UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

Form
10-K

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|---------------------------------------------- | ------------------------------------------------------------------------------------------
|x                                              | ANNUAL
  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES Exchange Act of 1934    
|                                              
|For the fiscal year ended: December
  31, 2008
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|Or                                            
|                                               |                                                                                           
|o                                              | TRANSITION
  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to _________

Commission file number 0-12248

Daxor Corporation(Exact name of registrant
as specified in its charter)

|                                  |  |                      
|--------------------------------- |  | ---------------------
|New York                          |  | 13-2682108           
|                                  |  |                      
|(State
  or Other Jurisdiction of |  | (I.R.S.
  Employer   
|Incorporation
  or Organization)  |  | Identification
  No.)

350 5th Avenue, Suite 7120, New York, New
York 10118(Address of Principal
Executive Offices)

Registrants telephone number, including area code: 212-244-0555

Name of each exchange on which registered: NYSE Amex

Securities registered pursuant to Section 12(b) of the Act: NONE

Securities registered pursuant to section 12(g) of the
Act:

COMMON STOCK, PAR VALUE $.01 PER SHARE(Title of each class)

Indicate by check mark if
the registrant is a well-known seasoned issuer, as defined in Rule 405 of the
Securities Act.

o Yes x No


Indicate by check mark if
the registrant is not required to file reports pursuant to Section 13 or
Section 15(d) of the Act.

o Yes x No


Indicate by check mark
whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (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

x Yes o No


Indicate by check mark if
disclosure of delinquent filers pursuant to Item 405 of Regulation S-K
(§229.405 of this chapter) is not contained herein, and will not be contained,
to the best of registrants knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this form 10-K.

o Yes x No


Indicate by check mark whether the registrant is a
large accelerated filer, an accelerated filer, a non-accelerated filer, or a
smaller reporting company. See definitions of large accelerated filer, accelerated
filer and smaller reporting company in Rule 12b-2 of the Exchange Act (Check
one):

| |                             |  |                              
| | --------------------------- |  | -----------------------------
| | Large accelerated filer   o |  | Accelerated filer   o        
| |                             |  |                              
| | Non-accelerated filer   o   |  | Smaller reporting company   x

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

o Yes x No


The aggregate market value of
the voting stock held by non-affiliates of the registrant, based upon the
closing price of the registrants common stock on June 30, 2008, the last day
of the registrants most recently completed second fiscal quarter was
$18,355,365. As of February 28, 2009 there were 4,285,718 shares of the
Registrants common stock, par value $.01 per share, outstanding.

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DOCUMENTS INCORPORATED BY REFERENCEThe Registrant
maintains an internet website at www.daxor.com for Daxor Corporation. For the Scientific
Medical Systems subsidiary, the website is www.Idant.com. None of the
information contained on this website is incorporated by reference into this
Form 10-K or into any other document filed by the Registrant with the
Securities and Exchange Commission.

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TABLE OF
CONTENTS

|         |  |                                                                                                                  |  |    |     
|-------- |  | ---------------------------------------------------------------------------------------------------------------- |  | -- | ----
|Item     |  | Description                                                                                                      |  |    | Page
|         |  |                                                                                                                  |  |    |     
|         |  |                                                                                                                  |  |   
|         |  | PART I                                                                                                           |  |   
|         |  |                                                                                                                  |  |   
|Item 1.  |  | Business                                                                                                         |  | 4 
|Item 1A. |  | Risk Factors                                                                                                     |  | 16
|Item 2.  |  | Properties                                                                                                       |  | 17
|Item 3.  |  | Legal Proceedings                                                                                                |  | 18
|Item 4.  |  | Submission of
  Matters to a Vote of Security Holders                                                            |  | 18
|         |  |                                                                                                                  |  |   
|         |  | PART II                                                                                                          |  |   
|         |  |                                                                                                                  |  |   
|Item 5.  |  | Market for
  Registrants Common Equity, Related Shareholder Matters and Issuer Purchases
  of Equity Securities |  | 19
|Item 6.  |  | Selected Financial
  Data                                                                                        |  | 20
|Item 7.  |  | Managements
  Discussion and Analysis of Financial Condition and Results of Operations                          |  | 21
|Item 7A. |  | Quantitative and
  Qualitative Disclosures about Market Risk                                                     |  | 28
|Item 8.  |  | Consolidated
  Financial Statements and Supplementary Data Index to Financial Statements                         |  | 38
|Item 9.  |  | Changes and
  Disagreements with Accountants on Accounting and Financial Disclosure                              |  | 65
|Item 9A. |  | Controls and
  Procedures                                                                                        |  | 65
|         |  |                                                                                                                  |  |   
|         |  | PART III                                                                                                         |  |   
|         |  |                                                                                                                  |  |   
|Item 10. |  | Directors and
  Executive Officers of the Registrant                                                             |  | 66
|Item 11. |  | Executive
  Compensation                                                                                         |  | 66
|Item 12. |  | Security Ownership
  of Certain Beneficial Owners and Management and Related Shareholder Matters                 |  | 66
|Item 13. |  | Certain
  Relationships and Related Transactions                                                                 |  | 66
|Item 14. |  | Principal
  Accountant Fees and Services                                                                         |  | 66
|         |  |                                                                                                                  |  |   
|         |  | PART IV                                                                                                          |  |   
|         |  |                                                                                                                  |  |   
|Item 15. |  | Exhibits and
  Financial Statement Schedules                                                                     |  | 67

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Introductory Note: Forward Looking Statements

This Form 10-K contains
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These
statements include statements regarding our plans, goals, strategies, intent,
beliefs or current expectations. These statements are expressed in good faith
and based upon reasonable assumptions when made, but there can be no assurance
that these expectations will be achieved or accomplished. Sentences in this
document containing verbs such as believe, plan, intend, anticipate,
target, estimate, expect, and the like, and/or future tense or
conditional constructions (will, may, could, should,, etc.) constitute
forward-looking statements that involve risks and uncertainties. Items
contemplating or making assumptions about, actual or potential future sales,
market size, collaborations and trends or operating results also constitute
such forward-looking statements. These statements are only predictions and
actual results could differ materially. Certain factors that might cause such a
difference are discussed throughout this Annual Report on Form 10-K, including
the section entitled Risk Factors. Any forward-looking statement speaks only
as of the date we made the statement, and we do not undertake to update the
disclosures contained in this document or reflect events or circumstances that
occur subsequently or the occurrence of unanticipated events.

PART I

Item 1. Business

Daxor Corporation is a
medical device manufacturing company with additional biotechnology services.
Daxor was originally founded in 1970 for cryobanking services and continues
these services through its wholly owned subsidiary, Scientific Medical Systems.
For the past 14 years, the Companys major focus has been on the development of
the BVA-100® Blood Volume Analyzer, an instrument that rapidly and
accurately measures human blood volume. The instrument is used in conjunction
with Volumex®, a single-use radiopharmaceutical diagnostic injection
and collection kit. The Company also performs cryobanking of blood through
Scientific Medical Systems and of semen through Idant, a subdivision of
Scientific Medical Systems. The Company maintains websites at www.daxor.com and
www.idant.com that describe its operations.

BVA-100 BLOOD VOLUME ANALYZER

Blood volume measurement has
a large potential market. Blood volume derangements are associated with a
variety of medical conditions, and it is well established that clinical
assessments of blood volume using physical examination or simple blood tests
such as hematocrit testing are frequently inadequate to determine total blood
volume. Previous methods of directly measuring blood volume have been extremely
complex and time-consuming. The BVA-100 is a CLIA-rated medium complexity
instrument that can measure blood volume with 98% accuracy within 60 to 90
minutes. Participating institutions utilize the BVA-100 for diagnosing and treating
patients with heart failure, kidney failure, and syncope, and to aid in fluid
and blood transfusion management in the critical care unit. The BVA-100 has
also been used to aid in the diagnosis and treatment of polycythemia,
hypertension, anemia, chronic fatigue, and to aid in presurgical evaluation.
Additional possible uses include management of kidney dialysis,
ultrafiltration, and blood optimization for elective surgery.

History and Development of the BVA-100

Blood volume measurement has
been available for more than 60 years, although previous methods required as
much as 4 to 8 hours of technician time with variable degrees of accuracy.
Measurement of blood volume is achieved by infusing a radioisotope indicator,
or tracer, into a patients vein and then collecting timed blood samples after
the tracer has distributed evenly throughout the circulatory system. The volume
of blood in a patient is inversely proportional to the dilution of the tracer,
which can be determined by measuring the level of radioactivity in the
individual blood samples and applying the inverse proportion calculations. The
measurement, while relatively simple in principle, has been difficult to
perform accurately and rapidly because of the high degree of precision required
in each step. Consequently, the technical complexity and significant time
required for achieving an accurate blood volume resultbefore the introduction
of Daxors BVA-100 Blood Volume Analyzerlimited the use of blood volume
measurements in most hospitals in the United States.

An alternative method used
for blood volume measurement involves taking a sample of the patients blood
and incubating it with the radioisotope chromium-51 (Cr-51).. After a series of
complex steps performed by a laboratory technician, the patients chromated red
blood cells are then re-transfused into the patient. This test is used by
nuclear medicine departments to evaluate the red cell volume in polycythemia
vera, a condition in which the patient may have too many red cells, which can
predispose to thrombosis and other complications. Daxors BVA-100 Blood Volume
Analyzer system uses a kit which contains an injectable iodine-131
(I-131)-albumin tracer, which greatly simplifies this process, and eliminates
the need to re-transfuse patient blood. Historically, it was thought that the
chromated red blood cell method was a more accurate method to determine a
patients red blood cell volume. However, a recent publication in the American Journal of Medical Sciences [Am J
Med Sci 2007;334(1):37-40] compared the Cr-51 method to Daxors semi-automated
method and found the two techniques to be equivalent, with significant time
savings and ease of use benefits with Daxors Blood Volume Analyzer BVA-100.

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Blood volume measurement is
an infrequently performed test. Instead of directly and objectively measuring
blood volume, physicians who needed to assess volume status commonly relied
upon clinical assessment with physical examination or surrogatetests such as
hemoglobin and hematocrit measurements. However, these methods have frequently
been shown to give inaccurate determinations of total blood volume. An
additional problem has been the difficulty of determining the ideal blood
volume for a specific individual. Daxors Chief Scientific Officer, Dr. Joseph
Feldschuh, and Dr. Yale Enson from Columbia University College of Physicians
and Surgeons, published their research studies in Circulation in October 1977 and the American Journal of Medical
Sciences in
June 2007 which showed that normal blood volume varies as a function of the
degree of deviation from ideal body weight. This research was conducted in the
laboratory of Nobel Prize Winner Dr. Andre Cournand, and the results of that
original and ongoing research have provided the basis for the proprietary
calculation engine of the BVA-100 Blood Volume Analyzers software.

Daxors patented injection
and collection kit(Volumex) utilizes Albumin I-131, a classic tracer used in
blood volume measurement. This kit eliminates most of the previously time-consuming
steps involved in preparation for a blood volume measurement. The BVA-100
software automatically calculates the blood volume, evaluates the statistical
reliability of the measurement, and compares the results to the most accurate
known predicted norm, which is a function of the patients height, weight and
gender. Results are available within 60 to 90 minutes. In emergency situations,
preliminary results can be available within just 20 to 25 minutes.

The Company initially
obtained marketing clearance from the FDA for the BVA-100 Blood Volume Analyzer
in 1997, and for its Volumex specialized single use injection kit in 1998. The
Company manufactures its own injection kit components and specialized
collection kit, and injection kit filling is performed by an FDA-licensed
radiopharmaceutical manufacturer. The Company can provide customized collection
kits for customers with special needs.The
Company has received United States, European Common Market, and Japanese
patents for its Blood Volume Analyzer. In January 2007, the Company purchased
two 10,000 square foot buildings in Oak Ridge, Tennessee to expand its
research, development, and manufacturing capabilities

MARKET OPPORTUNITY

Utilization of the BVA-100

The Company believes that
the most significant market for its blood volume measurement equipment consists
of approximately 8,500 hospitals and Radiology Imaging Centers in the United
States. The Company believes that there is an additional international market
of 10,000-14,000 potential users of the BVA-100. This section describes some of
the many widespread conditions in which blood volume measurement promises to
improve diagnosis and treatment.

Blood volume measurement is
an approved test with six separate CPT codes. Reimbursement has been received from
a number of insurance companies, including Medicare, for measurement of blood
volume using the BVA-100 Blood Volume Analyzer. Reimbursement is particularly
important for hospitals because revenue from patients who are admitted to the
hospital is based upon set amounts from the insurance companies. However,
out-patients provide an additional stream of cash flow with well defined costs
and the ability for the hospital to be profitable by providing such services.

Scientific Studies Utilizing the BVA-100

Since 2002, eighteen
original research articles have been published utilizing data obtained from the
BVA-100, one of which was cited in the American College of Cardiology/American
Heart Association treatment guidelines for heart failure. Several clinical studies
are ongoing or are in the final approval phase to investigate the clinical
application of blood volume measurements in critical care, heart failure,
ultrafiltration, and pre- and post-surgical applications, as outlined below. In
addition, several studies are in the early approval phase to investigate the
clinical application of blood volume measurement in hemodialysis, hypertension,
subarachnoid hemorrhage and hyponatremia. Presentations from a recent symposium
held at Vanderbilt University were published in the American Journal of Medical Sciences in June 2007 and
featured the results of significant research involving current and potential
clinical applications of blood volume measurement. Daxor has worked extensively
with facilities that use the BVA-100 Blood Volume Analyzer in research studies,
providing equipment, training, ongoing consultation, and assistance with
interpretation and display of results. For some research projects, Daxor has
also provided Volumex kits as well as direct financial support.

Heart Failure

Approximately five million
individuals are treated annually in the United States for heart failure. It is
estimated that $38 billion is spent each year on heart failure treatment, of
which $23 billion is spent on hospital treatment. Heart failure is the number
one reason for admission to hospitals in the US for patients over 65 years of
age. The overwhelming majority of patients treated for heart failure must be
treated with a combination of powerful drugs that may drastically change the
patients blood volume. Three thousand patients annually receive heart
transplants, and an increasing number are receiving left ventricular assist
devices (LVAD), which is a type of mechanical heart.

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In the May 2004 issue of the
American Journal of Cardiology,
Dr. Ana-Silvia Androne, Dr. Stuart Katz and their colleagues at Columbia
Presbyterian Medical Center published a landmark study utilizing the BVA-100 to
measure blood volume in NYHA Class III and IV heart failure patients. In this
observational study, cardiologists treated the patients according to standard
clinical guidelines without incorporating blood volume measurement which was
performed on the patients. Patients were categorized as hypovolemic,
normovolemic, or hypervolemic, and their outcomes over time were recorded. At
the end of one year, 39% of the hypervolemic patients had died or received an
urgent heart transplant. In contrast, none
of the normovolemic or hypovolemic patients died or received an urgent
transplant. At the end of two years, 55% of hypervolemic patients had died or
received an urgent heart transplant, while the normovolemic patients continued
to have a 0% mortality rate. This study showed a remarkable correlation between
blood volume and outcome and suggests that effectively treating patients to
normovolemia may dramatically improve outcomes.

The study also reported on
the accuracy of clinical assessment of volume status in these patients.
Physicians who were trained in cardiology assessed patients blood volume
statuses using standard laboratory tools and physical examination. When
choosing between three possible choicesdecreased, normal, or increased blood
volumespecialists were correct only 51% of the time in evaluating these
severely ill cardiac patients when compared to the direct measurement results
provided by the BVA-100. This study was cited in the most recent revision of
the American College of Cardiology/American Heart Association 2005 guidelines
for the treatment of chronic heart failure. These guidelines are updated once
every 3 to 5 years. This landmark study highlights the importance of correcting
a heart failure patients expanded blood volume to normal and is the first to
provide direct evidence that achievement of normovolemia is associated with
improved outcomes, and that treating to normovolemia is a legitimate goal. As a
result, the use of blood volume measurement in heart failure treatment may
significantly prolong lives and reduce expensive and risky interventions.

Critical Care (Intensive Care Unit)

One of the essential
components of critical care is the optimal management of fluid status. Correct
interpretation of clinical signs and symptoms is essential for fluid
resuscitation and fluid management in the critical care setting. Blood volume
measurement promises to take the guesswork out of volume assessment and to
enable more precise and appropriate treatment. Dr. Feldschuh published a
chapter entitled Blood Volume Measurements in Critical Care in the 4th
edition (2009) of Critical Care
which reviews the importance of volume measurement in the critical care
setting.

Dr. Mihae Yu and colleagues
at The Queens Medical Center in Honolulu, Hawaii, have been studying the use
of blood volume measurement in the critical care unit. They have performed blood
volume measurement in the surgical intensive care unit and recorded how results
have influenced treatment decisions. Their most recent results were published
in the February 2009 issue of the American Journal of Surgery. The findings
were based on 86 data points from 40 patients, and showed that blood volume
measurement results led to a change in treatment plan 36% of the time. Among
patients who received a pulmonary artery catheter (PAC) for hemodynamic
measurements, treatment would have been changed 50% of the time if blood volume
data were available to treating physicians. Among patients who did not receive
PAC measurement, treatment would have been changed 33% of the time if blood
volume data had been available. In addition, Dr. Yu and her colleagues have
presented their findings at the Society of Critical Care annual meetings from
2006-2009 and their studies were featured in the November 2005 issue of Anesthesiology News,the January 2008 Hawaii
Medical Journal and the June 2008 Anesthesia and Analgesia These preliminary
studies are being followed up by additional studies evaluating how
incorporating blood volume measurement into critical care treatment affects
outcomes.

Dr. Yu is now engaged in a
major study, partially funded by Daxor, involving blood volume measurement in
the intensive care unit. The purpose of the study will be to determine
specifically whether clinical outcomes and length of hospital stays can be
improved by incorporating blood volume measurement as a routine clinical tool
in the intensive care unit.

Syncope

The Cleveland Clinic
Cardiovascular Department is ranked first in the United States by the annual
survey in U.S. News & World Report.
There have been more blood volumes performed at the Cleveland Clinic to date
than at any other hospital in the United States.

Syncope, or sudden loss of
consciousness, has been estimated to be responsible for 3-5% of emergency
department visits and 1- 6% of hospital admissions. As many as one million
individuals per year experience an episode of syncope.

Since March 2000, the
Syncope Clinic in the Cardiovascular Department of the Cleveland Clinic has
been utilizing the BVA-100 to aid in diagnosing over 2000 syncope patients.
These patients have presented with a wide range of blood volume derangements,
including moderate to severe hypovolemia that would not have been detected
without blood volume measurement. Results from blood volume measurement and
tilt table testing (a standard test in syncope diagnosis ) were published in
June of 2007 in the American Journal of
Medical Sciences by Dr. Fetnat Fouad-Tarazi, Head of the Hemodynamic
and Neuroregulation Lab. Dr. Fouad-Tarazis study demonstrated that blood
volume derangements are a frequent finding in syncope patients and that blood
volume measurements should be incorporated into the diagnostic work-up of a
syncope patient to guide therapy.

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Postural Orthostatic
Tachycardia Syndrome (POTS) is a condition in which patients, primarily women,
develop a rapid heart beat and symptoms suggesting impending fainting. POTS
affects an estimated 500,000 people in the United States alone. POTS (an
excessive increase in heart rate [>30 bpm] on standing, associated with
orthostatic symptoms in the absence of orthostatic hypotension) can produce
substantial disability among otherwise healthy people. Dr. Satish Raj and
colleagues at the Vanderbilt University Medical School published a study in the
April 2005 Circulationwhich
utilized the blood volume analyzer.Patients
with POTS - particularly those with rapid heart beats  are sometimes diagnosed
as having panic attacks and treated inappropriately with psychiatric
medications. This study, using the BVA-100, demonstrated that many of these
patients have a marked reduction in their plasma volume as well as a significant
reduction in their red cell volume. This was the first study of its type to
document that these patients have low blood volume as a cause of their
condition and they could theoretically be treated with medications (such as
epoietin alfa) to increase their blood volume and decrease these attacks. This
is one of the first studies to provide clear evidence that low blood volume may
play a major role in POTS and provides guidance for specific corrective
therapy.

Anemia in Chronic Heart Failure

Anemia is frequently found
in patients with chronic heart failure (CHF) and is associated with poor
prognosis. Low hematocrit in CHF patients can result from either increased
plasma volume (hemodilution) or from reduced red cell volume (true anemia). It
is difficult, if not impossible, to distinguish dilutional anemia
(pseudoanemia) from true anemia without performing a blood volume measurement.
A study conducted by Ana-Silvia Androne and colleagues at the Columbia
Presbyterian Medical Center published in the January 2003 issue of Circulation used the BVA-100 to show that
patients with hemodilution experienced worse outcomes than did patients with
true anemia. This suggests that volume overload may be a key mechanism which
contributes to poor outcome in anemic CHF patients. The study also showed that
anemic CHF patients experienced worse outcomes than did non-anemic CHF
patients.

In another study by Dr.
Mancini and colleagues from Columbia Presbyterian Medical Center which was also
published in the January 2003 issue of Circulation,
26 patients with anemia and CHF were randomized to receive either
erythropoietin or placebo for 3 months. CHF patients who received
erythropoietin showed significant increases in red cell volume as measured by
the BVA-100 and corresponding significant improvements in exercise capacity.
This is one of the first studies to prove that correct treatment of anemia in
CHF patients can significantly improve their heart failure status.

Transfusion Decisions in Surgery

Effective volume management
in surgical situations requires accurate assessment of a patients need for
transfusions. Knowing whether and when to transfuse blood depends on
effectively balancing the benefits vs. risks of transfusion for each patient at
any given time. Under current transfusion practices, patients may undergo major
surgery with just half the concentration of normal red cells. This degree of
anemia has its own inherent risks. There was a report in the February 2001
issue of the New England Journal of Medicine
that as many as 40 - 50% of patients undergoing cardiac bypass graft surgery
(CABG) experience some degree of measurable permanent brain damage such as
memory loss. In the journal Transfusion,
Dr. Robert Valeri, a senior researcher at the Boston Naval Hospital, estimated
that there may be as many as 40,000 heart attacks per one million operations
due to undertransfusion. Blood volume measurement, by quantifying a patients
blood volume prior to surgery, can provide important information about how much
blood loss a patient can safely sustain.

Dt. Ketan Shevde and
colleagues at Maimonides Medical Center (Brooklyn, NY) published a study in the
November 2002 issue of the Journal of
Clinical Anesthesia which used the BVA-100 to show that there was a
mean loss in red cell volume of 6.5% in females and 23.7% in males following
coronary bypass graft (CABG) surgery. The mean number of intraoperative pRBC
transfusions was 1.38 units for females and 0.39 units for males.

Daxor is currently
sponsoring a study at the Virginia Commonwealth University which measures
changes in blood volume before, during and after elective cardiac surgery (i.e.
CABG or valve repair/replacement). Dr. Mark Nelson and colleagues have enrolled
30 patients in this study to date, which has shown greater than anticipated
loss of red cells and total blood volume during and after surgery.

