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UNITED STATESSECURITIES AND EXCHANGE COMMISSION  WASHINGTON, D.C. 20549




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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 |  |                                            

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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-

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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-

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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

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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 SUBSIDIARYCONDENSED 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 EquitySecurities, 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

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.

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 Paymentof 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.

-3-

---



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.

-4-

---



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.

-5-

---



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.

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.

-6-

---



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%.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

-8-

---



| |    |                                                                                                                                                                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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.

-9-

---



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.

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.

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

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.

-10-

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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.

-11-

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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 | 

-12-

---



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.

-13-

---



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

(c)
There were no reports on Form 8-k filed.

-14-

---



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                

-15-

---