF INVESTMENTS
AS AT SEPTEMBER 30, 2008


	COST		FAIR MARKET VALUE		TOTAL NET UNREALIZED GAIN (LOSS)

TOTAL COMMON STOCK	$	39,818,753	$	64,860,362	$	25,041,609
TOTAL PREFERRED STOCK		2,829,857		2,013,876		(815,981	)

TOTAL EQUITIES		42,648,610		66,874,238		24,225,628

TOTAL BONDS		65,770		14,000		(51,770	)

TOTAL PORTFOLIO	$	42,714,380	$	66,888,238	$	24,173,858

DAXOR CORPORATION
SUMMARY OF INVESTMENTS
AS AT SEPTEMBER 30, 2007


	COST		FAIR MARKET VALUE		TOTAL NET UNREALIZED GAIN (LOSS)

TOTAL COMMON STOCK	$	23,820,181	$	65,822,207	$	42,002,026
TOTAL PREFERRED STOCK		816,018		1,178,765		362,747

TOTAL EQUITIES		24,636,199		67,000,972		42,364,773

TOTAL BONDS		184,646		350,970		166,324

TOTAL PORTFOLIO	$	24,820,845	$	67,351,942	$	42,531,097

Summary of Proceeds Received and Market Valuation at 09/30/08
Put and Call Options


Total Proceeds Received on open positions at 01/01/08		Sale of Options from 01/01/08-09/30/08		Expirations and Assignments of Options from 01/01/08-09/30/08		Proceeds Received on open positions at 09/30/08		Market Value at 09/30/08		Unrealized Appreciation (Depreciation) at 09/30/08

$	7,645,833	$	23,984,659	$	19,841,191	$	11,789,301	$	10,805,915	$	983,386

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Summary of Proceeds Received and Market Valuation at 09/30/07
Put and Call Options


Total Proceeds Received on open positions at 01/01/07		Sale of Options from 01/01/07-09/30/07		Expirations and Assignments of Options from 01/01/07-09/30/07		Proceeds Received on open positions at 09/30/07		Market Value at 09/30/07		Unrealized Appreciation (Depreciation) at 09/30/07

$	2,848,667	$	13,305,465	$	7,891,005	$	8,263,127	$	8,053,557	$	227,570

Item 4. Controls and Procedures

As of September 30, 2008, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer, Chief Financial Officer and Treasurer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Rule 13a-14 under the Securities and Exchange of 1934, as amended.

The Company’s management and board of directors are fully committed to the review and evaluation of the procedures and policies designed to assure effective internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

The Company currently has two legal actions pending which have been filed in different jurisdictions. Both of these actions cover the normal range of the Company’s business. It is the opinion of management that the Company has substantial legal and factual defenses to the plaintiffs’ claims and we intend to defend both actions vigorously.

Item 1A. Risk Factors

There have been no material changes from the risk factors disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2007 as filed with the Securities and Exchange Commission on March 31, 2008. A change in Medicare and Medicaid reimbursement rates was effective as of January 1, 2008 and at this time the Company is unable to quantify the effect this change will have on operating revenue. This change is discussed in greater detail in the Recent Developments section of this 10-Q.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults upon Senior Securities

None.

Item 4. Submission of Matters to a Vote of Security Holders

None.

Item 5. Other Information

None.

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Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits


	31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

	31.2	Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

	32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

	32.2	Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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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, thereunto duly authorized.


DATE: November 12, 2008	By:	/s/ JOSEPH FELDSCHUH, M.D.

		JOSEPH FELDSCHUH, M.D.,
		President and Chief Executive Officer

DATE: November 12, 2008	By:	/s/ DAVID FRANKEL

		DAVID FRANKEL
		Chief Financial Officer

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