Clinical Validation of the BVA-100

In addition to examining the
role of blood volume in relation to various medical conditions, some studies
have examined how blood volume measurement with the BVA-100 compares to other
measurement methods. These reports provide important validation for physicians
to accept the use of the BVA-100 in clinical settings.

Dr. S. J. Alrawi and
colleagues from the Lutheran Medical Center (New York) published an article in
the November 2002 Saudi Medical Journal
comparing the BVA-100 with pulmonary artery catheterization. The study found
that pulmonary artery catheterization does not provide an accurate estimate of
blood volume. Direct blood volume measurement is less invasive and more
accurate.

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Similarly, Dr. Yu and
colleagues have given presentations at major medical conferences which compare
the BVA-100 to a variety of surrogate volume measures including stroke volume
variation, pulse pressure variation, right ventricular end diastolic volume,
brain natriuretic peptide, PAC and peripheral hematocrit. Most of these
surrogate volume measures showed poor correlation with intravascular volume
status. Several publications which describe these findings in detail can be
expected in the next two years.

Dr. Howard Dworkin and
colleagues from William Beaumont Hospital compared blood volume measurement
with the BVA-100 to the previous gold standard blood volume measurement method,
which consists of simultaneous radioisotopic measurement of red cell and plasma
volume. They found that results correlated very closely with each other, but
measurement with the BVA-100 took 90 minutes as opposed to 3.5 hours required
for the standard method. These results were published in the July 2007 issue of
the American Journal of Medical Sciences.

Other Medical Conditions for Blood
Volume Measurement Utilizing the BVA-100

There are several other
major conditions for which blood volume measurement promises to improve
diagnosis and treatment. While no research studies have been published yet
which address the role of the BVA-100 in diagnosing and treating these
conditions, some physicians have foundBVA-100 measurements useful for treating
such patients, and the Company is currently exploring the potential for
expanded use of blood volume measurement in the treatment protocols for these
conditions at other facilities:

Ultrafiltration in Heart Failure

Alterations in blood volume
are an intrinsic element of the pathophysiology and treatment of heart failure.
Patients with decompensated heart failure typically experience volume overload,
which can contribute to further morbidity and mortality. Ultrafiltration (UF)
has been used in patients with decompensated heart failure with demonstrated
diuretic resistance as an early alternative to diuresis with strong positive
clinical results. Daxor is currently sponsoring a study led by Dr. Mitchell
Saltzberg at the Christiana Care Medical Center (Wilmington, DE) to assess
blood volumes before and after ultrafiltration, as well as at 30 and 90 day
follow-ups. Study endpoints include mortality, all-cause rehospitalization
rate, and need for long-term hemodialysis. To date, 5 out of a projected 50
patients with acute decompensated heart failure have been enrolled in this
study.

In addition, Valley Hospital
(Ridgewood, NJ) is currently conducting a retrospective study to examine
whether blood volume analysis should become a standard of care in heart failure
patients. Their findings will be published in the near future.

Hypertension

Hypertension can be induced
by two primary physiological processes: expanded blood volume or constricted
blood vessels. Similarly, anti-hypertensive therapy falls into two broad
categories: diuretic therapy which leads to reductions in plasma volume, or
vasodilator therapy which relaxed blood vessels. Daxor is currently in the
early stages of developing a protocol with Dr. Elijah Saunders of the
University of Maryland (Baltimore, MD) to use the BVA-100 to identify the presence
or absence of blood volume expansion in hypertension patients and to evaluate
whether they are being correctly treated with regard to the underlying
mechanisms of hypertension.

Hemodialysis

Hemodialysis (HD) removes
excess intravascular and extravascular volume as well as solutes that
accumulate during end-stage renal disease (ESRD). An understanding of fluid
changes that occur during HD with ultrafiltration (UF) is essential for
determining the efficacy of HD, as well as for reducing complications: If an
excessive volume of fluid is removed during HD, patients are more likely to
experience complications such as hypotension, cramping and/or lightheadedness.
In contrast, if patients are not dialyzed to their target weights, they are at
risk of remaining in a state of chronic volume overload, which may lead to
hypertension, left ventricular hypertrophy, and/or congestive heart failure.

Daxor is currently in the
early stages of developing a proposal with Dr. David Goldfarb of the Dialysis
Center at the Department of Veteran Affairs New York Harbor Healthcare System
which will compare blood volumes before and after a hemodialysis session.
Moreover, this study will explore how changes in blood volume in the course of
a single hemodialysis session relate to patient outcomes  particularly the
occurrence of hypotensive episodes.

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Blood Substitutes

BioPure Corporation develops
and manufactures two proprietary blood substitutes  one for human use and one
for veterinary use. These hemoglobin-based products are administered
intravenously to help transport oxygen to the bodys tissues; BioPure has been
seeking FDA approval for its human blood substitute HemoPure. It was in the
process of conducting a trial with the US Naval Medical Research Center to see
whether HemoPure could be used to treat casualties when traditional blood
transfusions are not available. However, the FDA put a clinical hold on this
trial due to high mortality rates in past trials with HemoPure. Given the unmet
medical need for blood substitutes, and the close fit between this research and
our long-term interest in blood products, Daxor recently explored the
possibility of investing in BioPure to keep the company afloat until some of
its ongoing clinical studies could be completed. However, after conducting
extensive due diligence, the management of Daxor has decided not to invest in
BioPure at this time. The company has, however, offered to assist BioPure with
blood volume measurements for future studies.

SCIENTIFIC MEDICAL SYSTEMS SUBSIDIARY (wholly
owned by Daxor)

Scientific Medical Systems
is a subsidiary wholly owned by Daxor that engages in cryobanking of human
blood. Idant, a division of Scientific Medical Systems, offers semen banking
services.

Blood Banking

The blood banking industry is
a group of for-profit and not-for-profit corporations whose total revenue is
estimated to exceed $6 billion. Blood banking services are provided by a broad
spectrum of organizations. Approximately one-half of the blood supply used for
transfusions is supplied by the American Red Cross and its affiliates. The
other portion is supplied by various other tax-exempt and for-profit
organizations. Some hospitals operate their own donor services but require the
services of outside vendors such as the Red Cross for adequate supplies of
blood products.

There are approximately
15-18 million blood transfusions administered annually to 4 million patients.
The present donor system of blood transfusions presents risks to individuals
receiving blood, such as infectious disease transmission, under- or
over-tranfusion, and pre- and post-surgical complications. Many risks from
donor blood, such as the risks of infectious disease transmission, can be
avoided by utilizing autologous (the patients own) blood. Additionally, physicians
who fear the complications of transfusion with donor blood may be more likely
to transfuse autologous blood as soon as it is needed, rather than withholding
transfusion until a patient is extremely anemic and at higher risk from
blood-loss-related complications.

In 1985, the Company
established the first facility in the United States for frozen, long-term
autologous blood banking and maintains the only blood bank in New York that
allows people to store their own blood for up to 10 years. Currently, the
Company is in the process of developing partnership programs whereby
corporations can provide frozen long-term blood storage as a benefit to their
employees. Taglich Brothers is a full-service brokerage firm in New York City
which has offered each of its employees the opportunity to store two units of
autologous blood at Idant Laboratories free-of-charge.

Recent Improvements and Innovations

In 2005, the Company began
using a recently available FDA-approved technology (manufactured by another
company) that extends the shelf-life of thawed frozen blood from 24 hours to 14
days. This development greatly increases the flexibility with which frozen
blood can be used and greatly increases the number of situations in which
thawed frozen blood can be provided to patients as needed. As part of this
program the company has also purchased new freezers and equipment that
incorporate this technology. It has also installed a back-up liquid nitrogen
system at its headquarters so that in the event of electrical failure, the
stored blood can be maintained in a frozen state for 23 weeks.

The Company has recently
received a trademark for a proposed program of Quality Assured Blood (QAB).
This concept is similar to existing safety protocols used to ensure the safety
of frozen donor semen (see Idant Semen Banking below) and is only possible
because of the unique advantages of frozen blood storage. Infectious diseases
such as HIV and Hepatitis have a window period of 3-6 months during which a
donor may be infected but has not yet produced the antibodies that are required
for the diseases to be detected. With Quality Assured Blood, a donor can be
tested for infectious disease, and can donate blood to be frozen and placed in
quarantine. The blood will then be retested after six months has elapsed, and
the blood will be removed from quarantine if it re-tests free of infectious
agents. This blood can then be used as donor blood with markedly reduced risk
of infectious disease transmission.

The Company has also
trademarked its Blood Optimization Program® (BOP) for maximizing
blood safety during surgery. The BOP uses a combination of blood volume
measurement, pre-surgical treatment of blood volume deficits, and frozen
autologous blood transfusion to maximize patient outcomes following surgery.
The Company has applied for and received trademark protection for the BOP name
and filed in February of 2007 for a methods patent for the Blood Optimization
Concept.

Under the Blood Optimization
Program, a patient can donate blood well in advance of surgery and store it in
a frozen state, leaving sufficient time to restore of the depleted blood before
entering surgery. Frozen red blood cells can be stored for 10 years, and frozen
plasma can be stored for 7 years. This lengthy storage time contrasts with the
42 day storage period for red blood cells that have been refrigerated. Once
thawed, frozen blood remains fresh and highly oxygenated for 2 weeks, rather
than just 24 hours. Additionally, blood volume measurement prior to surgery can
identify patients with existing blood volume deficits such as reduced red cell
volume, which can be treated with the medication erythropoietin.

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The main elements of the
Blood Optimization Program are (a) blood volume measurement to determine the
current blood volume status of the patient and suitability for blood donation;
(b) if the patient is anemic or red cell volume deficient, treatment with
epoietin alfa (Procrit® and Epogen® manufactured by
Amgen) to stimulate rapid red cell replacement; (c) if the patient is suitable
for blood donation, remove one unit of blood and process for freezing of both
red cells and plasma. Frozen blood requires special processing with a sterile
cryopreservative agent to prevent destruction of the red cells during freezing;
(d) treat the patient with epoietin alfa where appropriate to stimulate more
rapid replacement of red cells; (e) repeat blood donation to provide enough
blood availability at the time of surgery so the patient will not need to
receive any blood but their own; and (f) quantify the amount of blood donated,
where time permits, so that patients will have no more than a 20% red cell
deficit at the end of the post operative period. At the present time, elderly
patientsare sometimes permitted to remain with red cell volume deficits as
great as 50% without receiving replacement transfusions.

In addition to the desire to
provide improved patient care, hospitals may have a significant monetary
incentive to participate in the Blood Optimization Program. Surgical patients
who experience complications from undertransfusion or adverse donor transfusion
reactions require extended hospital stays, for which the hospitals are often
not reimbursed. Hospitals operate under a Diagnostic Regulatory Guideline (DRG)
system for reimbursement, which means that a hospital will be reimbursed
according to a diagnosis, not according to the number of days that a patient
spends in the hospital. A low blood volume detection and treatment program
could significantly reduce complications and enable shorter hospital stays,
with corresponding financial rewards for the host hospital.

In 2005 the Company hired a
part-time individual with marketing experience to work on the Blood
Optimization Program (BOP). This program is intended to incorporate Daxors
BVA-100 Blood Volume Analyzer and its subsidiarys frozen autologous blood
banking, increasing awareness and utilization of both these technologies. This
individual has been meeting with administrative blood bank representatives to
develop strategies that would enable hospitals to utilize these technologies to
optimize blood volumes in patients undergoing surgery. The combination of blood
volume measurement and frozen blood banking provides the unique opportunity to
simultaneously minimize the consequences of blood loss by optimizing a
patients blood volume before surgery, and maximize transfusion safety by
making sure that a patients own blood is available if transfusion is required.
While response to this program has been limited so far, the Company has signed
agreements with four hospitals to participate in this program.

Idant Semen (Sperm) Banking

Idant, a subdivision of the
wholly owned subsidiary Scientific Medical Systems, has been a pioneer in the
technology and commercial application of long-term cryopreservation of human
sperm. The division provides frozen semen services to physicians worldwide.
Idant holds approximately 50,000 human semen units in long-term storage at its
central New York City facility. The Company was a founding member of the
American Association of Tissue Banks. The company stores semen from a large
cross-section of anonymous donors and is able to offer semen from donors with
varying physical characteristics that meet our clients needs. The Company
maintains a complete physical description of each donor on file and, when
needed, can match multiple physical characteristics and other desired special
characteristics to those of the sterile father. The increased likelihood of a
child who resembles his recipient father can make a child conceived via
artificial insemination much more psychologically acceptable to the father.

The Company also provides
cryostorage for later personal use. Semen storage may be desirable for men who
have been found to be marginally fertile and who may therefore attain improved
fertility with artificial insemination, who anticipate impaired fertility or
sterility such as may occur with chemotherapy or radiation for cancer
treatment, or who are undergoing a vasectomy but may nevertheless wish to
father children in the future. Cancer patients who store semen are frequently
in their teens or twenties; by utilizing cryopreservation they will be able to
father their own children in later years, despite the high risk of sterility
and birth defects associated with anti-cancer treatments. The Company receives
referrals for these services from multiple sources, primarily physicians.

Idant has been a pioneer in
the safety of anonymous semen donation. In 1985, Idant was the first semen bank
to institute an AIDS quarantine period for frozen semen. Viruses such as HIV
and Hepatitis B or C may be undetectable for up to six months in infected
individuals. By testing the donor prior to and then again six months after
donation, the risk of Hepatitis and HIV transmission can be virtually
eliminated. Four years after Idant Laboratories pioneered this approach (in
1989), New York and a number of other states enacted laws requiring semen banks
to quarantine frozen sperm for a minimum of six months.

In 2004 Idant received confirmation
of two successful conceptions utilizing sperm stored at Idant for,
respectively, 21 and 28 years. This was the longest successful cryopreservation
of sperm in medical history, and these achievements were published in an
October 2005 publication in Fertility and
Sterility. The Company believes that its unique storage system for
human sperm is responsible for this extraordinary success.

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RESEARCH AND DEVELOPMENT

As detailed in Item 2
Properties, in January of 2007 Daxor acquired additional space with the
intention of being able to further expand our research and development and to
be prepared, in the future, for increased demand for our products.

When Daxor Corporation
developed the first semi-automated blood volume measurement system approved by
the FDA, it encountered a generation of physicians who had little or no direct
experience with blood volume measurements. The one exception was hematologists
who used the test to diagnose a single condition, polycythemia vera (elevated
red cell volume) and who preferred to use another method (Chromium 51) to
measure red cell volume.

Daxor presumed that the
benefits of an automated system which involved no transfusion risks and which
measured both red cell count and plasma volume would be readily and widely
accepted. However, key personnel at the first facilities to use the BVA-100
(Lutheran Medical Center, Maimonides Hospital, Englewood Hospital, Brooklyn
Hospital, Coney Island Hospital, and Long Island Jewish Hospital) returned the
system after performing beta testing because they could not convince their
administrators that the test was cost-effective. A blood volume measurement can
cost the hospital $450 - $600 to perform. In contrast, a surrogate test such as
a hemoglobin or hematocrit, although it may be quite inaccurate, can be
performed for just $5 - $10. The company therefore has to demonstrate that the
savings obtained through increased lifespans and shortened hospital stays makes
the test cost-effective.

Until mid-2002 the company
employed a limited sales staff with heavy emphasis on scientific training.
Management then began to recruit a professional sales and marketing team. By
mid-2003, it became apparent from feedback acquired by the new sales team that
in addition to cost concerns associated with the instrument, there were
additional technical problems that needed to be overcome.

Among the major problems was
that the blood volume analyzer was functioning on a DOS operating platform that
dated from the mid-1980s. This placed a number of restrictions on the
flexibility of the system. Another major problem was that all gamma counters in
use at that time for clinical measurement were considered high complexity
instruments under the Clinical Laboratory Improvement Act (CLIA). This meant
that the instrument had to be used by a facility headed by an individual with
advanced specialized background training.

By 2003 the company sold
only five instruments despite the fact that it instituted trial agreements with
a number of hospitals. It had become clear that major changes were needed. By
early 2004 the company decided to expand its research and development
facilities in Oak Ridge, Tennessee, to develop a more advanced version of the
system which would run on a Windows operating platform. The Company developed a
new network of subcontractors, including a group of specialized computer
programmers, who were absorbed into the Company as full-time employees in
January 2005. The Company also contracted with an original equipment
manufacturer (OEM) to build the instrument and to retain for itself the final
quality assurance testing operations.

A significant number of
engineering changes were included in converting the BVA-100 DOS version into
the BVA-100 Windows version. As a result of these improvements, the new BVA-100
system was categorized by CLIA as a medium complexity instrument, which made it
accessible to a wider group of potential users. In addition, the many
improvements allowed the system to better meet users needs. To the best of our
knowledge, this is the only radioisotope nuclear medical instrument which has
been designated as a medium complexity instrument because of the quality
assurance controls that have been built into the instrument.

In addition to improving the
BVA-100, the Company has dedicated considerable time and effort to physician
education. A limited number of account representatives work primarily to
educate physicians (clinicians) on how best to utilize the instrument. The
company also offers unlimited clinical assistance through the services of its
Chief Scientist and CEO, Joseph Feldschuh, M.D., as well as Gary Fischman, PhD,
Dpm, Director of Research. Additional staff members, including John
Reyes-Guerra, the Vice President of Sales and Marketing, and Sandra Gilbert,
PhD, the Clinical Research Coordinator, devote part or all of their time to
supporting the development, completion, and publication of clinical studies. In
addition, the Company has four Medical Directors on staff: (1) Donald
Margouleff, M.D., former Professor of Medicine at NYU School of Medicine and
former Chief of the Division of Nuclear Medicine at North Shore University
Hospital; (2) Ariel Distenfeld, M.D., former Director of the Blood Bank at
Cabrini Medical Center, who established the second autologous blood bank in New
York; (3) Robert Rosenthal, M.D., former hematologist and former Director of
the Blood Bank for the Hospital for Joint Diseases; (4) Elena Agranovsky,
Medical Director at Bayside Diagnostics Laboratory and former Chief of the
Hematology Laboratory at Elmhurst General Medical Center. The Company also
continues to provide financial and clinical support for studies at various
institutions.

MARKETING

The Companys marketing of
the blood volume analyzer can be divided roughly into three phases: initial
beta testing at local facilities, late-stage beta testing at nationally
recognized institutions  with an emphasis on developing studies for
publication, and marketing of the instrument for clinical use. During
late-stage beta testing and the marketing phase, the instrument continued to
experience a number of major technical improvements and alternations.

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Initial Beta Testing (1999-2000)

After obtaining FDA approval
for the instrument and the accompanying Volumex kit, the Company began beta
testing the BVA-100 at local hospitals in 1999. The Company had no prior
experience in marketing a medical instrument or device and relied on a limited
number of sales staff who had specialized technical knowledge and a background
in physiology. From 1999 to 2000, the Company loaned the instrument and
provided associated kits to a number of local hospitals free of charge. In some
cases, these hospitals also received direct financial support for performing
research studies. The participating facilities at that time included Lutheran
Medical Center, Maimonides Hospital, Brooklyn Hospital, Coney Island Hospital,
and Long Island Jewish Hospital.

Some hospitals, such as
Lutheran Medical Center, were able to publish their findings in peer-reviewed
clinical journals. Some of these early studies clearly demonstrated that
invasive techniques such as pulmonary artery catheterization (PAC) were not
nearly as accurate as direct measurement of blood volume in assessing a
patients volume status. In some cases, the hospitals performed studies but
were unsuccessful in publishing their results.

After these facilities
completed their studies, they returned the BVA-100 instruments to the Company
because they could not convince their respective administrators that the test
was cost-effective. During this time, the Company sold only a single Blood
Volume Analyzer.

Late Stage Beta Testing (2000-2002)

As a result of feedback from
the initial beta testing, the Company recognized that it was essential for the
instrument to be placed in nationally recognized facilities. These facilities,
because they worked with more complex medical conditions and had wider name
recognition, were more likely to recognize the benefits of blood volume
measurement and to publish their results. Additionally, studies from these
prestigious institutions were more likely to be highly regarded by other
facilities. The Company arranged for the loan of an instrument to the Cleveland
Clinic, the Mayo Clinic, and the NYU Medical Center. US News & World Report publishes an annual ranking of
6200 hospitals in the United States. At the time, the Mayo Clinic and The
Cleveland Clinic ranked respectively #2 and #3 in the annual ranking of
hospitals, while the Cleveland Clinic Cardiovascular Department ranked # 1 in
the U.S. After trial agreements lasting more than 1 year, these facilities
purchased their instruments and paid for Volumex kits as they continued to
utilize the Blood Volume Analyzer.

Despite the positive
response from these facilities, it became increasingly apparent that the
company needed significantly more clinical studies to support the reliability,
utility, and cost-effectiveness of blood volume measurement with the BVA-100.
It also became clear that the original version of the BVA-100, which was based
on a DOS platform, needed to be changed in order to provide adequate features
and flexibility to meet users needs (see Research and Development section
above).

It has been an ongoing goal
of the Company to partner with medical facilities to develop studies that will
result in publications in peer-reviewed journals, with the intent of increasing
awareness and acceptance of the need for accurate, rapid blood volume
measurement. A number of studies initiated between 2000 and 2002 were
eventually published in 2004 and later. This time lag in publishing clinical
study results reflects both the time needed to complete the study itself, as
well as the fact that it can take a year or more from submission of a
manuscript to its final publication.

Marketing Phase (2002-present)

By 2002, the Company
recognized that it needed to recruit an experienced medical device marketing
staff. In September 2002 the Company hired a National Sales Manager and three
Regional Sales Managers with extensive experience in the medical device and
nuclear medicine field. Subsequently, several different sales programs were
tested. It was believed that the best program format consisted of a National
Sales Manager supported by regional sales representatives. John Reyes-Guerra,
one of the original regional vice presidents, was made Vice President of Sales
and Marketing.

The marketing team has made
great progress in identifying which facilities and departments are most able to
utilize the BVA-100 in a cost-effective manner and has developed a repertoire
of educational and marketing material. Depending on a facilitys needs and its
ability to perform studies that are likely to increase widespread acceptance of
the BVA-100, the Company offers the Blood Volume Analyzer to potential users on
a sale, lease, or loan basis. Facilities that receive a loan of the instrument
for research pay for the Volumex kits that are not used purely for research
purposes, which can provide a source of ongoing revenue for the Company. These
users include hospitals, surgery centers, intensive care units, and imaging
centers (radiology). The Company also has been demonstrating its equipment at
major trade shows such as nuclear medicine, surgical anesthesiology, and trauma
conferences. In 2007 the Company exhibited at a total of 20 national, local and
regional trade shows, and in 2008 it exhibited at 31 national and regional
trade shows.

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Despite its success at a few
key institutions, the BVA-100 continues to encounter some significant obstacles
to widespread acceptance. The Company has attempted to balance sales efforts
with education and the development and support of continued clinical research.
Towards this goal, the following eighteen original research articles have been
published since 2002 which utilize blood volume data obtained from the BVA-100:

|                                                                                                                               |                                                                                                                                                                                                                                                                                                           
|------------------------------------------------------------------------------------------------------------------------------ | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1.                                                                                                                             | Kalra P, Anagnostopoulos
  C, Bolger AP et al. The Regulation and Measurement of Plasma Volume in Heart
  Failure. JACC. 2002; 391:
  1901-1908.                                                                                                                                                          
|                                                                                                                               |                                                                                                                                                                                                                                                                                                           
|2.                                                                                                                             | Shevde K, Pagala M,
  Tyagaraj C et al. Preoperative Blood Volume Deficit Influences Blood
  Transfusion Requirements in Females and Males Undergoing Coronary Bypass
  Graft Surgery. J Clin Anesth.
  2002; 14:512-517.                                                                                 
|                                                                                                                               |                                                                                                                                                                                                                                                                                                           
|3.                                                                                                                             | Alrawi SJ, Miranda LS,
  Cunningham JN et al. Correlation of Blood Volume Values and Pulmonary Artery
  Catheter Measurements. Saudi Med J.
  2002; 23:1367-1372.                                                                                                                                         
|                                                                                                                               |                                                                                                                                                                                                                                                                                                           
|4.                                                                                                                             | Androne AS, Katz SD, Lund
  L et al. Hemodilution is Common in Patients with Advanced Heart Failure. Circulation. 2003; 107:226-229.                                                                                                                                                                      
|                                                                                                                               |                                                                                                                                                                                                                                                                                                           
|5.                                                                                                                             | James KB, Stelmach K,
  Armstrong R et al. Plasma Volume and Outcome in Pulmonary Hypertension. Tex Heart Inst J. 2003; 30:305-307.                                                                                                                                                                       
|                                                                                                                               |                                                                                                                                                                                                                                                                                                           
|6.                                                                                                                             | Mancini DM, Katz SD, Lang
  CC et al. Effect of Erythropoietin on Exercise Capacity in Patients with
  Moderate to Severe Chronic Heart Failure. Circulation.
  2003; 107:294-299.                                                                                                                        
|                                                                                                                               |                                                                                                                                                                                                                                                                                                           
|7.                                                                                                                             | Katz SD, Mancini D,
  Androne AS et al. Treatment of Anemia in Patients with Chronic Heart Failure.
  J Card Fail. 2004; 10 (Suppl
  1): S13-S16.                                                                                                                                                         
|                                                                                                                               |                                                                                                                                                                                                                                                                                                           
|8.                                                                                                                             | Androne AS, Hryniewicz K,
  Hudaihed A et al. Relation of Unrecognized Hypervolemia in Chronic Heart
  Failure to Clinical Status, Hemodynamics, and Patient Outcomes. Am J Cardiol. 2004; 93:1254-1259.                                                                                                  
|                                                                                                                               |                                                                                                                                                                                                                                                                                                           
|9.                                                                                                                             | James KB, Troughton RW,
  Feldschuh J et al. Blood Volume and Brain Natriuretic Peptide in Congestive
  Heart Failure: A Pilot Study. Am Heart J,
  2005; 150:984.e1-984.e6.                                                                                                                              
|                                                                                                                               |                                                                                                                                                                                                                                                                                                           
|10.                                                                                                                            | Jacob G, Raj S, Ketch T et
  al. Postural Pseudoanemia: Posture-Dependent Change in Hematocrit. Mayo Clin Proc. 2005; 80:611-614.                                                                                                                                                                         
|                                                                                                                               |                                                                                                                                                                                                                                                                                                           
|11.                                                                                                                            | Raj SR, Biaggioni I,
  Yamhure PC et al. Renin-Aldosterone Paradox and Perturbed Blood Volume
  Regulation Underlying Postural Tachycardia Syndrome. Circulation. 2005; 111:1574-1582.                                                                                                                    
|                                                                                                                               |                                                                                                                                                                                                                                                                                                           
|12.                                                                                                                            | Dworkin HJ, Premo M, Dees
  S. Comparison of Red Cell and Whole Blood Volume as Performed Using Both
  Chromium-51 Tagged Red Cells and Iodine-125 Tagged Albumin and Using I-131 Tagged
  Albumin and Extrapolated Red Cell Volume. Am
  J Med Sci, 2007; 334:37-40.                                     
|                                                                                                                               |                                                                                                                                                                                                                                                                                                           
|13.                                                                                                                            | Feldschuh J and Katz S.
  The Importance of Correct Norms in Blood Volume Measurement.Am J Med Sci, 2007; 334:41-46.                                                                                                                                                                                      
|                                                                                                                               |                                                                                                                                                                                                                                                                                                           
|14.                                                                                                                            | Fouad-Tarazi F, Calcatti
  J, Christian R et al. Blood Volume Measurement as a Tool in Diagnosing
  Syncope. Am J Med Sci. 2007;
  334:53-56.                                                                                                                                                             
|                                                                                                                               |                                                                                                                                                                                                                                                                                                           
|15.                                                                                                                            | Abramov D, Cohen RS, Katz
  SD et al. Comparison of Blood Volume Characteristics in Anemic Patients with
  Low Versus Preserved Left Ventricular Ejection Fractions. Am J Cardiol. 2008; 102:1069-1072.                                                                                                   
|                                                                                                                               |                                                                                                                                                                                                                                                                                                           
|16.                                                                                                                            | Yamauchi H, Buik-Aghai EN,
  Yu M et al. Circulating Blood Volume Measurements Correlate Poorly with
  Pulmonary Artery Catheter Measurements. HawaiI
  Medical Journal. 2008; 67:8-11.                                                                                                                  
|                                                                                                                               |                                                                                                                                                                                                                                                                                                           
|17.                                                                                                                            | Takanishi DM, Yu M, Lurie
  F et al. Peripheral Blood Hematocrit in Critically Ill Surgical Patients: An
  Imprecise Surrogate of True Red Blood Cell Volume. Anesth Analg. 2008; 106:1808-1812.                                                                                                          
|                                                                                                                               |                                                                                                                                                                                                                                                                                                           
|18.                                                                                                                            | Takanishi DM, Biuk-Aghai
  EN, Yu M et al. The Availability of Circulating Blood Volume Values Alters
  Fluid Management in Critically Ill Surgical Patients. Am J Surg. 2009; 197:232-237.                                                                                                               
|                                                                                                                               |                                                                                                                                                                                                                                                                                                           
|In addition, the following
  presentations which were made at major medical conferences may be published
  in the near future:
|                                                                                                                               |                                                                                                                                                                                                                                                                                                           
|1.                                                                                                                             | 2006 Heart Failure Society
  of America Poster Presentations - Columbia Presbyterian College of Surgeons
  and Physicians, New York, NY -The Administration of Subcutaneous
  Erythropoietin in Elderly Patients with Heart Failure and Normal Ejection
  Fraction Over Three Months is Safe and Effective
|                                                                                                                               |                                                                                                                                                                                                                                                                                                           
|2.                                                                                                                             | 2006 Society of Critical
  Care Medicine Poster Presentation - The Queens Medical Center, Honolulu, HI
   Blood Volume Measurements: Impact on Fluid Management                                                                                                                                         
|                                                                                                                               |                                                                                                                                                                                                                                                                                                           
|3.                                                                                                                             | 2007 Society of Critical
  Care Medicine Poster Presentation  The Queens Medical Center, Honolulu, HI
   Does Blood Volume and Brain Natriuretic Peptide Correlate?                                                                                                                                    
|                                                                                                                               |                                                                                                                                                                                                                                                                                                           
|4.                                                                                                                             | 2008 Society of Critical
  Care Medicine Poster Presentation  The Queens Medical Center, Honolulu, HI
   Right Ventricular End Diastolic Volume and Brain Natriuretic Peptide May
  Not Reflect Intravascular Volume Status in Critically Ill Patients.                                                
|                                                                                                                               |                                                                                                                                                                                                                                                                                                           
|5.                                                                                                                             | 2008 Society of Critical
  Care Medicine Poster Presentation  The Queens Medical Center, Honolulu, HI
   Stroke Volume Variation as a Marker of Intravascular Volume Compared to
  Blood Volume Measurement                                                                                            
|                                                                                                                               |                                                                                                                                                                                                                                                                                                           
|6.                                                                                                                             | 2009 Society of Critical
  Care Medicine Poster Presentation  The Queens Medical Center, Honolulu, HI
   A Comparison of Pulse Pressure Variation and Blood Volume Measurement                                                                                                                         

13

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PATENT AND COPYRIGHT PROTECTION

Existing Patents

The Company owns separate
United States patents on its Blood Volume Analyzer BVA-100 and on its Volumex
injection kit. These are the only U.S. patents ever issued for an automated
instrument dedicated to the measurement of total human blood volume for a
specific individual. The Company also received a European patent covering 12
countries and received the first patent ever issued in Japan for an instrument
to measure human blood volume.

The instrument is designed
to work with the Volumex injection kit, which is manufactured by the Company.
It is theoretically possible to use the Blood Volume Analyzer without the kit
by preparing the reagents used for the test. However, the cost and time for
such preparations would be non economical and it is unlikely that a purchaser
of the instrument would use it without purchasing the reagent kit. This is the
first U.S. patent ever issued for a system that permits a fixed quantified
amount of isotope to be injected for diagnostic purposes. The injection system
was specifically designed for use with the BVA-100. However, it can be used for
other diagnostic test purposes where a precise complete quantitative injection
of a diagnostic reagent is required.

The blood bank has received
two recent trademarks: one is for Quality Assured Blood and the other is for
the Blood Optimization Program (BOP). The Company has applied for and received
trademark protection for the BOP name.

In February, 2007 the
companys patent attorneys filed a methods patent for the Companys Blood
Optimization Program (BOP). The program is designed to ensure, where possible,
that patients undergoing surgery enter surgery with a normal amount of blood,
both plasma volume and red cell volume. It is also designed to enable patients
to have their own autologous blood available to them to replace blood lost
during surgery and in the post-operative period.

The Blood Optimization
Methods Program Patent is designed to eliminate, where possible, the types of
medical and surgical situations which can result in stroke, heart attack, or
even death. The use of frozen blood as opposed to refrigerated blood eliminates
many of the aging effects which have been demonstrated in refrigerated blood.

Future Projects and Potential Patents

The Company expects to file
additional patents for tests associated with the BVA-100 in the near future to
provide additional applications, as outlined below:

Glomerular Filtration Rate

The Company is working on an
instrument that will automate the measurement of glomerular filtration rate
(GFR), whichis a very important and sensitive test of kidney function. At
present, this test is performed infrequently because of the difficulty in the
current methodology. The Company believes that it can automate the glomerular
filtration rate test, which will make it more feasible for regular medical use.

Measurement of Total Body Albumin

The Company is planning to
file a patent for the measurement of total body albumin using measurements from
the Blood Volume Analyzer. Albumin is a major carrier of hundreds of vital
components within the circulatory system and is a key molecule responsible for
maintaining oncotic pressure. Abnormal total body albumin is common in many
disease states, such as heart failure, cancer, and diabetes. Burn patients in
particular experience serious loss of albumin, and replacement quantities may
be difficult to calculate. The ability to measure total body albumin accurately
would be expected to facilitate more precise albumin replacement therapy.

Needleless Injection System

The Company is reviewing an
alternative injection kit system that can be used without a needle. Some
intensive care units emphasize an elimination of needles wherever possible. The
Volumex kit is injected into an intravenous system flowing into the patients
vein, rather than through a direct needle stick. Thus, a person using a kit who
accidentally stuck himself would not be exposed to the patients blood.
Nevertheless, we think it would be an advantage if we can develop a needleless
system.

14

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UL and CE Mark

In March, 2007, Daxor
finished the final phase, inspection, to receive U.L. (Underwriters Laboratory)
approval. The process consisted of Daxor submitting the complete BVA-100 and
associated panel P.C. for physical inspection and testing, including the
strenuous electrical inspection safety examination. Blood volume analyzers
shipped after April 2007 bear the U.L. mark.

Daxor is in the process of
achieving the CE mark. CE is a self-certification mark for which the manufacturer
must possess proof of compliance with the standards. Daxors immediate goal is
to pass the U.S. and Canadian standards for CE. As part of the UL testing,
Daxor has passed the electrical safety part and possesses its verification from
the UL for this component. The second component is EMC (electromagnetic
compatibility). For Daxor to be able to market and distribute the instrument in
countries other than the U.S. and Canada, it would need to pass those countrys
specific requirements, which may or may not have been met by the EMC and
electrical testing, and would be required in many countries to translate
existing documentation into that countrys primary language.

Idant Semen Storage Client
Identification

The Company is also
exploring the submission of a patent for methodology of improving client
identification in its semen bank. It is introducing additional patient
protection for stored donor semen, which may be eligible for patent protection.
In the 34 years of Idant Semen Bank operations, there has never been a mix-up
in any stored specimen.

COMPETITION

BVA-100 Blood Volume Analyzer

The medical technology
market is intensely competitive. However, there are no direct competing
instruments manufactured or marketed that perform rapid, accurate semi-automated
blood volume analysis, similar to the BVA-100. The Company believes that its
receipt of United States, European and Japanese patents for its Blood Volume
Analyzer provides significant protection against any future potential
competition in the blood volume analysis field.

The receipt of the U.S.
patent for the injection kit system provides significant additional protection,
as the Company believes that the kits will be a major source of ongoing
revenue. The Company believes that its main hindrance to market acceptability,
rather than any specific competition, will be the need to demonstrate that its
blood volume measurement equipment is capable of producing accurate data in a
cost-effective manner.

Blood Banking

The Scientific Medical
Systems frozen blood bank is the only facility that provides long-term
personal frozen blood storage in the Northeastern United States. Multiple
companies that previously attempted to provide long-term personal blood storage
to members of the public were unsuccessful.

To date, the Company has not
made a profit from its blood banking services. However, the Company believes
that its acquisition of new FDA-approved technology (see above) may enable
frozen blood banking services to eventually become financially self-sustaining
and profitable. This technology also opens up the potential for paid,
double-tested donors, who are tested before blood storage, then placed in
quarantine for 6 months, and then tested again.

In the past, the Company has
experienced significant opposition from some non-profit blood banking
organizations that viewed frozen autologous blood as a potential competitive
threat to their operations. It is the Companys intention to form alliances
with hospitals utilizing the Blood Optimization Program. The Company views
personal blood storage as a supplement to and not as competition to other
existing blood donor services. The Company will initially focus its attention
on facilities within a 200 mile radius of New York City. If the Program proves
successful, the Company will then develop satellite facilities in conjunction
with other medical partners in other parts of the United States. For further
discussion, please see the patent and copyright section above.

Semen Banking

There are at least 300 sperm
banks in the United States operated either by commercial entities or by
academic institutions. The Company believes that its unique storage system,
coupled with clear documentation of successful conception from the longest-term
frozen stored semen in medical history, will help to expand its marketing
efforts. The Companys use of straws for semen storage, and the unique carousel
storage system which keeps the frozen semen straws continuously submerged in
liquid nitrogen, avoids any type of cross contamination with other samples. The
Company has also developed a web site (www.Idant.com) that will be helpful for
marketing purposes.

15

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WARRANTIES

The Company recognizes
warranty and indemnification obligations under SFAS No.5 (As Amended),
Accounting for Contingencies (SFAS 5), FASB Interpretation No. 45,
Guarantors Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others and FASB Concepts Statement
(SFAC) No.7 (As Amended), Using Cash Flow Information and Present Value in
Accounting Measurements. These pronouncements require a guarantor to recognize
and disclose a liability for obligations it has undertaken in relation to the
issuance of the guarantee.

The Company warrants that
its products are free from defects in material and workmanship for a period of
one year from the date of initial acceptance by our customers. The warranty
does not cover any losses or damage that occurs as a result of improper
installation, misuse or neglect and repair or modification by anyone other than
the Company or its authorized repair agent. The Companys policy is to accrue
anticipated warranty costs based upon historical percentages of items returned
for repair within one year of the initial sale. The Companys repair rate of
product under warranty has been minimal and a historical percentage has not
been established. The Company has not provided for any reserves for such
warranty liability.

The Company generally
warrants its Blood Volume Analyzers against defects in material and workmanship
for a period of up to one year from the date of shipment, plus any extended
warranty period purchased by the consumer. With respect to semen banking and
blood banking, the Company warrants that its methods of storage are in compliance
with all existing federal and state regulations.

GOVERNMENT REGULATION

The development, testing,
production and marketing of medical devices are subject to regulation by the
FDA under the Federal Food, Drug and Cosmetic Act, and may be subject to regulation
by similar agencies in various states and foreign countries.

The governing statutes and
regulations generally require manufacturers to comply with regulatory
requirements designed to assure the safety and effectiveness of medical
devices. The FDA clearance for marketing of the Blood Volume Analyzer, BVA-100,
and the associated quantitative injection kit marks one of the most important
milestones in the history of Daxor. The products manufactured by and for the
Company with regard to the BVA-100 are subject to continuing FDA regulations
and inspections.

The New York State
Department of Health regulates the Companys Idant Semen and Blood Banks within
New York State. The Idant Semen Bank and Blood Bank are divisions of Scientific
Medical Systems, which is a subsidiary wholly owned by the Daxor Corporation.
Scientific Medical Systems has its own separate directors. These facilities are
licensed and annually inspected by the New York State Department of Health.

PRODUCT LIABILITY EXPOSURE

The Companys business
involves the inherent risk of product liability claims. The Company currently
maintains general product liability insurance and an umbrella liability policy,
which the Company believes are sufficient to protect the Company from any
potential liability risks to which it may be subject. However, there can be no
assurances that product liability insurance coverage will continue to be
available or, if available, that it can be obtained in sufficient amounts or at
a reasonable cost.

ENVIRONMENTAL

The Company believes it is
in compliance with the current laws and regulations governing the protection of
the environment and that continued compliance would not have a material adverse
effect on the Company or require any material capital expenditures. Compliance
with local codes for the installation and operation of the Companys products
is the responsibility of the end user.

EMPLOYEES

On February 24, 2009, the
Company had a labor force of thirty six, all of which were leased through ADP
Total Source. The Company maintains a work force at its main headquarters in
the Empire State Building in New York City, as well as a manufacturing division
and a technology support group in Oak Ridge, Tennessee, and a technology
support group. The Company believes that its labor force relations are good.

Item 1A: Risk Factors

The Company has incurred
substantial operating losses over the past five years. These losses have mainly
resulted from steadily increasing expenses for marketing and research and
development as the Company attempts to build a market for its products. During
this time, the Company has relied on income from investments to partially cover
operating losses and provide the necessary funds for expanded research and
development and marketing.

16

---



In the Companys fiscal year
ended December 31, 2008, the sale of Blood Volume Kits accounted for 57.1% of
the Companys total consolidated sales. There were three customers (hospitals)
that accounted for 49.5% of the Companys sale 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 in our Form
10-Q for the period ended September 30, 2008, 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 reimbursement policy for
hospital outpatients through December 31, 2007 included 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
only includes 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 does not entirely cover
the costs associated with the procedure and the radiopharmaceutical.

In response to Medicares
change in its reimbursement policy for diagnostic radiopharmaceuticals, Daxor
has lobbied CMS both individually and as a member of the Society of Nuclear
Medicines APC Task Force, which is a select group of representatives from
industry and healthcare that represents the more than 16,000 nuclear medicine
professionals in the United States. One of the missions of the APC Task Force
is to work directly with the CMS in an attempt to amend the current policy
limiting the reimbursement of diagnostic radiopharmaceuticals for outpatient
diagnostic services.

Daxor has also begun to
concentrate its marketing and sales effort on inpatient diagnostic services by
demonstrating the cost savings associated with the use of the blood volume
analysis in the care of critically ill patients.

At December 31, 2008,
approximately 80% of the fair market value of the Companys investment
portfolio consisted of utility stocks whose market price can be sensitive to
rising interest rates. There is a risk that in an environment of rising
interest rates that the market value of these stocks could decline and the
utilities could reduce their dividend payments to compensate for increased
interest expense. This could have an adverse effect on the Companys ability to
fund research and development and marketing efforts necessary to build a market
for their products.

At December 31, 2008, the
Companys investment portfolio consisted of 104 separate stocks. The top three
holdings at December 31, 2008 comprised approximately 35% of the value of the
investment portfolio. These same three holdings accounted for approximately 36%
of the dividend income for the year ended December 31, 2007. A reduction in
dividend payments by these companies could have a material effect on the
Companys dividend income.

The Company also receives
significant income from option sales related to its investment portfolio. The
income from options is variable, and less predictable than income from
dividends from the Companys portfolio, which have minor variations.

The Company has a
significant dependence on a single individual, Dr. Joseph Feldschuh, who is the
CEO of the Company. Dr. Feldschuh is the Chief Scientist of the Company and is
believed to have more experience with blood volume measurement than any other
physician in the United States. He is involved in assisting and advising
various physician groups that are conducting research. His scientific knowledge
would be difficult to replace. Dr. Feldschuh is also the sole individual
responsible for investment decisions with respect to the Companys investment
portfolio. Loss of his part time services in this area would be expected to
result in a material reduction in return on the Companys assets.

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.

Item 2: Properties

In December 2002, the
Company signed a twelve year lease extension commencing January 1, 2003, for
its existing facility at the Empire State Building. The Company has occupied
this space since January 1992. The Company currently occupies approximately
7,200 square feet. The lease has a two year option for renewal after ten years.
There are options for an additional 18,000 square feet of space. The Company
has a pilot manufacturing facility in Oak Ridge, Tennessee which is currently
manufacturing the BVA-100 Blood Volume Analyzers, and where R&D activities
are performed.

17

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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 sq. ft. buildings. The
buildings were constructed in 2004; 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 property was $775,000 plus closing fees. Daxor financed
the purchase with a $500,000 10-year mortgage, with the first five years fixed
at 7.49%, and the second 5 years to be reset in 2012. For the years ending
December 31, 2008 through December 31, 2011, principal and interest payments
will total $71,190 per year.

All Warehousing and
Distribution for the BVA-100 takes place along with related software support
and development at the facility located at 107 Meco Lane. Most of the Companys
Research and Development (R&D) and Verification and Validation (V&V)
functions are also fulfilled at this location. The Management Information
Support Function and Hardware Disaster Relief Center which mirrors and backs up
all computer activity in the New York City Headquarters is also located at 107
Meco Lane.

The building at 109 Meco
Lane is currently being used for radiopharmaceutical distribution. In order to
be able to use the facility for this type of distribution, we have obtained our
licenses from the Federal Nuclear Regulatory Commission and the State of
Tennessee for nuclear capability. The Company subsequently obtained a license
from the Food and Drug Administration (FDA) to become a re-shipper. This
license enables Daxor to receive batches of Volumex from our third party
manufacturer and to ship the doses to our clients.

In November of 2008, a
construction project commenced at 109 Meco Lane. Management expects the project
to be completed by the end of March 2009 and the total cost to be approximately
$1,500,000. The project involves the construction of laboratory and office
space.

The Company subleases a
small 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 annual amount of rental income received
from the President of the Company in each of the years ended December 31, 2008,
2007 and 2006 was $11,478, $11,022 and $10,646. For the years ended December
31, 2008, 2007 and 2006 the Company had sublease income from non-affiliated
third parties of $0, $0 and $3,000. The sublease income is shown on the Income
Statement as part of other revenues.

Item 3: Legal Proceedings

The Company has one pending
legal action which covers the normal range of its business. It is the opinion
of management that the Company has substantial legal and factual defenses to
contest this action. The Company intends to aggressively and vigorously defend
this action.

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

No matters were submitted to
a vote of the stockholders during the fourth quarter of the fiscal year ended
December 31, 2008.

18

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PART II

Item 5: Market for Registrants Common Equity, Related
Stockholder Matters and
Issuer Purchases of Equity Securities.

The common stock is traded
on the American Stock Exchange under the symbol DXR.

|     |                  |  |      |       |     |   |       | 
|---- | ---------------- |  | ---- | ----- | --- | - | ----- | 
|2008 |                  |  | High |       | Low |  
|     |                  |  |      |       |     |  
|     |                  |  |      |       |     |   |       | 
|     | First
  Quarter  |  | $    | 14.75 |     | $ | 8.51  | 
|     | Second
  Quarter |  | $    | 19.00 |     | $ | 11.55 | 
|     | Third
  Quarter  |  | $    | 18.53 |     | $ | 14.99 | 
|     | Fourth
  Quarter |  | $    | 16.98 |     | $ | 13.47 | 
|     |                  |  |      |       |     |   |       | 
|2007 |                  |  | High |       | Low |  
|     |                  |  |      |       |     |  
|     |                  |  |      |       |     |   |       | 
|     | First
  Quarter  |  | $    | 14.65 |     | $ | 12.75 | 
|     | Second
  Quarter |  | $    | 15.75 |     | $ | 12.96 | 
|     | Third
  Quarter  |  | $    | 16.99 |     | $ | 14.02 | 
|     | Fourth
  Quarter |  | $    | 18.30 |     | $ | 12.75 | 

On February 20, 2009, the
Company had approximately 143 holders of record of the Common Stock. The
Company believes there are approximately 900 beneficial holders of their Common
Stock.

For the Year Ended December
31, 2008, the Company paid total dividends of $6,452,502 or $1.50 per share on
its Common Stock. The dividend of $1.50 per share was paid as follows: $0.25
per share on August 26th, $0.25 per share on November 26th
and a special dividend of $1.00 per share on December 30, 2008.

This is the first time the
Company has paid dividends since a single cash dividend of $0.50 per share on
the Common Stock in 1997. No dividends have been declared or paid in 2009 and
any future dividends will be dependent upon the Companys earnings, financial
condition and other relevant factors.

19

---



Item 6: Selected Financial Data.

The
following table sets forth certain selected financial data with respect to the
Company. The consolidated statements of operations data for the years ended
December 31, 2008, 2007, 2006 and 2005 are derived from our audited
consolidated financial statements that are included in this Form 10-K. The
consolidated statements of operations data for the year ended December 31, 2004
has been derived from audited consolidated financial statements that are not
included in this report.

Operations Data:

|                                                                 |  |                         |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|---------------------------------------------------------------- |  | ----------------------- | ---------- | ---- | - | ---------- | - | ---- | ---------- | ---- | - | ---------- | - | - | ---------- | -
|                                                                 |  | Year Ended December 31,
|                                                                 |  |                         |            |      |   |            |   |      |            |      |  
|                                                                 |  | 2008                    |            | 2007 |   | 2006       |   | 2005 |            | 2004 |  
|                                                                 |  |                         |            |      |   |            |   |      |            |      |  
|                                                                 |  |                         |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|Operating revenues                                               |  | $                       | 1,761,055  |      | $ | 1,869,779  |   | $    | 1,486,449  |      | $ | 1,343,538  |   | $ | 1,066,314  |  
|                                                                 |  |                         |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|Total revenues                                                   |  | $                       | 1,761,055  |      | $ | 1,869,779  |   | $    | 1,486,449  |      | $ | 1,343,538  |   | $ | 1,066,314  |  
|                                                                 |  |                         |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|                                                                 |  |                         |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|Costs and expenses:                                              |  |                         |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|Operations of laboratories & costs of
  production               |  |                         | 717,278    |      |   | 682,786    |   |      | 631,567    |      |   | 565,742    |   |   | 251,622    |  
|Research and development                                         |  |                         | 2,438,423  |      |   | 2,576,708  |   |      | 2,332,399  |      |   | 2,152,261  |   |   | 1,566,115  |  
|Selling, general and administrative                              |  |                         | 3,812,506  |      |   | 4,041,155  |   |      | 3,947,404  |      |   | 3,528,560  |   |   | 2,790,444  |  
|                                                                 |  |                         |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|Total costs and expenses                                         |  |                         | 6,968,207  |      |   | 7,300,649  |   |      | 6,911,370  |      |   | 6,246,563  |   |   | 4,608,181  |  
|                                                                 |  |                         |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|                                                                 |  |                         |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|                                                                 |  |                         |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|Loss from operations                                             |  |                         | (5,207,152 | )    |   | (5,430,870 | ) |      | (5,424,921 | )    |   | (4,903,025 | ) |   | (3,541,867 | )
|                                                                 |  |                         |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|                                                                 |  |                         |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|Other income and expenses:                                       |  |                         |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|Dividend income                                                  |  |                         | 2,509,966  |      |   | 2,419,476  |   |      | 2,273,737  |      |   | 2,511,054  |   |   | 1,990,669  |  
|Gains on sale of investments                                     |  |                         | 17,249,716 |      |   | 14,853,934 |   |      | 3,316,710  |      |   | 1,515,653  |   |   | 989,599    |  
|Mark to market of short positions                                |  |                         | 5,364,215  |      |   | 357,337    |   |      | (544,629   | )    |   | (204,225   | ) |   | 266,807    |  
|Other revenues                                                   |  |                         | 11,924     |      |   | 11,112     |   |      | 13,838     |      |   | 14,686     |   |   | 15,245     |  
|Investment recovery                                              |  |                         |           |      |   |           |   |      |           |      |   | 75,000     |   |   |           |  
|Admin expense relating to portfolio
  investments                |  |                         | (99,935    | )    |   | (55,538    | ) |      | (44,564    | )    |   | (36,842    | ) |   | (1,126     | )
|Interest expense, net of interest Income                         |  |                         | (147,501   | )    |   | (197,211   | ) |      | (363,952   | )    |   | (296,114   | ) |   | (108,949   | )
|                                                                 |  |                         |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|Total other income and expenses                                  |  |                         | 24,888,385 |      |   | 17,389,110 |   |      | 4,651,140  |      |   | 3,579,212  |   |   | 3,152,245  |  
|                                                                 |  |                         |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|                                                                 |  |                         |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|                                                                 |  |                         |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|Income (loss) before income taxes                                |  |                         | 19,681,233 |      |   | 11,958,240 |   |      | (773,781   | )    |   | (1,323,813 | ) |   | (389,622   | )
|                                                                 |  |                         |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|Provision for income taxes                                       |  |                         | 4,557,964  |      |   | 1,311,024  |   |      | 11,750     |      |   | 12,168     |   |   |           |  
|                                                                 |  |                         |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|                                                                 |  |                         |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|Net Income (loss)                                                |  | $                       | 15,123,269 |      | $ | 10,647,216 |   | $    | (785,531   | )    | $ | (1,335,981 | ) | $ | (389,622   | )
|                                                                 |  |                         |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|                                                                 |  |                         |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|                                                                 |  |                         |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|Weighted average number of common shares
  outstanding - basic   |  |                         | 4,350,951  |      |   | 4,572,119  |   |      | 4,625,168  |      |   | 4,638,384  |   |   | 4,615,993  |  
|                                                                 |  |                         |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|Weighted average number of common shares
  outstanding - diluted |  |                         | 4,375,623  |      |   | 4,572,119  |   |      | 4,625,168  |      |   | 4,638,384  |   |   | 4,615,993  |  
|                                                                 |  |                         |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|                                                                 |  |                         |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|Income (loss) per common equivalent share -
  basic              |  | $                       | 3.48       |      | $ | 2.33       |   | $    | (0.17      | )    | $ | (0.29      | ) | $ | (0.08      | )
|                                                                 |  |                         |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|                                                                 |  |                         |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|Income (loss) per common equivalent share -
  diluted            |  | $                       | 3.46       |      | $ | 2.33       |   | $    | (0.17      | )    | $ | (0.29      | ) | $ | (0.08      | )
|                                                                 |  |                         |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|                                                                 |  |                         |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|Dividends paid per common share                                  |  | $                       | 1.50       |      |   |           |   |      |           |      |   |           |   |   |           |  
|                                                                 |  |                         |            |      |   |            |   |      |            |      |   |            |   |   |            |  

20

---



Selected
Balance Sheet Data:

|                       |  |                         |            |      |   |             |   |      |            |      |   |            |   |   |            |  
|---------------------- |  | ----------------------- | ---------- | ---- | - | ----------- | - | ---- | ---------- | ---- | - | ---------- | - | - | ---------- | -
|                       |  | Year Ended December 31, |           
|                       |  | 2008                    |            | 2007 |   | 2006        |   | 2005 |            | 2004 |  
|                       |  |                         |            |      |   |             |   |      |            |      |  
|                       |  |                         |            |      |   |             |   |      |            |      |   |            |   |   |            |  
|Total
  assets         |  | $                       | 76,824,181 |      | $ | 102,560,500 |   | $    | 78,166,312 |      | $ | 59,565,053 |   | $ | 55,746,607 |  
|Total
  liabilities*   |  | $                       | 33,363,540 |      | $ | 47,644,615  |   | $    | 32,528,520 |      | $ | 20,820,252 |   | $ | 15,493,319 |  
|Stockholders
  equity |  | $                       | 43,460,641 |      | $ | 54,915,885  |   | $    | 45,637,792 |      | $ | 38,744,801 |   | $ | 40,253,288 |  
|Return
  on equity**   |  |                         | 30.74      | %    |   | 21.18       | % |      | 0.00       | %    |   | 0.00       | % |   | 0.00       | %

* Total liabilities include
deferred taxes on unrealized gains.

** Return on equity is
calculated by dividing the Companys net income or loss for the period by the
average stockholders equity for the period.

Item 7: Managements Discussion and Analysis of Financial
Condition and Results of Operations.

RESULTS OF OPERATIONS

Operating Revenues

In 2008 revenue from
operations was $1,761,055.vs. 2007 revenue from operations of $ 1,869,779 for a
decrease of 6%. In 2006, operating revenues were $1,486,449.

Equipment sales and kit
sales decreased from $1,453,201 in 2007 to $1,381,105 in 2008. In 2008 the
Company sold four blood volume analyzers for a total of $260,000 versus six in
2007 for $390,500. Kit sales increased by 4% in 2008 over 2007 and by 15% in
2007 over 2006. Kit sales increased by 35% in 2006 over 2005 and by 53% in 2005
over 2004. 3,113 patients, utilizing the BVA-100, had blood volume measurements
in 2008 vs. 3,015 in 2007, 2,886 in 2006 and 2,132 in 2005. For the year ended
December 31, 2008 the Company provided 472 Volumex doses free of charge to
facilities utilizing the BVA-100 for research versus 328 in 2007, 194 in
2006,95 in 2005 and 83 in 2004.

The major reasons for the
current year increase in kit sales are an increase in utilization of existing
instruments along with 53 Blood Volume Analyzers placed in service at December
31, 2008 versus 50 placed in service at December 31, 2007. Effective February
1, 2007, the Company raised prices by approximately 5% on Blood Volume Kits
which was the first price increase in two years. The Company did not raise
prices on Blood Volume Kits in 2008.

The decrease in Gross Profit
Percentage on Kit Sales for the year ended December 31, 2008 is mainly due to
the aforementioned increase in Volumex doses provided free of charge to
facilities using the BVA-100 for research. The main reason for the decrease in
Gross Profit Percentage for Equipment Sales and Related Services from 56.3% for
the year ended December 31, 2007 to 51.2% for the year ended December 31, 2008
is that six blood volume analyzers were sold in 2007 versus four in 2008. The
gross margin on the blood volume analyzer is substantially higher than the
gross margin on Volumex Kits.

21

---



The following table provides
gross margin information on Equipment Sales & Related Services for the
years ended December 31, 2008 and December 31, 2007:

|                                          |  |                                           |           |                                                           |   |                                        |   |   |           |  
|----------------------------------------- |  | ----------------------------------------- | --------- | --------------------------------------------------------- | - | -------------------------------------- | - | - | --------- | -
|Equipment
  Sales and
  Related Services: |  | Kit
  Sales Year Ended
  December 31,2008 |           | Equipment
  Sales and Other Year Ended
  December 31,2008 |   | Total
  Year Ended December 31,
  2008 |  
|                                          |  |                                           |           |                                                           |   |                                        |   |   |           |  
|Revenue                                   |  | $                                         | 1,005,981 |                                                           | $ | 375,124                                |   | $ | 1,381,105 |  
|Cost of Goods Sold                        |  |                                           | 516,054   |                                                           |   | 158,522                                |   |   | 674,576   |  
|Gross Profit                              |  |                                           | 489,927   |                                                           |   | 216,602                                |   |   | 706,529   |  
|Gross Profit Percentage                   |  |                                           | 48.7      | %                                                         |   | 57.7                                   | % |   | 51.2      | %

|                                          |  |                                           |         |                                                           |   |                                        |   |   |           |  
|----------------------------------------- |  | ----------------------------------------- | ------- | --------------------------------------------------------- | - | -------------------------------------- | - | - | --------- | -
|Equipment
  Sales and
  Related Services: |  | Kit
  Sales Year Ended
  December 31,2007 |         | Equipment
  Sales and Other Year Ended
  December 31,2007 |   | Total
  Year Ended December 31,
  2007 |  
|                                          |  |                                           |         |                                                           |   |                                        |   |   |           |  
|Revenue                                   |  | $                                         | 963,318 |                                                           | $ | 489,883                                |   | $ | 1,453,201 |  
|Cost of Goods Sold                        |  |                                           | 475,811 |                                                           |   | 159,127                                |   |   | 634,938   |  
|Gross Profit                              |  |                                           | 487,507 |                                                           |   | 330,756                                |   |   | 818,263   |  
|Gross Profit Percentage                   |  |                                           | 50.6    | %                                                         |   | 67.5                                   | % |   | 56.3      | %

Operating revenues from
Cryobanking and related services decreased in 2008 by $36,628 or 8.8% from
2007. This was due mainly to revenue from semen storage decreasing by $19,392
or 6.9% to $262,675 versus $282,067 in the year ended December 31, 2007. There
was also a decrease of $14,743 in semen analysis and other lab services. The
Companys Idant Laboratories subsidiary contributed 21.6%, 22.3%, and 29.0% of
operating revenues in 2008, 2007 and 2006 respectively.

Operating Expenses

For 2008, consolidated
expenses from operations including cost of sales totaled $6,968,207 and the
loss from operations was $5,207,152. In 2007, expenses from operations
including cost of sales totaled $7,300,649; the loss from operations was $
5,430,870. In 2006, expenses from operations including cost of sales totaled
$6,911,370; the loss from operations totaled $5,424,921.

Total Operating costs
including cost of sales for Daxor and the BVA segment were $6,017,752 for the
year ended December 31, 2008 versus $6,351,501 for the year ended December 31,
2007 for a decrease of $ 333,749 or 5.2%. The main reason for this decrease is
a reduction of $278,489 in payroll and related expenses.

Research and Development
expenses for Daxor and the BVA segment decreased in 2008 by $132,751 or 5.5% to
$2,257,601 from $2,390,352 in 2007. However, Daxor remains committed to making
Blood Volume Analysis a standard of care in at least three disease states. In
order to achieve this goal, we are continuing to spend time and money in
research and development in order to get the best product to market. We are still
working on the following three projects: 1) GFR: Glomeril Filtration Rate, 2)
Total Body Albumin Analysis, and 3) Wipe Tests for radiation contamination and
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 give the company extended protection with a second patent when it is
completed.

Total Operating Costs
including cost of sales for the Cryobanking segment were $950,455 for the year
ended December 31, 2008 versus $949,148 for the year ended December 31, 2007
for an increase of $1,307 or 0.1%.

Dividend Income

Dividend income earned in
2008 was $2,509,966 vs. $2,419,476 in 2007, for an increase of $90,490, or
3.7%. In 2006, dividend income was $2,273,737.

Investment Gains

Gains on the sale of
investments were $17,249,716 in 2008 vs. $14,853,934 in 2007, and $3,316,710 in
2006. A major reason for the increase in Gains on the sale of investments in
2008 is that the Company realized $1,173,622 in gains on a security that was
sold as the result of a merger. This stock would not have otherwise been sold
but would have been held by the Company as of December 31, 2008.

22

---



The sum of dividend income
plus investment gain from sale of securities was $19,759,682 in 2008,
$17,273,410 in 2007, and $5,590,447 in 2006.

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 December 31, 2008, the
Company had $32,973,248 in short-term debt versus $47,214,047 at December 31,
2007. The following amounts are included in short-term debt at December 31,
2008 and December 31, 2007: Income Taxes Payable of $2,643,958 and $1,295,668
respectively, Deferred Tax Liability of $8,066,823 and $15,726,213
respectively, and Securities borrowed at fair market value of $107,871 and
$20,362,259. The Deferred Tax Liability represents taxes due on the unrealized
gain of the investment portfolio and Securities borrowed at fair market value
represent short positions in common stock.

At December 31, 2008, stockholders
equity was $43,460,641 vs. $54,915,885 at December 31, 2007. At December 31,
2008 the Companys security portfolio had a market value of $68,339,143 versus
$74,919,193 at December 31, 2007. At December 31, 2008, the Companys total
liabilities and stockholders equity were $76,824,181 versus $102,560,500 at
December 31, 2007.

Income from the Companys
security portfolio is a major asset for the Company as it conintues its efforts
in research and marketing staff. At December 31, 2008, the Company is in a
satisfactory financial position with adequate funds available for its immediate
and anticipated needs. The Company plans its budgetary outlays on the
assumption that the raising of additional financial capital may be difficult in
the next 2 to 4 years. The Company believes that its present liquidity and
assets are adequate to sustain the expenses associated with its sales and
marketing program.

The following table shows
the Cost, Market Value, Net Unrealized Gain, Unrealized Gain and Loss at
December 31st from 2004 through 2008.

|                  |  |      |            |                       |   |                         |  |                    |            |                     |   |            |  |   |             |  
|----------------- |  | ---- | ---------- | --------------------- | - | ----------------------- |  | ------------------ | ---------- | ------------------- | - | ---------- |  | - | ----------- | -
|Valuation
  Date: |  | Cost |            | Fair
  Market
  Value |   | Net
  Unrealized
  Gain |  | Unrealized
  Gains |            | Unrealized
  Losses |  
|                  |  |      |            |                       |   |                         |  |                    |            |                     |  
|December 31, 2008 |  | $    | 50,709,601 |                       | $ | 68,339,143              |  | $                  | 17,629,542 |                     | $ | 28,469,540 |  | $ | (10,839,998 | )
|December 31, 2007 |  |      | 29,987,157 |                       |   | 74,919,193              |  |                    | 44,932,036 |                     |   | 47,386,399 |  |   | (2,454,363  | )
|December 31, 2006 |  |      | 23,307,390 |                       |   | 66,968,446              |  |                    | 43,661,056 |                     |   | 43,927,770 |  |   | (266,714    | )
|December 31, 2005 |  |      | 25,649,467 |                       |   | 57,246,006              |  |                    | 31,596,539 |                     |   | 32,440,131 |  |   | (843,592    | )
|December 31, 2004 |  |      | 22,907,780 |                       |   | 54,806,400              |  |                    | 31,898,620 |                     |   | 32,133,292 |  |   | (234,672    | )

The Companys invested
capital has increased over the past 5 years, going from $22,907,780 in 2004 to
$50,709,601 in 2008. The value of the Companys investments increased from
$54,806,400 in 2004 to $68,339,143 during this 5 year period. The Company has
been able to partially offset the continuing operating losses which in 2007
were the highest in the Companys history. The increase in value of the
Companys assets provides an underpinning for the Companys expanding
activities. While there can be no assurance that these assets will not decrease
in value, it is unlikely, at the present time, that they will go back to
historical cost. The Company feels, however, that with respect to the Blood
Volume Analyzer and the Blood Optimization Program, it is undercapitalized.
Recent inquiries have indicated that additional capital is not available on
reasonable terms without great dilution to existing shareholders. The Company
believes that if the blood volume analyzer becomes a standard of care in any
one of the areas described in this 10-K filing, it will then have much easier
access to additional capital.

CRITICAL ACCOUNTING POLICIES

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 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 engage in the short selling of 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 for the period presented

23

---



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 this capital with a
  high degree of safety.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|2. | The Company maintains a
  diversified securities portfolio comprised primarily of electric utility
  preferred and common 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 engage in short positions up to 15% of the
  value of its portfolio. The Companys 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 approximately of 80% 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%.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|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 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 which can be written. The amount of the portfolio on
  which options are actually written is usually between 3-10% of the portfolio.
  The actual 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 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 average 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 its
  stock.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

Managements Discussion and
Analysis of Financial Condition and Results of Operations discuss the Companys
condensed consolidated financial statements, which have been prepared in
accordance with US GAAP. The Company considers the following accounting
policies to be critical accounting policies.

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
radioisotope 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.

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. Daxor
Corporation does not guarantee payments to the leasing company.

24

---



The
sales of the single-use radioisotope 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. Historically, service contracts were recorded by the Company as
deferred revenue and were amortized into income in the period in which they
were earned. Effective January 1, 2006, the Company began offering service
contracts priced on an annual basis which are billed annually or quarterly
depending upon the contractual arrangement with the customer. There were four
hospitals that the Company billed during the year ended December 31, 2008 for
the entire amount of their annual service contract. At December 31, 2008 and
December 31, 2007, deferred revenue pertaining to the historical service contracts
was $17,042 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. The Company
invoices customers for storage fees for various time periods. These time
periods range from one month up to one, two or three years. The Company will
only recognize revenue for those storage fees that are earned in the current
reporting period, and will defer the remaining revenues to the period in which
they are earned. Effective October, 2005, the Company has altered our billing
procedure as such that clients will only be billed on a quarterly basis.
Therefore, future revenue recognition will not include deferred revenue on the
storage fees, but rather will be earned in the same period in which the
invoices are generated.

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 history, a liability has not
been recorded with respect to product / warranty liability.

Use of Estimates

The
preparation of financial statements in conformity with US GAAP requires
management to make 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.. Although these estimates are based upon
managements best knowledge of current events and actions, actual results could
differ from those estimates

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 event 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.

25

---



Contractual Obligations

In December 2002, the
Company signed a lease which commenced on January 1, 2003, for its existing
facility at the Empire State Building. The lease expires on December 31, 2015.
The Company has occupied this space since January 1992. The company currently
occupies approximately 7,200 square feet. There are options for an additional
18,000 square feet of space. The Company has acquired a 20,000 square foot
manufacturing facility in Oak Ridge, Tennessee which is currently manufacturing
the BVA-100 Blood Volume Analyzers, and where R&D activities are performed.
The Companys Volumex syringes are filled by an FDA approved radio
pharmaceutical manufacturer. The manufacturer has worked with Daxor since 1987.
The manufacturers prices are reviewed annually.

TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS

|                                                                                       |  |       |           |                        |   |               |  |             |         |                     |   |         |  |   |         | 
|-------------------------------------------------------------------------------------- |  | ----- | --------- | ---------------------- | - | ------------- |  | ----------- | ------- | ------------------- | - | ------- |  | - | ------- | 
|                                                                                       |  |       |           | Payments Due By Period |  
|Contractual
  Obligations                                                              |  | Total |           | Less Than
  1 Year     |   | 1  3
  Years |  | 3  5 Years |         | More Than
  5 years |  
|                                                                                       |  |       |           |                        |   |               |  |             |         |                     |   |         |  |   |         | 
|(Long-Term Debt Obligations)1                                                          |  | $     | 515,542   |                        | $ | 71,190        |  | $           | 142,380 |                     | $ | 301,972 |  |   | 0       | 
|                                                                                       |  |       |           |                        |   |               |  |             |         |                     |   |         |  |   |         | 
|(Capital Lease Obligations)                                                            |  |       | 0         |                        |   | 0             |  |             | 0       |                     |   | 0       |  |   | 0       | 
|                                                                                       |  |       |           |                        |   |               |  |             |         |                     |   |         |  |   |         | 
|(Operating Lease Obligations)2                                                         |  | $     | 2,205,588 |                        | $ | 315,084       |  | $           | 630,168 |                     | $ | 630,168 |  | $ | 630,168 | 
|                                                                                       |  |       |           |                        |   |               |  |             |         |                     |   |         |  |   |         | 
|(Purchase Obligations)                                                                 |  |       | 0         |                        |   | 0             |  |             | 0       |                     |   | 0       |  |   | 0       | 
|                                                                                       |  |       |           |                        |   |               |  |             |         |                     |   |         |  |   |         | 
|(Other Long-Term Liabilities Reflected on the
  Registrants Balance Sheet under GAAP) |  |       | 0         |                        |   | 0             |  |             | 0       |                     |   | 0       |  |   | 0       | 
|                                                                                       |  |       |           |                        |   |               |  |             |         |                     |   |         |  |   |         | 
|Total                                                                                  |  | $     | 2,721,130 |                        | $ | 386,274       |  | $           | 772,548 |                     | $ | 932,140 |  | $ | 630,168 | 
|                                                                                       |  |       |           |                        |   |               |  |             |         |                     |   |         |  |   |         | 

1This amount represents the total monthly mortgage
payment of $5,932 which includes principal and interest for the property
purchased at 107 and 109 Meco Lane in Oak Ridge, Tennessee. There is a monthly
payment of $5,932 through December of 2011. The Company has the option of
making a balloon payment of $301,972 in January of 2012 or refinancing the
remaining amount of the mortgage.

2This amount represents a total monthly rental payment
of $26,257 which consists of base rent of $25,535 and $722 for two separate
spaces at 350 5th Avenue.

Summary of Actual Portfolio Investments

The companys portfolio
value is exposed to fluctuations in the general value of 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. 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 its
diversity of holdings. At December 31, 2008 and 2007, the company held 104 and
63 separate stocks, respectively.

Puts and calls are 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.

26

---



December 31, 2008

The following is summary
information on the actual Securities Portfolio held by Daxor Corporation during
the year ended and as at December 31, 2008:

|                           |  |                             |        |      |   |              |  |                    |            |                     |   |                          |  |   |             |   |   |           | 
|-------------------------- |  | --------------------------- | ------ | ---- | - | ------------ |  | ------------------ | ---------- | ------------------- | - | ------------------------ |  | - | ----------- | - | - | --------- | 
|Description                |  | Percent of
  Portfolio Cost |        | Cost |   | Market Value |  | Unrealized
  Gains |            | Unrealized
  Losses |   | Dividends and
  Interest | 
|                           |  |                             |        |      |   |              |  |                    |            |                     |   |                          | 
|Utilities-Common Stock     |  |                             | 63.25  | %    | $ | 32,074,124   |  | $                  | 53,875,289 |                     | $ | 27,660,548               |  | $ | (5,859,383  | ) | $ | 2,096,733 | 
|Non-Utilities Common       |  |                             | 30.95  | %    |   | 15,692,238   |  |                    | 12,035,699 |                     |   | 610,069                  |  |   | (4,266,608  | ) |   | 124,453   | 
|Total Common Stock         |  |                             | 94.20  | %    |   | 47,766,362   |  |                    | 65,910,988 |                     |   | 28,270,617               |  |   | (10,125,991 | ) |   | 2,221,186 | 
|Mutual Funds-Non-Utilities |  |                             | 0.34   | %    |   | 172,710      |  |                    | 165,500    |                     |   | 0                        |  |   | (7,210      | ) |   |           | 
|Utilities-Preferred Stock  |  |                             | 0.53   | %    |   | 270,498      |  |                    | 438,884    |                     |   | 173,317                  |  |   | (4,931      | ) |   | 26,523    | 
|Non-Utilities- Preferred   |  |                             | 4.87   | %    |   | 2,467,026    |  |                    | 1,823,771  |                     |   | 25,606                   |  |   | (668,861    | ) |   | 123,134   | 
|Total Preferred Stock      |  |                             | 5.40   | %    |   | 2,737,524    |  |                    | 2,262,655  |                     |   | 198,923                  |  |   | (673,792    | ) |   | 149,657   | 
|Total Equities             |  |                             | 99.94  | %    |   | 50,676,596   |  |                    | 68,339,143 |                     |   | 28,469,540               |  |   | (10,806,993 | ) |   | 2,370,843 | 
|Utilities-Bonds            |  |                             | .06    | %    |   | 33,005       |  |                    | 0          |                     |   | 0                        |  |   | (33,005     | ) |   | 0         | 
|Total Portfolio            |  |                             | 100.00 | %    | $ | 50,709,601   |  | $                  | 68,339,143 |                     | $ | 28,469,540               |  | $ | (10,839,998 | ) | $ | 2,370,843 | 
|                           |  |                             |        |      |   |              |  |                    |            |                     |   |                          |  |   |             |   |   |           | 

During the year ended
December 31, 2008, the Company received $ 87,465 of dividends on stocks that
were not in the Securities Portfolio at December 31, 2008 and was charged
$32,483 for dividends on short positions. The Company also received $84,141 in
money market dividends.

Summary of Put and Call
Options at December 31, 2008

|                       |  |                     |            |                |   |                    |  |                     |           |  |   |            |  
|---------------------- |  | ------------------- | ---------- | -------------- | - | ------------------ |  | ------------------- | --------- |  | - | ---------- | -
|Description            |  | Proceeds
  Received |            | Market
  Value |   | Unrealized
  Gains |  | Unrealized
  Losses |          
|                       |  |                     |            |                |   |                    |  |                     |          
|Puts                   |  | $                   | 7,125,645  |                | $ | 7,118,277          |  | $                   | 2,364,802 |  | $ | (2,357,434 | )
|Calls                  |  | $                   | 6,686,330  |                | $ | 1,306,082          |  | $                   | 5,575,222 |  | $ | (194,974   | )
|                       |  |                     |            |                |   |                    |  |                     |           |  |   |            |  
|Total
  Puts and Calls |  | $                   | 13,811,975 |                | $ | 8,424,359          |  | $                   | 7,940,024 |  | $ | (2,552,408 | )
|                       |  |                     |            |                |   |                    |  |                     |           |  |   |            |  

December 31, 2007

The following is summary
information on the actual Securities Portfolio held by Daxor Corporation during
the year ended and as at December 31, 2007:

|                          |  |                             |        |      |   |              |  |                    |            |                     |   |                          |  |   |            |   |   |           | 
|------------------------- |  | --------------------------- | ------ | ---- | - | ------------ |  | ------------------ | ---------- | ------------------- | - | ------------------------ |  | - | ---------- | - | - | --------- | 
|Description               |  | Percent of
  Portfolio Cost |        | Cost |   | Market Value |  | Unrealized
  Gains |            | Unrealized
  Losses |   | Dividends and
  Interest | 
|                          |  |                             |        |      |   |              |  |                    |            |                     |   |                          | 
|Utilities-Common Stock    |  |                             | 86.51  | %    | $ | 25,941,264   |  | $                  | 70,550,992 |                     | $ | 46,696,888               |  |   | (2,087,160 | ) | $ | 1,957,012 | 
|                          |  |                             |        |      |   |              |  |                    |            |                     |   |                          |  |   |            |   |   |           | 
|Non-Utilities Common      |  |                             | 9.68   | %    |   | 2,903,548    |  |                    | 2,770,677  |                     |   | 226,645                  |  |   | (359,516   | ) |   | 4,640     | 
|Total Common Stock        |  |                             | 96.19  | %    |   | 28,844,812   |  |                    | 73,321,669 |                     |   | 46,923,533               |  |   | (2,446,676 | ) |   | 1,961,652 | 
|Utilities-Preferred Stock |  |                             | 2.25   | %    |   | 673,367      |  |                    | 968,869    |                     |   | 295,502                  |  |   | 0          |   |   | 47,594    | 
|Non-Utilities- Preferred  |  |                             | .95    | %    |   | 284,332      |  |                    | 282,105    |                     |   | 5,460                    |  |   | (7,687     | ) |   | 9,444     | 
|Total Preferred Stock     |  |                             | 3.20   | %    |   | 957,699      |  |                    | 1,250,974  |                     |   | 300,962                  |  |   | (7,687     | ) |   | 57,038    | 
|Total Equities            |  |                             | 99.39  | %    |   | 29,802,511   |  |                    | 74,572,643 |                     |   | 47,224,495               |  |   | (2,454,363 | ) |   | 2,018,690 | 
|Utilities-Bonds           |  |                             | .51    | %    |   | 151,881      |  |                    | 289,550    |                     |   | 137,669                  |  |   | 0          |   |   | 0         | 
|Non-Utilities- Bonds      |  |                             | .10    | %    |   | 32,765       |  |                    | 57,000     |                     |   | 24,235                   |  |   | 0          |   |   | 3,687     | 
|Total Bonds               |  |                             | .61    | %    |   | 184,646      |  |                    | 346,550    |                     |   | 161,904                  |  |   | 0          |   |   | 3,687     | 
|                          |  |                             |        |      |   |              |  |                    |            |                     |   |                          |  |   |            |   |   |           | 
|Total Portfolio           |  |                             | 100.00 | %    | $ | 29,987,157   |  | $                  | 74,919,193 |                     | $ | 47,386,399               |  | $ | (2,454,363 | ) | $ | 2,022,377 | 
|                          |  |                             |        |      |   |              |  |                    |            |                     |   |                          |  |   |            |   |   |           | 

27

---



During the year ended
December 31, 2007, the Company received $381,578 of dividends on stocks that
were not in the Securities Portfolio at December 31, 2007 and was charged
$74,427 for dividends on short positions. The Company also received $93,635 in
money market dividends.

Summary of Put and Call
Options at December 31, 2007

|                       |  |                     |           |                |   |                    |  |                     |           |  |   |            |  
|---------------------- |  | ------------------- | --------- | -------------- | - | ------------------ |  | ------------------- | --------- |  | - | ---------- | -
|Description            |  | Proceeds
  Received |           | Market
  Value |   | Unrealized
  Gains |  | Unrealized
  Losses |          
|                       |  |                     |           |                |   |                    |  |                     |          
|Puts                   |  | $                   | 1,545,102 |                | $ | 2,172,670          |  | $                   | 360,565   |  | $ | (988,133   | )
|Calls                  |  | $                   | 6,100,731 |                | $ | 3,799,962          |  | $                   | 3,602,061 |  | $ | (1,301,292 | )
|                       |  |                     |           |                |   |                    |  |                     |           |  |   |            |  
|Total
  Puts and Calls |  | $                   | 7,645,833 |                | $ | 5,972,632          |  | $                   | 3,962,626 |  | $ | (2,289,425 | )
|                       |  |                     |           |                |   |                    |  |                     |           |  |   |            |  

Item 7A: Quantitative and Qualitative Disclosures about
Market Risk.

In light of the Safe Harbor
provisions so that a company could not be considered an investment company, we
have done an analysis of what would have occurred if the company had elected to
use a Safe Harbor provision instead of the cash management program that it
developed which utilizes dividend paying utilities combined with option sales.
It should be noted that it is not mandatory to utilize T-bills, only that it is
a Safe Harbor provision, where one is not required to explain or justify that
one is an operating company rather than in investment company. We elected to
augment the companys revenue rather than accept the Safe Harbor T-bill
scenario. We understood that there were risks, and the concept was approved by
the Board of Directors of Daxor before this policy was inaugurated.

The Board of Directors
reviews and approves the investment policy at least once a year. The current
policy is: 1) the primary investments are in electric utilities; no more than
20% of the companys assets can be in shorts at any one time; 2)the company
can continue to sell covered call options; sell naked put options on securities
it is willing to own; 3) concentration of no more than 10% of any one stock in
the portfolio; 4) if a stock were to grow to more than 10% due to natural
increase in value, it is exempt from the 10% concentration rule. The Company has always had on its Board of
Directors, for the last twenty years, at least one person who could be
considered an expert on investing accounting policy with Wall Street
experience.

In 1985, the Company had a
secondary offering which raised approximately $7.1 million. In 1984, prior to
clearance by the SEC of the underwriting, the Company had its cash management
policy of investing in electric utilities reviewed by the SEC. The SEC reviewed
the policy and the Companys operations, and permitted the secondary offering
to proceed without any alterations. In 1992, the Company had its cash
management investment policies questioned by the SEC and no action was taken
against the Company. The following graphs illustrate what would have happened
to the company if the Company had chosen at that time, beginning in 1993, to
undertake a so-called Safe Harbor policy. Two separate T-bill rates were used
for this analysis; one for an average rate of approximately 2%, and one for an
average rate of approximately 3%. The 2% and 3% scenarios are reasonable
approximations of which the Company might have encountered during this time.
During the 16 year period of 1993-2008 which is covered in this analysis, the
annual yield on U.S. Treasuries at a one year constant maturity varied from
1.24% to 6.11%.

In November 2005, the
Companys cash policy was again questioned by the SEC and a formal response was
provided by the Company on January 13, 2006. The following additional information
is provided to illustrate what the Companys current financial position would
have been had it followed a simple policy of investing its cash in treasury
securities. The Company also is providing a graph adapted from information
provided on the Federal Reserve website at www.federalreserve.gov. The company
provided similar information in an amended 10-K filed on November 9, 2006. The
current graphs include the year ended December 31, 2008.

Graph 1 illustrates three
sets of data from 1993 to 2008: 1) the companys reported net income from all
sources, 2) the companys operation income minus operating expenses, and 3) a
hypothetical net income calculated assuming that, rather than following its
existing investment policy, the Company had invested in Treasury Bills and
received an interest rate of 2%.

28

---



Graph 1: Comparison of Net Earnings with Hypothetical
Earnings That Would Have Resulted Had the Company Invested in Treasury Bills
from 1993 to 2008 and Received a 2% Interest Rate

MESSAGE

For the years ended December
31, 2008 and 2007, the Company had net income of $15,123,269 and $10,647,216
respectively. However, for the years ended December 31, 2006, 2005 and 2004,
the company recorded  losses of $785,531, $1,335,981 and $389,622 despite
supplemental revenue from investments. For the years ended December 31, 1996
through December 31,2002, the company sustained heavy operating losses but was
close to breaking even due to supplemental income. From 1993 to 1995, the
company reported a net profit despite increasing losses from operations. As can
be seen, from 1993 through 1995, the company also sustained operating losses.

Had the company invested in
Treasury Bills and received a 2% interest rate, the annual losses for 2005
through 2008 would have been approximately $5 million. In 2004, the loss would
have been over $3 million and in 2003 close to $3 million. From 1996-2002, the
company would have lost approximately $2 million each year.

29

---



Graph 2: Comparison of Net Earnings with Hypothetical Earnings
That Would Have Resulted Had the Company Invested in Treasury Bills from 1993
to 2008 and Received a 3% Interest Rate

MESSAGE

Graph 2 shows the same basic scenario as Graph 1, except that
the hypothetical net income was calculated assuming a 3% interest rate from
Treasury Bills. The results are similar to those from Graph 1, but the loss is
slightly lower because of the 1% higher interest rate.

30

---



Graph 3: Hypothetical Change in Company Assets that Would
Have Occurred Had Persistent Losses from Investment in Treasury Bills with a 2%
Rate of Interest Forced the Company to Cover Losses by Liquidating Sections of
its Portfolio

MESSAGE

Graph 3 compares the
Companys marketable securities at cost with a hypothetical value of
securities. This hypothetical value was calculated assuming that the Company
had begun investing in Treasury Bills in 1993 and received a 2% interest rate.
The marketable securities at cost approximately represent the amount of money
the Company has available, or its approximate assets. Using our existing
investment policy, the cost of the Companys marketable securities has
gradually increased from approximately $28 million at December 31, 1993 to
approximately $50 million at December 31, 2008.

Had the company invested in
Treasury Bills, because of the continuing net loss (as demonstrated in Graph
1), the Company would have been forced to steadily sell investment capital to
cover those losses. The calculations take this dwindling supply of capital into
account. Lost capital would only have been partially replaced by interest on
the Treasury Bills, and the amount of investment income would have declined as
the amount of capital decreased. By year end 2004, the value of the Companys
securities would have dwindled to approximately $7 million, from a starting
point of over $27 million. By year end 2005, the estimated value of the
securities would have fallen to approximately $2 million and the Company would
likely have faced likely bankruptcy by the end of 2006.

31

---



Graph 4: Hypothetical Change in Company
Assets that Would Have Occurred Had Persistent Losses from Investment in
Treasury Bills a 3% Rate of Interest Forced the Company to Cover Losses by
Liquidating Sections of its Portfolio

(LINE GRAPH)

Graph 4
illustrates the same scenario as Graph 3, but assuming a 3% interest rate from
Treasury Bills. The loss is somewhat less in this scenario, but by year end
2004, securities would have fallen to approximately $10 million, and the
estimated value of the securities by 2005 would have been approximately $5
million by the end of 2005. Under this scenario, the Company would have been
facing bankruptcy by the end of 2007.

32

---



Graph 5: Loans Payable per Year

(LINE GRAPH)

Graph 5
illustrates the Companys loans payable at December 31 from 1993 to 2008. From
1993 to 1995, the amount of loans payable decreased sharply, and then stayed in
a narrow range from 1995 to 2001, remaining below $3 million and reaching a low
of $1 million at December 31, 2001. After 2001, because of the companys expanded
research and development, the amount of loans began to increase steadily until
December 31, 2005, when they exceeded the 1993 amount. By December 31, 2007,
the amount of loans returned somewhat to 2004 levels. The increase in the loan
balance at December 31, 2008 is mainly a result of the increased cost of the
investment portfolio.

33

---



Graph 6: Operating Revenues and Total
Expenses from 1993 to 2008

(LINE GRAPH)

Graph 6
illustrates operational revenues and total expenses from 1993 to 2008.
Operational revenues dropped sharply between 1995 and 1996. Between 1998 and
1999, operational revenues began to recover, and reached pre-1995 levels in
2007. Expenses were fairly constant between 1993 and 2001, but they have
increased since 2001 because of the expansion in research, development, and
marketing. Throughout the entire sixteen year period of 1993-2008, operating
expenses have exceeded operating revenues each year.

34

---



Graph 7: Marketable Securities at Cost
Compared to the Rate of Return

(LINE GRAPH)

Graph 7 shows
the cost of securities compared with rate of return (investment income/cost of
securities) from 1993 to 2008. The rate of return includes dividends and net
profits from security sales, but it does not include unrealized profits. If
unrealized profits had been included, the rate of return would have been
higher.

The actual
rate of return is more than three times the rate of return that the company
would have received if the Company had invested exclusively in Treasury Bills.
The Company, therefore, has benefited from the cash management policy of the
past 16 years.

Graph 8: Portfolio of Treasury Securities at
One Year constant maturity from 1993 -2008 from Federal Reserve Bank Data.

(LINE GRAPH)

35

---



Graph 8 shows
the market yield for the past 15 years on U.S Government Treasury securities at
a one year constant maturity. The yields have ranged from a high of 6.11% in
2000 down to a low of 1.24% in 2003. The average yield for the past sixteen
years is 4.10%, and the average interest rate for the past five years is 3.36%.

Graph 9: Comparison of Net Earnings with
Hypothetical Earnings That Would Have Resulted Had the Company Invested in
Treasury Bills with Yields reported by the Federal Reserve Bank from 1993-2008.

(LINE GRAPH)

Graph 9
illustrates the same three sets of data as graphs 1 and 2, utilizing interest
rates from Graph 8. The results are similar to those from the previous two
graphs, validating the accuracy of those hypothetical predictions. Had the
company invested in these or similar Treasury Bills, the company would have
faced persistent losses over this 16 year period.

36

---



Graph 10: Hypothetical Change in Company
Assets that Would Have Occurred Had Persistent Losses from Investment in
Treasury Bills with Yields Reported by the Federal Reserve Bank Forced the
Company to Cover Losses by Liquidating Sections of its Portfolio

(LINE GRAPH)

Graph 10
illustrates the same scenario as Graphs 3 and 4, utilizing the interest rates
from Graph 8. Again, the results are very similar to those from graphs 4 and 5,
providing validation for the hypothetical predictions. By year end 2004,
securities would have fallen to approximately $15 million, and securities by
year end 2005 to been approximately $10 million. Had the company invested in
these or similar Treasury Bills, by year end 2006, the value of the securities
would have fallen to $5 million and the Company would likely have faced
bankruptcy in 2007.

37

---



Item 8: Financial Statements and Supplementary Data.

Index
to Consolidated Financial Statements

|                                                                                                                                     |   
|------------------------------------------------------------------------------------------------------------------------------------ | --
|Report of
Independent Registered Public Accounting Firm                                                                              | 39
|                                                                                                                                    
|Consolidated Balance Sheets -
December 31, 2008 and 2007.                                                                            | 40
|                                                                                                                                    
|Consolidated
Statements of Operations  for the years
ended December 31, 2008, 2007 and 2006                                          | 41
|                                                                                                                                    
|Consolidated
Statements of Stockholders Equity and Comprehensive Income (Loss) for the
years ended December 31, 2008, 2007 and 2006 | 42
|                                                                                                                                    
|Consolidated
Statements of Cash Flows  for the years
ended December 31, 2008, 2007 and 2006.                                         | 43
|                                                                                                                                    
|Notes to
Consolidated Financial Statements                                                                                           | 44

38

---



REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM

To the Stockholders
and Board of Directors of Daxor Corporation

We have audited the
accompanying consolidated balance sheets of Daxor Corporation and subsidiary
(the Company) as of December 31, 2008 and 2007, and the related consolidated
statements of operations, stockholders equity and comprehensive income (loss),
and cash flows for each of the three years in the period ended December 31,
2008. These financial statements are the responsibility of the Companys
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in
accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. The Company is not required to have, nor were we engaged
to perform, an audit of its internal control over financial reporting. Our
audits included consideration of internal control over financial reporting as a
basis for designing audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the
Companys internal control over financial reporting. Accordingly, we express no
such opinion. An audit also includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.

In our opinion, the
consolidated financial statements referred to above present fairly, in all
material respects, the consolidated financial position of Daxor Corporation and
subsidiary as of December 31, 2008 and 2007, and the consolidated results of
its operations and its cash flows for each of the three years in the period
ended December 31, 2008, in conformity with U.S. generally accepted accounting
principles.

/s/ Rotenberg Meril Solomon
Bertiger & Guttilla, P.C.

Saddle Brook, NJ

March 20, 2009

39

---



DAXOR CORPORATION AND SUBSIDIARY CONSOLIDATED FINANCIAL STATEMENTS

DAXOR CORPORATION AND SUBSIDIARY 
CONSOLIDATED BALANCE SHEETS

|                                                                                                     |  |                   |             |                   |   |             |  
|---------------------------------------------------------------------------------------------------- |  | ----------------- | ----------- | ----------------- | - | ----------- | -
|                                                                                                     |  | December 31,
2008 |             | December 31,
2007 |  
|                                                                                                     |  |                   |             |                   |  
|                                                                                                    
|                                                                                                     |  |                   |             |                   |  
|ASSETS                                                                                               |  |                   |             |                   |   |             |  
|                                                                                                     |  |                   |             |                   |   |             |  
|                                                                                                     |  |                   |             |                   |   |             |  
|CURRENT ASSETS                                                                                       |  |                   |             |                   |   |             |  
|                                                                                                     |  |                   |             |                   |   |             |  
|Cash and cash equivalents, including $1,994,558 of Treasury Bills in 2008 and $1,970,872 at 2007     |  | $                 | 2,545,040   |                   | $ | 2,029,834   |  
|Receivable from broker(held in money market accounts)                                                |  |                   | 2,829,979   |                   |   | 10,495,417  |  
|Available-for-sale securities, at fair value                                                         |  |                   | 68,339,143  |                   |   | 74,919,193  |  
|Securities sold, not received, at fair value                                                         |  |                   |            |                   |   | 12,404,409  |  
|Accounts receivable, net of reserve of $88,645 in 2007 and $57,655 in 2007                           |  |                   | 205,568     |                   |   | 214,334     |  
|Inventory                                                                                            |  |                   | 426,826     |                   |   | 255,834     |  
|Prepaid expenses and other current assets                                                            |  |                   | 131,912     |                   |   | 145,827     |  
|                                                                                                     |  |                   |             |                   |   |             |  
|                                                                                                     |  |                   |             |                   |   |             |  
|Total Current Assets                                                                                 |  |                   | 74,478,468  |                   |   | 100,464,848 |  
|                                                                                                     |  |                   |             |                   |   |             |  
|Property and equipment, net                                                                          |  |                   | 2,308,555   |                   |   | 2,058,494   |  
|Other assets                                                                                         |  |                   | 37,158      |                   |   | 37,158      |  
|                                                                                                     |  |                   |             |                   |   |             |  
|                                                                                                     |  |                   |             |                   |   |             |  
|Total Assets                                                                                         |  | $                 | 76,824,181  |                   | $ | 102,560,500 |  
|                                                                                                     |  |                   |             |                   |   |             |  
|                                                                                                     |  |                   |             |                   |   |             |  
|                                                                                                     |  |                   |             |                   |   |             |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                 |  |                   |             |                   |   |             |  
|                                                                                                     |  |                   |             |                   |   |             |  
|                                                                                                     |  |                   |             |                   |   |             |  
|CURRENT LIABILITIES                                                                                  |  |                   |             |                   |   |             |  
|                                                                                                     |  |                   |             |                   |   |             |  
|Accounts payable and accrued liabilities                                                             |  | $                 | 604,420     |                   | $ | 498,212     |  
|Loans payable                                                                                        |  |                   | 13,052,162  |                   |   | 3,314,303   |  
|Income taxes payable                                                                                 |  |                   | 2,643,958   |                   |   | 1,295,668   |  
|Mortgage payable, current portion                                                                    |  |                   | 40,306      |                   |   | 37,313      |  
|Puts and calls, at fair value                                                                        |  |                   | 8,424,359   |                   |   | 5,972,632   |  
|Securities borrowed, at fair value                                                                   |  |                   | 107,871     |                   |   | 20,362,259  |  
|Deferred revenue                                                                                     |  |                   | 33,349      |                   |   | 7,417       |  
|Deferred income taxes                                                                                |  |                   | 8,066,823   |                   |   | 15,726,213  |  
|                                                                                                     |  |                   |             |                   |   |             |  
|                                                                                                     |  |                   |             |                   |   |             |  
|Total Current Liabilities                                                                            |  |                   | 32,973,248  |                   |   | 47,214,017  |  
|                                                                                                     |  |                   |             |                   |   |             |  
|LONG TERM LIABILITIES                                                                                |  |                   |             |                   |   |             |  
|                                                                                                     |  |                   |             |                   |   |             |  
|Mortgage payable, less current portion                                                               |  |                   | 390,292     |                   |   | 430,598     |  
|                                                                                                     |  |                   |             |                   |   |             |  
|Total Liabilities                                                                                    |  |                   | 33,363,540  |                   |   | 47,644,615  |  
|                                                                                                     |  |                   |             |                   |   |             |  
|COMMITMENTS AND CONTINGENCIES                                                                        |  |                   |             |                   |   |             |  
|                                                                                                     |  |                   |             |                   |   |             |  
|STOCKHOLDERS EQUITY                                                                                 |  |                   |             |                   |   |             |  
|Common stock, $.01 par value                                                                         |  |                   |             |                   |   |             |  
|Authorized - 10,000,000 shares                                                                       |  |                   |             |                   |   |             |  
|Issued - 5,316,550 shares                                                                            |  |                   |             |                   |   |             |  
|Outstanding  4,289,118 and 4,468,618 shares,
respectively                                           |  |                   | 53,165      |                   |   | 53,165      |  
|Additional paid in capital                                                                           |  |                   | 10,660,547  |                   |   | 10,594,161  |  
|Accumulated other comprehensive income                                                               |  |                   | 11,459,203  |                   |   | 29,205,823  |  
|Retained earnings                                                                                    |  |                   | 32,158,138  |                   |   | 23,487,371  |  
|Less: cost of common stock held in treasury, at cost, 1,027,432
shares
  in 2008 and 847,932 in 2007 |  |                   | (10,870,412 | )                 |   | (8,424,635  | )
|                                                                                                     |  |                   |             |                   |   |             |  
|Total Stockholders Equity                                                                           |  |                   | 43,460,641  |                   |   | 54,915,885  |  
|                                                                                                     |  |                   |             |                   |   |             |  
|Total Liabilities and Stockholders Equity                                                           |  | $                 | 76,824,181  |                   | $ | 102,560,500 |  
|                                                                                                     |  |                   |             |                   |   |             |  

See accompanying notes to consolidated
financial statements

40

---



DAXOR CORPORATION AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS 
FOR THE YEARS ENDED DECEMBER 31

|                                                                             |  |      |            |      |   |            |   |   |            |  
|---------------------------------------------------------------------------- |  | ---- | ---------- | ---- | - | ---------- | - | - | ---------- | -
|REVENUES:                                                                    |  | 2008 |            | 2007 |   | 2006       |  
|                                                                             |  |      |            |      |   |            |  
|                                                                             |  |      |            |      |   |            |   |   |            |  
|Operating revenues - equipment sales and related services                    |  | $    | 1,381,105  |      | $ | 1,453,201  |   | $ | 1,055,706  |  
|Operating revenues - cryobanking and related services                        |  |      | 379,950    |      |   | 416,578    |   |   | 430,743    |  
|                                                                             |  |      |            |      |   |            |   |   |            |  
|                                                                            
|Total Revenues                                                               |  |      | 1,761,055  |      |   | 1,869,779  |   |   | 1,486,449  |  
|                                                                             |  |      |            |      |   |            |   |   |            |  
|                                                                            
|Costs of Sales:                                                              |  |      |            |      |   |            |   |   |            |  
|Costs of equipment sales and related services                                |  |      | 674,576    |      |   | 634,938    |   |   | 585,742    |  
|Costs of cryobanking and related services                                    |  |      | 42,702     |      |   | 47,848     |   |   | 45,825     |  
|                                                                             |  |      |            |      |   |            |   |   |            |  
|                                                                            
|Total Costs of Sales                                                         |  |      | 717,278    |      |   | 682,786    |   |   | 631,567    |  
|                                                                             |  |      |            |      |   |            |   |   |            |  
|                                                                            
|Gross Profit                                                                 |  |      | 1,043,777  |      |   | 1,186,993  |   |   | 854,882    |  
|                                                                             |  |      |            |      |   |            |   |   |            |  
|                                                                             |  |      |            |      |   |            |   |   |            |  
|OPERATING EXPENSES:                                                          |  |      |            |      |   |            |   |   |            |  
|                                                                             |  |      |            |      |   |            |   |   |            |  
|Research and development expenses:                                           |  |      |            |      |   |            |   |   |            |  
|Research and development-equipment sales and related
services                |  |      | 2,257,601  |      |   | 2,390,352  |   |   | 2,195,371  |  
|Research and development-cryobanking and related services                    |  |      | 180,822    |      |   | 186,356    |   |   | 137,028    |  
|                                                                             |  |      |            |      |   |            |   |   |            |  
|                                                                            
|Total Research and Development Expenses                                      |  |      | 2,438,423  |      |   | 2,576,708  |   |   | 2,332,399  |  
|                                                                             |  |      |            |      |   |            |   |   |            |  
|                                                                            
|Selling, General & Administrative Expenses:                                  |  |      |            |      |   |            |   |   |            |  
|Selling, general, and administrative; equipment sales and related
  services |  |      | 3,085,575  |      |   | 3,326,211  |   |   | 3,645,655  |  
|Selling, general & administrative; cryobanking and related
  services        |  |      | 726,931    |      |   | 714,944    |   |   | 301,749    |  
|                                                                             |  |      |            |      |   |            |   |   |            |  
|                                                                            
|Total Selling, General & Administrative Expenses                             |  |      | 3,812,506  |      |   | 4,041,155  |   |   | 3,947,404  |  
|                                                                             |  |      |            |      |   |            |   |   |            |  
|                                                                            
|Total Operating Expenses                                                     |  |      | 6,250,929  |      |   | 6,617,863  |   |   | 6,279,803  |  
|                                                                             |  |      |            |      |   |            |   |   |            |  
|                                                                            
|Loss from Operations                                                         |  |      | (5,207,152 | )    |   | (5,430,870 | ) |   | (5,424,921 | )
|                                                                             |  |      |            |      |   |            |   |   |            |  
|                                                                            
|Other income (expenses):                                                     |  |      |            |      |   |            |   |   |            |  
|Dividend income-investment portfolio                                         |  |      | 2,509,966  |      |   | 2,419,476  |   |   | 2,273,737  |  
|Realized gains on sale of securities, net                                    |  |      | 17,249,716 |      |   | 14,853,934 |   |   | 3,316,710  |  
|Mark to market of short positions                                            |  |      | 5,364,215  |      |   | 357,337    |   |   | (544,629   | )
|Other revenues                                                               |  |      | 11,924     |      |   | 11,112     |   |   | 13,838     |  
|Interest expense, net of interest income of $37,408,$12,838 and
$3,699       |  |      | (147,501   | )    |   | (197,211   | ) |   | (363,952   | )
|Administrative expenses relating to portfolio investments                    |  |      | (99,935    | )    |   | (55,538    | ) |   | (44,564    | )
|                                                                             |  |      |            |      |   |            |   |   |            |  
|                                                                            
|Total Other income, net                                                      |  |      | 24,888,385 |      |   | 17,389,110 |   |   | 4,651,140  |  
|                                                                            
|Income (Loss) before income taxes                                            |  | $    | 19,681,233 |      | $ | 11,958,240 |   | $ | (773,781   | )
|                                                                            
|Provision for income taxes                                                   |  |      | 4,557,964  |      |   | 1,311,024  |   |   | 11,750     |  
|                                                                             |  |      |            |      |   |            |   |   |            |  
|                                                                            
|Net Income (Loss)                                                            |  | $    | 15,123,269 |      | $ | 10,647,216 |   | $ | (785,531   | )
|                                                                             |  |      |            |      |   |            |   |   |            |  
|                                                                            
|Weighted average number of shares outstanding - basic                        |  |      | 4,350,951  |      |   | 4,572,119  |   |   | 4,625,168  |  
|Net income (loss) per common equivalent share - basic                        |  | $    | 3.48       |      | $ | 2.33       |   | $ | (0.17      | )
|                                                                            
|Weighted average number of shares outstanding - diluted                      |  |      | 4,375,623  |      |   | 4,572,119  |   |   | 4,625,168  |  
|Net income (loss) per common equivalent share - diluted                      |  | $    | 3.46       |      | $ | 2.33       |   | $ | (0.17      | )

41

---



DAXOR CORPORATION AND SUBSIDIARY STATEMENTS OF STOCKHOLDERS EQUITY AND COMPREHENSIVE INCOME (LOSS)

|                                                                            |  |                                  |           |        |   |                              |  |                                              |            |                     |   |                   |   |       |            |                               |   |             |   |   |             |   |   |             |  
|--------------------------------------------------------------------------- |  | -------------------------------- | --------- | ------ | - | ---------------------------- |  | -------------------------------------------- | ---------- | ------------------- | - | ----------------- | - | ----- | ---------- | ----------------------------- | - | ----------- | - | - | ----------- | - | - | ----------- | -
|                                                                            |  | Common Stock                     |           |        |   |                              |  |                                              |            |                     |   |                   |   |       |           
|                                                                            |  |                                  |           |        |   |                              |  |                                              |            |                     |   |                   |   |       |           
|                                                                            |  | Number of
  Shares
  Outstanding |           | Amount |   | Additional
  Paid in Capital |  | Accumulated
  Other
  Comprehensive
  Income |            | Retained
  Earnings |   | Treasury 
  Stock |   | Total |            | Comprehensive
  Income (Loss) |  
|                                                                            |  |                                  |           |        |   |                              |  |                                              |            |                     |   |                   |   |       |            |                               |  
|                                                                           
|Balances,
  December 31, 2005                                               |  |                                  | 4,630,426 |        | $ | 53,165                       |  | $                                            | 10,303,902 |                     | $ | 20,537,750        |   | $     | 13,625,686 |                               | $ | (5,775,702  | ) | $ | 38,744,801  |   |   |             |  
|                                                                            |  |                                  |           |        |   |                              |  |                                              |            |                     |   |                   |   |       |            |                               |   |             |   |   |             |   |   |             |  
|                                                                            |  |                                  |           |        |   |                              |  |                                              |            |                     |   |                   |   |       |            |                               |   |             |   |   |             |   |   |             |  
|Change in
  unrealized gain on securities, net of$4,222,581deferred taxes   |  |                                  |           |        |   |                              |  |                                              |            |                     |   | 7,841,937         |   |       |            |                               |   |             |   |   | 7,841,937   |   | $ | 7,841,937   |  
|                                                                            |  |                                  |           |        |   |                              |  |                                              |            |                     |   |                   |   |       |            |                               |   |             |   |   |             |   |   |             |  
|Option based
  compensation expense                                         |  |                                  |           |        |   |                              |  |                                              | 77,980     |                     |   |                   |   |       |            |                               |   |             |   |   | 77,980      |   |   |             |  
|                                                                            |  |                                  |           |        |   |                              |  |                                              |            |                     |   |                   |   |       |            |                               |   |             |   |   |             |   |   |             |  
|Net loss                                                                    |  |                                  |           |        |   |                              |  |                                              |            |                     |   |                   |   |       | (785,531   | )                             |   |             |   |   | (785,531    | ) |   | (785,531    | )
|                                                                            |  |                                  |           |        |   |                              |  |                                              |            |                     |   |                   |   |       |            |                               |   |             |   |   |             |   |   |             |  
|Purchase of
  treasury stock                                                |  |                                  | (15,100   | )      |   |                              |  |                                              |            |                     |   |                   |   |       |            |                               |   | (241,395    | ) |   | (241,395    | ) |   |             |  
|                                                                            |  |                                  |           |        |   |                              |  |                                              |            |                     |   |                   |   |       |            |                               |   |             |   |   |             |   |   |             |  
|Comprehensive
  Income                                                      |  |                                  |           |        |   |                              |  |                                              |            |                     |   |                   |   |       |            |                               |   |             |   |   |             |   | $ | 7,056,406   |  
|                                                                            |  |                                  |           |        |   |                              |  |                                              |            |                     |   |                   |   |       |            |                               |   |             |   |   |             |   |   |             |  
|                                                                            |  |                                  |           |        |   |                              |  |                                              |            |                     |   |                   |   |       |            |                               |   |             |   |   |             |   |   |             |  
|Balances,
  December 31, 2006                                               |  |                                  | 4,615,326 |        | $ | 53,165                       |  | $                                            | 10,381,882 |                     | $ | 28,379,687        |   | $     | 12,840,155 |                               | $ | (6,017,097  | ) | $ | 45,637,792  |   |   |             |  
|                                                                            |  |                                  |           |        |   |                              |  |                                              |            |                     |   |                   |   |       |            |                               |   |             |   |   |             |   |   |             |  
|                                                                            |  |                                  |           |        |   |                              |  |                                              |            |                     |   |                   |   |       |            |                               |   |             |   |   |             |   |   |             |  
|Change in
  unrealized gain on securities, net of$444,843 deferred taxes    |  |                                  |           |        |   |                              |  |                                              |            |                     |   | 826,136           |   |       |            |                               |   |             |   |   | 826,136     |   | $ | 826,136     |  
|                                                                            |  |                                  |           |        |   |                              |  |                                              |            |                     |   |                   |   |       |            |                               |   |             |   |   |             |   |   |             |  
|Option based
  compensation expense                                         |  |                                  |           |        |   |                              |  |                                              | 43,937     |                     |   |                   |   |       |            |                               |   |             |   |   | 43,937      |   |   |             |  
|                                                                            |  |                                  |           |        |   |                              |  |                                              |            |                     |   |                   |   |       |            |                               |   |             |   |   |             |   |   |             |  
|Net income                                                                  |  |                                  |           |        |   |                              |  |                                              |            |                     |   |                   |   |       | 10,647,216 |                               |   |             |   |   | 10,647,216  |   |   | 10,647,216  |  
|                                                                            |  |                                  |           |        |   |                              |  |                                              |            |                     |   |                   |   |       |            |                               |   |             |   |   |             |   |   |             |  
|Treasury stock
  issued upon exercise of stock options                      |  |                                  | 17,100    |        |   |                              |  |                                              | 168,342    |                     |   |                   |   |       |            |                               |   | 91,578      |   |   | 259,920     |   |   |             |  
|                                                                            |  |                                  |           |        |   |                              |  |                                              |            |                     |   |                   |   |       |            |                               |   |             |   |   |             |   |   |             |  
|Purchase of
  treasury stock                                                |  |                                  | (163,808  | )      |   |                              |  |                                              |            |                     |   |                   |   |       |            |                               |   | (2,499,116  | ) |   | (2,499,116  | ) |   |             |  
|                                                                            |  |                                  |           |        |   |                              |  |                                              |            |                     |   |                   |   |       |            |                               |   |             |   |   |             |   |   |             |  
|Comprehensive
  Income                                                      |  |                                  |           |        |   |                              |  |                                              |            |                     |   |                   |   |       |            |                               |   |             |   |   |             |   | $ | 11,473,352  |  
|                                                                            |  |                                  |           |        |   |                              |  |                                              |            |                     |   |                   |   |       |            |                               |   |             |   |   |             |   |   |             |  
|                                                                            |  |                                  |           |        |   |                              |  |                                              |            |                     |   |                   |   |       |            |                               |   |             |   |   |             |   |   |             |  
|Balances,
  December 31, 2007                                               |  |                                  | 4,468,618 |        | $ | 53,165                       |  | $                                            | 10,594,161 |                     | $ | 29,205,823        |   | $     | 23,487,371 |                               | $ | (8,424,635  | ) | $ | 54,915,885  |   |   |             |  
|                                                                            |  |                                  |           |        |   |                              |  |                                              |            |                     |   |                   |   |       |            |                               |   |             |   |   |             |   |   |             |  
|                                                                            |  |                                  |           |        |   |                              |  |                                              |            |                     |   |                   |   |       |            |                               |   |             |   |   |             |   |   |             |  
|Change in
  unrealized gain on securities, net of $9,555,873 deferred taxes |  |                                  |           |        |   |                              |  |                                              |            |                     |   | (17,746,620       | ) |       |            |                               |   |             |   |   | (17,746,620 | ) | $ | (17,746,620 | )
|                                                                            |  |                                  |           |        |   |                              |  |                                              |            |                     |   |                   |   |       |            |                               |   |             |   |   |             |   |   |             |  
|Option based
  compensation expense                                         |  |                                  |           |        |   |                              |  |                                              | 66,386     |                     |   |                   |   |       |            |                               |   |             |   |   | 66,386      |   |   |             |  
|                                                                            |  |                                  |           |        |   |                              |  |                                              |            |                     |   |                   |   |       |            |                               |   |             |   |   |             |   |   |             |  
|Net income                                                                  |  |                                  |           |        |   |                              |  |                                              |            |                     |   |                   |   |       | 15,123,269 |                               |   |             |   |   | 15,123,269  |   |   | 15,123,269  |  
|                                                                            |  |                                  |           |        |   |                              |  |                                              |            |                     |   |                   |   |       |            |                               |   |             |   |   |             |   |   |             |  
|Common Stock
  Dividends                                                    |  |                                  |           |        |   |                              |  |                                              |            |                     |   |                   |   |       | (6,452,502 | )                             |   |             |   |   | (6,452,502  | ) |   |             |  
|                                                                            |  |                                  |           |        |   |                              |  |                                              |            |                     |   |                   |   |       |            |                               |   |             |   |   |             |   |   |             |  
|Purchase of
  treasury stock                                                |  |                                  | (179,500  | )      |   |                              |  |                                              |            |                     |   |                   |   |       |            |                               |   | (2,445,777  | ) |   | (2,445,777  | ) |   |             |  
|                                                                            |  |                                  |           |        |   |                              |  |                                              |            |                     |   |                   |   |       |            |                               |   |             |   |   |             |   |   |             |  
|Comprehensive
  Loss                                                        |  |                                  |           |        |   |                              |  |                                              |            |                     |   |                   |   |       |            |                               |   |             |   |   |             |   | $ | (2,623,351  | )
|                                                                            |  |                                  |           |        |   |                              |  |                                              |            |                     |   |                   |   |       |            |                               |   |             |   |   |             |   |   |             |  
|                                                                            |  |                                  |           |        |   |                              |  |                                              |            |                     |   |                   |   |       |            |                               |   |             |   |   |             |   |   |             |  
|Balances,
  December 31, 2008                                               |  |                                  | 4,289,118 |        | $ | 53,165                       |  | $                                            | 10,660,547 |                     | $ | 11,459,203        |   | $     | 32,158,138 |                               | $ | (10,870,412 | ) | $ | 43,460,641  |   |   |             |  
|                                                                            |  |                                  |           |        |   |                              |  |                                              |            |                     |   |                   |   |       |            |                               |   |             |   |   |             |   |   |             |  

42

---



DAXOR CORPORATION AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS 
FOR THE YEARS ENDED DECEMBER 31

|                                                                                       |  |      |             |      |   |             |   |   |             |  
|-------------------------------------------------------------------------------------- |  | ---- | ----------- | ---- | - | ----------- | - | - | ----------- | -
|                                                                                       |  | 2008 |             | 2007 |   | 2006        |  
|                                                                                       |  |      |             |      |   |             |  
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                  |  |      |             |      |   |             |   |   |             |  
|Net income (loss)                                                                      |  | $    | 15,123,269  |      | $ | 10,647,216  |   | $ | (785,531    | )
|Adjustments to reconcile net income (loss)
  to net cash used in operating activities: |  |      |             |      |   |             |   |   |             |  
|Depreciation & amortization                                                            |  |      | 288,748     |      |   | 229,929     |   |   | 166,399     |  
|Deferred Income Taxes                                                                  |  |      | 1,896,483   |      |   |            |   |   |            |  
|Provision for bad debts                                                                |  |      | 30,990      |      |   | 23,492      |   |   | (7,137      | )
|Gain on sale of fixed assets                                                           |  |      | (213,814    | )    |   | (151,016    | ) |   | (29,802     | )
|Loss on disposal of fixed assets                                                       |  |      | 81,315      |      |   | 73,384      |   |   |            |  
|Non-cash consideration received on
  instrument sale (1)                               |  |      |            |      |   | (65,000     | ) |   |            |  
|Stock dividend income received on
  investments                                        |  |      |            |      |   |            |   |   | (4,326      | )
|Stock based compensation associated with
  employee stock option plans                 |  |      | 66,386      |      |   | 43,937      |   |   | 77,980      |  
|Non-cash research and development Expense
  (1)                                        |  |      |            |      |   | 65,000      |   |   |            |  
|Gains on sale of investments, net                                                      |  |      | (17,249,716 | )    |   | (14,853,934 | ) |   | (3,316,710  | )
|Marked to market adjustments on options and
  shorts                                   |  |      | (5,364,215  | )    |   | (357,337    | ) |   | 544,629     |  
|Change in operating assets and operating
  liabilities:                                |  |      |             |      |   |             |   |   |             |  
|Increase in accounts receivable                                                        |  |      | (22,224     | )    |   | (63,717     | ) |   | (35,380     | )
|(Increase) decrease in prepaid expenses
  & other current assets                       |  |      | 13,915      |      |   | (30,716     | ) |   | 115,521     |  
|(Increase) decrease in inventory                                                       |  |      | (170,992    | )    |   | (84,838     | ) |   | 20,865      |  
|Increase in other assets                                                               |  |      |            |      |   | (5,000      | ) |   |            |  
|Increase (decrease) in accounts payable and
  accrued liabilities                      |  |      | 106,208     |      |   | 99,071      |   |   | (99,057     | )
|Increase in Income Taxes Payable                                                       |  |      | 1,348,290   |      |   | 1,281,842   |   |   |            |  
|Increase(decrease) in deferred income                                                  |  |      | 25,932      |      |   | 4,662       |   |   | (87,713     | )
|                                                                                       |  |      |             |      |   |             |   |   |             |  
|Net cash used in operating activities                                                  |  |      | (4,039,425  | )    |   | (3,143,025  | ) |   | (3,440,262  | )
|                                                                                       |  |      |             |      |   |             |   |   |             |  
|                                                                                       |  |      |             |      |   |             |   |   |             |  
|CASH FLOWS FROM INVESTING ACTIVITIES                                                   |  |      |             |      |   |             |   |   |             |  
|Purchase of property and equipment                                                     |  |      | (666,310    | )    |   | (1,642,489  | ) |   | (344,534    | )
|Proceeds from sale of fixed assets                                                     |  |      | 260,000     |      |   | 195,500     |   |   | 65,000      |  
|                                                                                       |  |      |             |      |   |             |   |   |             |  
|(Decrease) increase in securities sold, not
  received                                 |  |      | 12,404,409  |      |   | (5,301,646  | ) |   | (6,083,827  | )
|(Decrease) increase in securities
borrowed                                             |  |      | (20,254,388 | )    |   | 9,696,537   |   |   | 9,362,925   |  
|Purchases of put and call options                                                      |  |      | (430,233    | )    |   | (772,799    | ) |   | (224,165    | )
|Sale of put and call options                                                           |  |      | 34,377,992  |      |   | 18,662,703  |   |   | 6,710,808   |  
|Purchase of investments                                                                |  |      | (72,322,528 | )    |   | (31,263,920 | ) |   | (13,697,234 | )
|                                                                                       |  |      |             |      |   |             |   |   |             |  
|Sales of investments                                                                   |  |      | 42,717,984  |      |   | 25,195,606  |   |   | 14,238,819  |  
|                                                                                       |  |      |             |      |   |             |   |   |             |  
|Net cash provided by (used in)investing
  activities                                   |  |      | (3,913,074  | )    |   | 14,769,492  |   |   | 10,027,792  |  
|                                                                                       |  |      |             |      |   |             |   |   |             |  
|                                                                                       |  |      |             |      |   |             |   |   |             |  
|CASH FLOWS FROM FINANCING ACTIVITIES:                                                  |  |      |             |      |   |             |   |   |             |  
|Proceeds from bank loan                                                                |  |      | 1,225,000   |      |   | 1,400,000   |   |   |            |  
|Repayment of bank loan                                                                 |  |      | (1,690,000  | )    |   | (1,400,000  | ) |   |            |  
|Proceeds from margin loans                                                             |  |      | 94,420,864  |      |   | 40,045,820  |   |   | 23,902,822  |  
|Repayment of margin loans                                                              |  |      | (76,552,567 | )    |   | (50,710,095 | ) |   | (27,503,033 | )
|Proceeds from mortgage                                                                 |  |      |            |      |   | 500,000     |   |   |            |  
|Dividends paid                                                                         |  |      | (6,452,502  | )    |   |             |   |   |             |  
|Repayment of mortgage                                                                  |  |      | (37,313     | )    |   | (32,089     | ) |   |            |  
|Purchase of treasury stock                                                             |  |      | (2,445,777  | )    |   | (2,499,116  | ) |   | (241,395    | )
|Proceeds from sale of treasury Stock                                                   |  |      |            |      |   | 259,920     |   |   |            |  
|                                                                                       |  |      |             |      |   |             |   |   |             |  
|Net cash provided by (used in) financing
  activities                                  |  |      | 8,467,705   |      |   | (12,435,560 | ) |   | (3,841,606  | )
|                                                                                       |  |      |             |      |   |             |   |   |             |  
|                                                                                       |  |      |             |      |   |             |   |   |             |  
|Net increase (decrease) in cash and cash
  equivalents                                 |  |      | 515,206     |      |   | (809,093    | ) |   | 2,745,924   |  
|Cash and cash equivalents at beginning of
  period                                     |  |      | 2,029,834   |      |   | 2,838,927   |   |   | 93,003      |  
|                                                                                       |  |      |             |      |   |             |   |   |             |  
|Cash and cash equivalents at end of period                                             |  | $    | 2,545,040   |      | $ | 2,029,834   |   | $ | 2,838,927   |  
|                                                                                       |  |      |             |      |   |             |   |   |             |  

1. The Company
  owed a hospital $65,000 of credits for Volumex Kits that were paid for and
  used in a research study.

See accompanying notes to consolidated
financial statements

43

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DAXOR CORPORATION AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(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 main focus of Daxor Corporation has been
the development and marketing 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 that the Company also sells
to its customers.

Significant Accounting Policies

Principles of Consolidation

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

Use of Estimates

The
preparation of financial statements in conformity with accounting principles generally
accepted in the United States of America requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those 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 loss.

Segment Information

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.

Cash and Cash Equivalents

The Company
considers cash equivalents to be all highly liquid investments purchased with
an original maturity of 90 days or less. Normally, these consist of U.S.
Treasury Bills. At December 31, 2008 and 2007 there were $1,994,558 and
$1,970,872 of U.S. Treasury Bills included in Cash and 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 loans
payable 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.

44

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Fair Value Measurements

Effective
January 1, 2008, we adopted SFAS No. 157, Fair Value Measurements (SFAS 157).
SFAS 157 defines fair value, establishes a framework for measuring fair value
under GAAP and enhances disclosures about fair value measurements. Fair value
is defined under SFAS 157 as the exchange price that would be received for an
asset or paid to transfer a liability (an exit price) in the principal or most
advantageous market for the asset or liability in an orderly transaction
between market participants on the measurement date. SFAS 157 establishes a
fair value hierarchy which requires an entity to maximize the use of observable
inputs and minimize the use of unobservable inputs when measuring fair value.
The standard describes three levels of inputs that may be used to measure fair
values which are discussed below. The adoption of SFAS 157 had no impact on our
financial statements other than the disclosures presented herein.

Level 1-
Quoted prices in active markets for identical assets or liabilities.

Level 2 -
Observable inputs other than Level 1 prices such as quoted prices for similar
assets or liabilities; quoted prices in markets that are not active; or other
inputs that are observable or can be corroborated by observable market data for
substantially the full term of the assets or liabilities. Level 2 assets
include corporate-owned key person life insurance policies.

Level 3 -
Unobservable inputs that are supported by little or no market activity and that
are significant to the fair value of the assets or liabilities. Level 3 assets
and liabilities include financial instruments whose value is determined using
pricing models, discounted cash flow methodologies, or similar techniques, as
well as instruments for which the determination of fair value requires
significant management judgment or estimation. This category includes auction
rate securities where independent pricing information was not able to be
obtained.

The Companys
marketable securities are valued using Level 1 observable inputs utilizing
quoted market prices in active markets. These marketable securities are
summarized in footnote 2, Fair Value Measurements.

Puts and Calls 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 interest bearing money market accounts.

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 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 engage in the short selling of 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 for the period presented

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

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | 
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|1. | The
  Companys investment goals are capital preservation and maintaining returns
  on this capital with a high degree of safety.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|2. | The Company
  maintains a diversified securities portfolio comprised primarily of electric
  utility preferred and common 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 engage in short positions up to 15% of
  the value of its portfolio. The Companys 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 approximately of 80% 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%.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|4. | Limited use
  of options to increase yearly investment income.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

45

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|   |                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   | 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 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 which can be written. The amount of the portfolio on
  which options are actually written is usually between 3-10% of the portfolio.
  The actual turnover of the portfolio is such that the average holding period
  is in excess of 5 years for available for sale securities.                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | d.                                                                                                                                                                                             | 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.                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | e.                                                                                                                                                                                             | Speculative
Short Sales/Short Options. The company 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 average 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 its stock.

Securities borrowed at
fair value

When a call option that has been sold
short is exercised, a short position is created 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 received at fair value

As of December 31, 2007, some of the financial institutions who held our securities did not increase our account
with the cash proceeds on a short sale of stock. In lieu of cash, some of our accounts received a credit for the
proceeds of the short sale. Cash was added or subtracted to these accounts weekly based on the market value of
these short positions. These securities were recorded by the Company as received but not delivered and were
valued at their quoted market price.

The short positions where the Company did not receive cash proceeds were closed out during 2008.

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.

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.

46

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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 of single use tracer doses supplied as Volumex kits 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, and associated laboratory
tests.

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 radioisotope doses (Volumex) that are used in conjunction with
the Blood Volume Analyzer are recognized as revenue in the period in which the
doses are shipped.

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 increments. These service
contracts are recorded by the Company as deferred revenue and are amortized
into income in the period in which they apply.

As at December
31, 2008 and December 31, 2007, deferred revenue pertaining to the kit sales
and historical service contracts was $31,706 and $7,417 respectively. Deferred
revenue related to the storage fees was $1,643 and $0, respectively. The total
deferred revenues were $33,349 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 three month storage terms.

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.

In June 2006,
the FASB issued FASB Interpretation No. 48 (FIN 48) Accounting for
Uncertainty in Income Taxes (an interpretation of FASB Statement No. 109)
which became effective in 2007. This interpretation was issued to clarify the
accounting for uncertainty in the amount of income taxes recognized in the
financial statements by prescribing 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. For those benefits to
be recognized, a tax position must be more likely than not to be sustained upon
examination by the taxing authorities. The amount recognized is measured as the
largest amount of benefit that is greater than 50 percent likely of being
realized upon ultimate settlement. The provisions of FIN 48 were adopted by the
Company on January 1, 2007 and had no effect on the Companys financial
statements upon adoption. The Company also evaluated its tax positions as of
December 31, 2008 and 2007 and reached the same conclusion.

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).

47

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Warranties and Indemnification Obligations

The Company
recognizes warranty and indemnification obligations under SFAS No.5 (As
Amended), Accounting for Contingencies (SFAS 5), FASB Interpretation No.
45, Guarantors Accounting and Disclosure Requirements for Guarantees,
Including Indirect Guarantees of Indebtedness of Others and FASB Concepts
Statement (SFAC) No.7 (As Amended), Using Cash Flow Information and Present
Value in Accounting Measurements. These pronouncements require a guarantor to
recognize and disclose a liability for obligations it has undertaken in
relation to the issuance of the guarantee.

The Company
warrants that its products are free from defects in material and workmanship
for a period of one year from the date of initial acceptance by our customers.
The warranty does not cover any losses or damage that occurs as a result of
improper installation, misuse or neglect and repair or modification by anyone
other than the Company or its authorized repair agent. The Companys policy is
to accrue anticipated warranty costs based upon historical percentages of items
returned for repair within one year of the initial sale. The Companys repair
rate of product under warranty has been minimal, and a historical percentage
has not been established. The Company has not provided for any reserves for
such warranty liability.

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.

Research and Development

Costs
associated with the development of new products are charged to operations as
incurred. Research and development costs for the years ended December 31, 2008,
2007 and 2006 were $2,438,423, $2,576,708 and $2,332,399. These amounts have
been calculated according to the criteria specified in SFAS No. 2  Accounting for Research and Development Costs

Advertising Costs

Advertising
expenditures relating to the advertising and marketing of the Companys
products and services are expensed in the period incurred. Advertising Expenses
for the years ended December 31, 2008, 2007 and 2006 amounted to $ 14,020,
$18,050 and $17,943.

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.

In 2008, stock options were included in the computation of earnings per common share due to their dilutive effect. The number of
dilutive stock options included in the computation of diluted earnings per common share was 25,100.In 2007 and 2006, stock options were not included in the computation of earnings per common share due to their anti-dilutive effect.
The number of anti-dilutive stock options excluded from the computation of diluted earnings per common share was 90,000 and 96,500,
respectively.The basic weighted average number of shares for 2008, 2007 and 2006 was 4,350,951, 4,572,119 and 4,625,168 respectively.

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).

48

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Stock Based Compensation

The Company
records compensation expense associated with stock options and other forms of
equity compensation in accordance with Statement of Financial Accounting
Standards No. 123 (revised 2004) or SFAS123R, Share-Based Payment. The
Company recognizes in the income statement the grant-date fair value of stock
options and other equity-based compensation issued to employees. 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.

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 year ended December 31, 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.

In December 2007,
the Securities and Exchange Commission (SEC)
issued Staff Accounting Bulletin No. 110 (SAB110). 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 January
1, 2008. 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 January 1, 2008. 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.

Recent Accounting Pronouncements

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 February
2008, the FASB issued FASB Staff Position 157-2, Effective Date of FASB
Statement No. 157, which delays the effective date of SFAS No. 157 until
January 1, 2009 for all nonfinancial assets and nonfinancial liabilities,
except for items that are recognized or disclosed at fair value in the
financial statements on a recurring basis (at least annually). The Company
believes the adoption of the delayed items of SFAS No. 157 will not have a
material impact on its financial statements.

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. SFAS No. 161 is effective for the Company on
January 1, 2009.

In May 2008,
the FASB issued SFAS No. 162, The Hierarchy of Generally Accepted Accounting
Principles (SFAS No. 162). SFAS No. 162 identifies the sources of accounting
principles and the framework for selecting the principles to be used in the
preparation of financial statements of nongovernmental entities that are
presented in conformity with generally accepted accounting principles in the
United States (commonly referred to as the GAAP hierarchy). The statement is
effective 60 days following the SECs approval of the Public Company Accounting
Oversight Board amendments to AU Section 411, The Meaning of Present Fairly in Conformity
With Generally Accepted Accounting Principles. The Company is currently
evaluating the potential impact, if any, the adoption of SFAS No. 162 will have
on its financial position, results of operations, cash flows, and disclosures.

49

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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.

(2) FAIR VALUE
MEASUREMENT

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 and short positions:

Summary of
Available for Sale Securities at December 31,2008

|                   |  |      |            |              |   |                  |  |                   |            |  |   |             |  
|------------------ |  | ---- | ---------- | ------------ | - | ---------------- |  | ----------------- | ---------- |  | - | ----------- | -
|Type of
  Security |  | Cost |            | Market Value |   | Unrealized Gains |  | Unrealized Losses |           
|                  
|Equity             |  | $    | 50,676,596 |              | $ | 68,339,143       |  | $                 | 28,469,540 |  | $ | (10,806,993 | )
|Debt               |  | $    | 33,005     |              | $ | 0                |  | $                 | 0          |  | $ | (33,005     | )
|                   |  |      |            |              |   |                  |  |                   |            |  |   |             |  
|Total
  Securities |  | $    | 50,709,601 |              | $ | 68,339,143       |  | $                 | 28,469,540 |  | $ | (10,839,998 | )
|                   |  |      |            |              |   |                  |  |                   |            |  |   |             |  

Summary of Put and Call Options at December 31, 2008

|                       |  |                   |            |              |   |                  |  |                   |           |  |   |            |  
|---------------------- |  | ----------------- | ---------- | ------------ | - | ---------------- |  | ----------------- | --------- |  | - | ---------- | -
|Description            |  | Proceeds Received |            | Market Value |   | Unrealized Gains |  | Unrealized Losses |          
|                      
|Puts                   |  | $                 | 7,125,645  |              | $ | 7,118,277        |  | $                 | 2,364,802 |  | $ | (2,357,434 | )
|Calls                  |  | $                 | 6,686,330  |              | $ | 1,306,082        |  | $                 | 5,575,222 |  | $ | (194,974   | )
|                       |  |                   |            |              |   |                  |  |                   |           |  |   |            |  
|Total Puts
  and Calls |  | $                 | 13,811,975 |              | $ | 8,424,359        |  | $                 | 7,940,024 |  | $ | (2,552,408 | )
|                       |  |                   |            |              |   |                  |  |                   |           |  |   |            |  

Summary of
Securities Borrowed at Fair Value at December 31, 2008

|                 |  |                   |         |              |   |                  |  |                   |     |  |   |      |  
|---------------- |  | ----------------- | ------- | ------------ | - | ---------------- |  | ----------------- | --- |  | - | ---- | -
|Type of Security |  | Proceeds Received |         | Market Value |   | Unrealized Gains |  | Unrealized Losses |    
|                
|Equity           |  | $                 | 108,287 |              | $ | 107,871          |  | $                 | 544 |  | $ | (128 | )
|                 |  |                   |         |              |   |                  |  |                   |     |  |   |      |  

Summary of
Available for Sale Securities at December 31,2007

|                   |  |      |            |              |   |                  |  |                   |            |  |   |            |  
|------------------ |  | ---- | ---------- | ------------ | - | ---------------- |  | ----------------- | ---------- |  | - | ---------- | -
|Type of
  Security |  | Cost |            | Market Value |   | Unrealized Gains |  | Unrealized Losses |           
|                  
|Equity             |  | $    | 29,802,511 |              | $ | 74,572,643       |  | $                 | 47,224,495 |  | $ | (2,454,363 | )
|Debt               |  | $    | 184,646    |              | $ | 346,550          |  | $                 | 161,904    |  | $ | (0         | )
|                   |  |      |            |              |   |                  |  |                   |            |  |   |            |  
|Total
  Securities |  | $    | 29,987,157 |              | $ | 74,919,193       |  | $                 | 47,386,399 |  | $ | (2,454,363 | )
|                   |  |      |            |              |   |                  |  |                   |            |  |   |            |  

50

---



Summary of Put
and Call Options at December 31, 2007

|                       |  |                   |           |              |   |                  |  |                   |           |  |   |            |  
|---------------------- |  | ----------------- | --------- | ------------ | - | ---------------- |  | ----------------- | --------- |  | - | ---------- | -
|Description            |  | Proceeds Received |           | Market Value |   | Unrealized Gains |  | Unrealized Losses |          
|                      
|Puts                   |  | $                 | 1,545,102 |              | $ | 2,172,670        |  | $                 | 360,565   |  | $ | (988,133   | )
|Calls                  |  | $                 | 6,100,731 |              | $ | 3,799,962        |  | $                 | 3,602,061 |  | $ | (1,301,292 | )
|                       |  |                   |           |              |   |                  |  |                   |           |  |   |            |  
|Total Puts
  and Calls |  | $                 | 7,645,833 |              | $ | 5,972,632        |  | $                 | 3,962,626 |  | $ | (2,289,425 | )
|                       |  |                   |           |              |   |                  |  |                   |           |  |   |            |  

Summary of
Securities Borrowed at Fair Value at December 31, 2007

|                   |  |                   |            |              |   |                  |  |                   |         |  |   |            |  
|------------------ |  | ----------------- | ---------- | ------------ | - | ---------------- |  | ----------------- | ------- |  | - | ---------- | -
|Type of
  Security |  | Proceeds Received |            | Market Value |   | Unrealized Gains |  | Unrealized Losses |        
|                  
|Equity             |  | $                 | 18,712,876 |              | $ | 20,362,259       |  | $                 | 101,313 |  | $ | (1,750,696 | )
|                   |  |                   |            |              |   |                  |  |                   |         |  |   |            |  

At December
31, 2008, the securities held by the Company had a market value of $68,339,143
and a cost basis of $50,709,601 resulting in a net unrealized gain of
$17,629,542 or 34.77% 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 December
31, 2008 and December 31, 2007, marketable securities, primarily consisting of
preferred and common stocks of utility companies, are valued at fair value.
Debt securities consist of one Corporate Bond at December 31, 2008.

(3) Valuation
and Qualifying Accounts

The allowance
for doubtful accounts for the years ended December 31, 2008, 2007, and 2006
were as follows:

|                                                               |  |                                |        |                                 |   |                            |  |                          |       |  |   |        | 
|-------------------------------------------------------------- |  | ------------------------------ | ------ | ------------------------------- | - | -------------------------- |  | ------------------------ | ----- |  | - | ------ | 
|                                                               |  | Balance at
  Beginning of Year |        | Charged to
  Costs and Expenses |   | Deductions
  From Reserves |  | Balance at
  End of Year |      
|                                                               |  |                                |        |                                 |   |                            |  |                          |      
|Classifications                                                |  |                                |        |                                 |   |                            |  |                          |       |  |   |        | 
|Year ended December 31, 2006
  Allowance for Doubtful Accounts |  | $                              | 41,300 |                                 | $ |                           |  | $                        | 7,137 |  | $ | 34,163 | 
|Year ended December 31, 2007
  Allowance for Doubtful Accounts |  | $                              | 34,163 |                                 | $ | 23,492                     |  | $                        |      |  | $ | 57,655 | 
|Year ended December 31, 2008
  Allowance for Doubtful Accounts |  | $                              | 57,655 |                                 | $ | 36,000                     |  | $                        | 5,010 |  | $ | 88,645 | 

The Company
has reviewed its inventory valuation and does not believe a reserve for slow
moving or obsolete inventory is required as of December 31, 2008, 2007 and
2006.

51

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(4) PROPERTY
AND EQUIPMENT

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

|                              |  |      |            |      |   |            |  
|----------------------------- |  | ---- | ---------- | ---- | - | ---------- | -
|                              |  | 2008 |            | 2007 |  
|                              |  |      |            |      |  
|                              |  |      |            |      |   |            |  
|Machinery and
  equipment     |  | $    | 1,431,842  |      | $ | 1,161,413  |  
|BVA Equipment on trial        |  |      | 578,000    |      |   | 782,000    |  
|Land and Land
  Improvements  |  |      | 196,991    |      |   | 196,991    |  
|Buildings                     |  |      | 598,422    |      |   | 598,422    |  
|Furniture and fixtures        |  |      | 364,732    |      |   | 352,972    |  
|Construction in
  progress    |  |      | 311,152    |      |   |           |  
|Leasehold improvements        |  |      | 611,565    |      |   | 591,866    |  
|                              |  |      |            |      |   |            |  
|                              |  |      | 4,092,704  |      |   | 3,683,664  |  
|                              |  |      |            |      |   |            |  
|Accumulated
  depreciation    |  |      | (1,784,149 | )    |   | (1,625,170 | )
|                              |  |      |            |      |   |            |  
|Property and
  equipment, net |  | $    | 2,308,555  |      | $ | 2,058,494  |  
|                              |  |      |            |      |   |            |  

For the years
ended December 31, 2008 and 2007, depreciation expense for the above listed
assets was $ 288,748 and $229,929.

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.

All
Warehousing and Distribution for the BVA-100 takes place along with related
software support and development at the facility located at 107 Meco Lane. Most
of the Companys Research and Development (R&D) and Verification and
Validation (V&V) functions are also fulfilled at this location. The Management
Information Support Function and Hardware Disaster Relief Center which mirrors
and backs up all computer activity in the New York City Headquarters is also
located at 107 Meco Lane.

The building
at 109 Meco Lane is currently being used for radiopharmaceutical distribution.
In order to be able to use the facility for this type of distribution, we have
obtained our licenses from the Federal Nuclear Regulatory Commission and the
State of Tennessee for nuclear capability. The Company subsequently obtained a
license from the Food and Drug Administration (FDA) to become a re-shipper.
This license enables Daxor to receive batches of Volumex from our third party
manufacturer and to ship the doses to our clients.

In November of
2008, a construction project commenced at 109 Meco Lane. Management expects the
project to be completed by the end of March 2009 and the total cost to be
approximately $1,500,000. The project involves the construction of laboratory
and office space.

(5) OTHER
ASSETS

In accordance
with SFAS No. 142, Goodwill and Other Intangible Assets, management
periodically reviews any goodwill or intangible assets for potential
impairment. At December 31, 2008 and 2007, the Company had no intangible
assets.

(6) LOANS AND
MORTGAGE PAYABLE

LOANS
PAYABLE

As
at December 31, 2008 and 2007 the Company has a note payable of $1,035,000 and
$1,500,000 respectively, with a bank. The note matures on May 27, 2009 and is
classified as short term. The note balance is an aggregate of borrowings (loans)
that was renewed as one note. The interest rate on the note payable is the
Banks Prime Interest rate less 1.50%. The interest rate on the total amount
due resets whenever the Prime Interest rate changes.

52

---



Interest
expense on the note payable was $33,698 for the year ended December 31, 2008
and $82,669 for the year ended December 31, 2007.

The loans bear
interest at approximately 1.75% at December 31, 2008 and 5.75% at December 31,
2007. These loans are secured by certain marketable securities of the Company.

Short term
margin debt due to brokers is secured by the Companys marketable securities
and totaled $12,017,162 at December 31, 2008 and $1,814,303 at December 31,
2007.

Interest
expense on short term margin debt was $117,335 for the year ended December 31,
2008 and $94,211 for the year ended December 31, 2007.

|                                                    |  |                                    |            |                                                               |  |                                                       |   |                                                      |            |                                                           |   |           |  |  |      |  
|--------------------------------------------------- |  | ---------------------------------- | ---------- | ------------------------------------------------------------- |  | ----------------------------------------------------- | - | ---------------------------------------------------- | ---------- | --------------------------------------------------------- | - | --------- |  |  | ---- | -
|SHORT-TERM
  BORROWINGS                             | 
|Years
  Ended December 31, 2008 and 2007.           | 
|                                                   
|                                                    | 
|Column
  A                                          |  | Column
  B                         |            | Column
  C                                                    |  | Column
  D                                            |   | Column
  E                                           |            | Column
  F                                                |  
|                                                    |  |                                    |            |                                                               |  |                                                       |   |                                                      |            |                                                           |  
|Category
  of
  aggregate
  short-term
  borrowings |  | Balance
  at
  the end of
  period |            | Weighted
  average
  interest
  rate at end
  of the
  period |  | Maximum
  amount
  outstanding
  during this
  period |   | Average
  amount
  outstanding
  during the
  period |            | Weighted
  average
  interest
  rates during
  the period |  
|                                                    |  |                                    |            |                                                               |  |                                                       |   |                                                      |            |                                                           |  
|2008                                                |  |                                    |            |                                                               |  |                                                       |   |                                                      |            |                                                           |   |           |  |  |      |  
|                                                    |  |                                    |            |                                                               |  |                                                       |   |                                                      |            |                                                           |   |           |  |  |      |  
|Banks                                               |  | $                                  | 1,035,000  |                                                               |  | 1.75                                                  | % | $                                                    | 1,500,000  |                                                           | $ | 872,500   |  |  | 3.86 | %
|                                                    |  |                                    |            |                                                               |  |                                                       |   |                                                      |            |                                                           |   |           |  |  |      |  
|Brokers                                             |  | $                                  | 12,017,162 |                                                               |  | 2.35                                                  | % | $                                                    | 12,017,162 |                                                           | $ | 3,389,129 |  |  | 3.46 | %
|                                                    |  |                                    |            |                                                               |  |                                                       |   |                                                      |            |                                                           |   |           |  |  |      |  
|All Categories                                      |  | $                                  | 13,052,162 |                                                               |  | 2.30                                                  | % | $                                                    | 13,517,162 |                                                           | $ | 4,261,629 |  |  | 3.54 | %
|                                                    |  |                                    |            |                                                               |  |                                                       |   |                                                      |            |                                                           |   |           |  |  |      |  
|2007                                                |  |                                    |            |                                                               |  |                                                       |   |                                                      |            |                                                           |   |           |  |  |      |  
|                                                    |  |                                    |            |                                                               |  |                                                       |   |                                                      |            |                                                           |   |           |  |  |      |  
|Banks                                               |  | $                                  | 1,500,000  |                                                               |  | 5.75                                                  | % | $                                                    | 1,500,000  |                                                           | $ | 1,200,000 |  |  | 6.89 | %
|                                                    |  |                                    |            |                                                               |  |                                                       |   |                                                      |            |                                                           |   |           |  |  |      |  
|Brokers                                             |  | $                                  | 1,814,303  |                                                               |  | 5.89                                                  | % | $                                                    | 2,914,807  |                                                           | $ | 1,341,343 |  |  | 7.02 | %
|                                                    |  |                                    |            |                                                               |  |                                                       |   |                                                      |            |                                                           |   |           |  |  |      |  
|All Categories                                      |  | $                                  | 3,314,303  |                                                               |  | 5.83                                                  | % | $                                                    | 4,414,807  |                                                           | $ | 2,541,343 |  |  | 6.96 | %
|                                                    |  |                                    |            |                                                               |  |                                                       |   |                                                      |            |                                                           |   |           |  |  |      |  

The average
borrowings were determined on the basis of the amounts outstanding at each
month-end. The weighted interest rate during the year was computed by dividing
actual interest expense in each year by average short-term borrowings in such
year.

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.

53

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The future
payments of principal on the mortgage for each of the next four years are as
follows:

|         |  |          |  |          |  |         
|-------- |  | -------- |  | -------- |  | --------
|12/31/09 |  | 12/31/10 |  | 12/31/11 |  | 12/31/12
|         |  |          |  |          |  |         
|         |  |          |  |          |  |         
|$40,306  |  | 43,431   |  | 46,798   |  | 300,063 

At December
31, 2008, the remaining principal due on the mortgage for the land and
buildings in Oak Ridge, Tennessee is $ 430,598. Of this amount, $40,306 is due
before December 31, 2009 and the remaining $390,292 is due after that date.

(7) SECURITIES
BORROWED AT FAIR VALUE

At December
31, 2008 and 2007 the Company maintained short positions in certain marketable
securities. The liability for short sales of securities is included in
Securities borrowed, at fair value in the accompanying balance sheets. The
cost basis of these positions or proceeds for these short sales were $108,288
and $18,712,876 at December 31, 2008 and 2007, respectively, and had respective
market values of $107,871 and $20,362,259 resulting in mark to market
adjustments of $417 and $(1,649,383) at December 31, 2008 and 2007.

(8) PUTS AND
CALLS, AT FAIR VALUE

At December
31, 2008 and 2007 the Company had open positions of put and call options on
various stocks the company is willing to buy or sell.

The following
summarizes the Companys Put and Call Options as of December 31, 2008 and
December 31, 2007.

|                     |  |               |            |              |  |                               |  |  |           | 
|-------------------- |  | ------------- | ---------- | ------------ |  | ----------------------------- |  |  | --------- | 
|Put and Call Options |  | Selling price |            | Fair
  value |  | Mark to
  Market
  Adjustment | 
|                     |  |               |            |              |  |                               | 
|December 31, 2008    |  |               | 13,811,975 |              |  | 8,424,359                     |  |  | 5,387,616 | 
|December 31, 2007    |  |               | 7,645,833  |              |  | 5,972,632                     |  |  | 1,673,201 | 

(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 December 31, 2008, 2007 and
2006, 85,200, 59,800 and 62,800 of the outstanding options were exercisable,
respectively.

At December
31, 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 December
31, 2008, there is a total unvested stock-based compensation expense of $14,846
and a total weighted average remaining service term of 0.51 years. Total
share-based compensation expense recognized in the Statement of Operations
aggregated $66,386 for the year ended December 31, 2008 and $43,937 for the
year ended December 31, 2007.

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.

In 2008, 2007
and 2006 a total of 28,100, 30,200 and 36,900, respectively, of stock options
were issued to various employees under the 2004 Stock Option Plan. The
weighted-average fair value per stock option granted in 2008, 2007 and 2006 was
$1.81, $2.65 and $2.95 respectively. The fair value of each option grant is
estimated on the date of grant using the Black-Scholes option-pricing model
with the following weighted-average assumptions used for grants in 2008, 2007
and 2006: no dividend yield, expected volatility of 29.27%, 24.14% and 24.62%,
respectively, risk-free interest rates of 2.89%, 4.14% and 4.34%, respectively
and an expected life of 3.00 years for 2008, 3.00 years for 2007 and 2.67 years
for 2006.

54

---



Details of
employee option activity are as follows:

|                                               |  |                    |         |                                     |   |       | 
|---------------------------------------------- |  | ------------------ | ------- | ----------------------------------- | - | ----- | 
|                                               |  | Number of
  Shares |         | Weighted
  Average
  Exercise Price |  
|                                               |  |                    |         |                                     |  
|Outstanding, December
  31, 2005               |  |                    | 78,100  |                                     | $ | 17.64 | 
|Granted                                        |  |                    | 36,900  |                                     |   | 19.47 | 
|Exercised                                      |  |                    |        |                                     |   |      | 
|Cancelled/Expired                              |  |                    | (18,500 | )                                   |   | 19.92 | 
|                                               |  |                    |         |                                     |   |       | 
|Outstanding, December
  31, 2006               |  |                    | 96,500  |                                     | $ | 19.36 | 
|Granted                                        |  |                    | 30,200  |                                     |   | 16.84 | 
|Exercised                                      |  |                    | (17,100 | )                                   |   | 15.20 | 
|Cancelled/Expired                              |  |                    | (19,600 | )                                   |   | 21.06 | 
|                                               |  |                    |         |                                     |   |       | 
|Outstanding, December
  31, 2007               |  |                    | 90,000  |                                     | $ | 18.93 | 
|Granted                                        |  |                    | 28,100  |                                     |   | 13.13 | 
|Cancelled/Expired                              |  |                    | (4,800  | )                                   |   | 19.55 | 
|                                               |  |                    |         |                                     |   |       | 
|Outstanding, December
  31, 2008               |  |                    | 113,300 |                                     | $ | 17.47 | 
|                                               |  |                    |         |                                     |   |       | 
|Outstanding -
  exercisable, December 31, 2008 |  |                    | 85,200  |                                     | $ | 18.90 | 
|                                               |  |                    |         |                                     |   |       | 

The following table summarizes information
concerning currently outstanding and exercisable options at December 31, 2008:

|                           |  |                                                 |         |                                                      |  |                                        |  |                                            |       |                                        |  |        |  |   |       | 
|-------------------------- |  | ----------------------------------------------- | ------- | ---------------------------------------------------- |  | -------------------------------------- |  | ------------------------------------------ | ----- | -------------------------------------- |  | ------ |  | - | ----- | 
|Options Outstanding        |  | Options Exercisable                             |        
|                           |  |                                                 |        
|Range of
  Exercise Prices |  | Number
  Outstanding
  at
  December 31,
  2008 |         | Weighted-
  Average
  Remaining
  Contractual
  Life |  | Weighted-
  Average
  Exercise
  Price |  | Number
  Exercisable
  December 31,
  2008 |       | Weighted-
  Average
  Exercise
  Price | 
|                           |  |                                                 |         |                                                      |  |                                        |  |                                            |       |                                        | 
|Below - $16.00             |  |                                                 | 38,700  |                                                      |  | 2.83 years                             |  | $                                          | 13.23 |                                        |  | 16,700 |  | $ | 15.64 | 
|$16.01 - $18.00            |  |                                                 | 33,000  |                                                      |  | 2.60 years                             |  | $                                          | 16.99 |                                        |  | 33,000 |  | $ | 16.99 | 
|$18.01 - $20.00            |  |                                                 | 6,100   |                                                      |  | 4.57 years                             |  | $                                          | 19.40 |                                        |  | 0      |  |   |      | 
|$20.01 - $22.00            |  |                                                 | 21,500  |                                                      |  | 0.97 years                             |  | $                                          | 21.44 |                                        |  | 21,500 |  | $ | 21.44 | 
|$22.01 - $25.00            |  |                                                 | 10,000  |                                                      |  | 0.98 years                             |  | $                                          | 22.68 |                                        |  | 10,000 |  | $ | 22.63 | 
|$25.01  above             |  |                                                 | 4,000   |                                                      |  | 1.12 years                             |  | $                                          | 25.20 |                                        |  | 4,000  |  | $ | 25.20 | 
|                           |  |                                                 |         |                                                      |  |                                        |  |                                            |       |                                        |  |        |  |   |       | 
|                           |  |                                                 | 113,300 |                                                      |  | 2.28 years                             |  | $                                          | 17.47 |                                        |  | 85,200 |  | $ | 18.90 | 

On October 1,
2002 the Company granted options to an Officer of the Corporation giving him
the right to purchase 20,000 shares of Daxor Common Stock at a price of $15.20.
During the year ended December 31, 2007, the employee exercised 17,100 options
and the remaining 2,900 expired without being exercised.

1,000 options
were granted to a member of the Board of Directors of the Company on July 5,
2006 at an exercise price of $19.44. This member of the Board of Directors
received a grant of an additional 1,000 options on October 26, 2007 at an
exercise price of $17.47.These options are reflected in the schedule shown
above.

Another member
of the Board of Directors received a grant of 2,000 options on April 12, 2007
at an exercise price of $15.11. These options are reflected in the schedule
shown above.

55

---



On March 7,
2008, the President and Chief Executive Officer and a member of the Board of
Directors received grants of 20,000 and 2,000 options respectively at an
exercise price of $11.39. These options are reflected in the schedule shown
above.

On September
24, 2008, three new members of the Board of Directors each received grants of
1,000 options with an exercise price of $19.11. These options are reflected in
the schedule shown above.

(10) CURRENT
INCOME TAXES

The tax
provision for income taxes is comprised of the following:

|                                   |  |      |            |      |   |           |  |   |        | 
|---------------------------------- |  | ---- | ---------- | ---- | - | --------- |  | - | ------ | 
|                                   |  | 2008 |            | 2007 |   | 2006      | 
|                                   |  |      |            |      |   |           | 
|Federal                            |  |      |            |      |   |           |  |   |        | 
|Regular Tax                        |  | $    | 901,380    |      | $ |          |  | $ |       | 
|Undistributed PHC tax              |  |      | 1,165,733  |      |   | 1,021,164 |  |   |       | 
|AMT Tax                            |  |      | 576,845    |      |   | 219,977   |  |   |       | 
|                                   |  |      |            |      |   |           |  |   |        | 
|State Franchise taxes              |  |      | 17,523     |      |   | 69,883    |  |   | 11,750 | 
|                                   |  |      |            |      |   |           |  |   |        | 
|Total Current Income Tax Provision |  |      | 2,661,481  |      |   | 1,311,024 |  |   | 11,750 | 
|Deferred taxes                     |  |      | 1,896,483  |      |   |          |  |   |       | 
|Total Tax Provision                |  | $    | 4,557, 964 |      | $ | 1,311,024 |  | $ | 11,750 | 

The current
federal income tax is comprised of a regular tax, the personal holding company
(PHC) income tax assessment and the Alternative Minimum Tax (AMT).

Daxor has
utilized all of its net operating loss carry forwards of $9,798,000 in 2008 resulting
in regular taxable income of approximately $2,651,000 and approximately
$901,000 of regular tax.

Under Internal revenue code section 542 a company is
defined as a PHC if it meets both an ownership test and an income test. The
ownership test is met if a company has five or fewer shareholders that own more
than 50% of the company, which is applicable to Daxor. The income test is met
if PHC income items such as dividends, interest and rents exceed 60% of
adjusted ordinary gross income. Adjusted ordinary income is defined as all
items of income except capital gains. For the years ended December 31, 2008 and
2007, more than 60% of Daxors adjusted gross income came from items defined as
PHC income.

Determining
the PHC tax liability requires computing Daxors undistributed PHC income and
taxing such PHC income at the statutory rate of 15%. Undistributed PHC income
is current year taxable income of the Company, exclusive of the net operating
loss carry forward deduction that is allowed for regular tax purposes.
Undistributed PHC income for the years ended December 31, 2008 and 2007 was
$14,224,000 and $11,097,000, respectively. The calculation does allow for
certain deductions and the most significant of these deductions are long-term
capital gains, and dividends paid. In 2008 Daxor had no long-term capital gains
but did pay dividends of $6,453,000. In 2007 it paid no dividends but did have
long-term capital gains of $3,960,000. In 2008 and 2007 the Company had a large
amount of short-term capital gains totaling $17,350,000 and $10,258,000
respectively. Short term capital gains are not a deduction for PHC tax
purposes, and therefore the Company had undistributed PHC income in 2008 and
2007 of and $7,772,000 and $6,808,000, respectively, that gave rise to the PHC
tax liability.

The AMT
liability arises because the income tax statute limits AMT NOL carry forwards
to 90% of AMT taxable income, leaving 10% to be taxed at AMT rates.

The federal
tax liability for 2008 and 2007 was paid in full on the statutory due date
which is 75 days after the end of the calendar year.

The long and
short term capital gains are shown on the Income Statement as part of Gains on
sales of securities, net.

State
franchise taxes are based on the companys net worth.

56

---



The following
is reconciliation between the federal statutory rate of 35% and the effective
rate:

|                                      |  |      |            |      |  |        |   |      |            |   |  |        |  
|------------------------------------- |  | ---- | ---------- | ---- |  | ------ | - | ---- | ---------- | - |  | ------ | -
|                                      |  | 2008 |            | 2008 |  | 2007   |   | 2007 |           
|                                      |  |      |            |      |  |        |   |      |           
|Computed expected provision (benefit) |  |      | 6,874,902  |      |  | 35.0   | % |      | 3,726,525  |   |  | 35.00  | %
|                                      |  |      |            |      |  |        |   |      |            |   |  |        |  
|at the Statutory rates                |  |      |            |      |  |        |   |      |            |   |  |        |  
|Non-deductible items                  |  |      |           |      |  | 0.00   | % |      | 459,110    |   |  | 4.31   | %
|                                      |  |      |            |      |  |        |   |      |            |   |  |        |  
|Undistributed PHC tax                 |  |      | 1,165,733  |      |  | 5.93   | % |      | 69,883     |   |  | 0.66   | %
|AMT Tax                               |  |      | 576,845    |      |  | 2.94   | % |      | 1,021,164  |   |  | 9.59   | %
|Franchise tax, net of tax benefit     |  |      | 11,390     |      |  | 0.06   | % |      | 219,977    |   |  | 2.07   | %
|Dividends Deduction                   |  |      | (614,942   | )    |  | -3.13  | % |      | (592,771   | ) |  | -5.57  | %
|NOL Utilization                       |  |      | (3,429,272 | )    |  | -17.46 | % |      | (3,592,864 | ) |  | -33.74 | %
|Tax Bracket benefit                   |  |      | (26,692    | )    |  | -0.14  | % |      |           |   |  |       |  
|                                      |  |      |            |      |  |        |   |      |            |   |  |        |  
|                                      |  |      | 4,557,964  |      |  | 23.20  | % |      | 1,311,024  |   |  | 12.32  | %
|                                      |  |      |            |      |  |        |   |      |            |   |  |        |  

By statute,
the tax years ended December 31, 2004 through December 31, 2007 remain open to
examination by the major taxing jurisdictions to which we are subject to tax.

11) DEFERRED
INCOME TAXES

Deferred
income taxes result from differences in the recognition of gains and losses on
marketable securities, as well as operating loss carry forwards, for tax and
financial statement purposes. The deferred income tax results in a liability
for the marketable securities, while the operating loss carry forwards result
in a deferred tax asset.

As of December
31, 2007 a valuation allowance had been established equal to the full amount of
the deferred tax assets as the Company believed that it was more likely than
not that these tax benefits would not be realized. However during 2008 the
Company realized unexpected large profits on its portfolio investment and if
fact has utilized the full amount of these benefits.

The deferred
tax liability that results from the net unrealized gain on the marketable
securities does not flow through the Statement of Operations due to the
classification of the marketable securities as available-for-sale. Instead, the
deferred tax liability is recorded in Accumulated Other Comprehensive Income, in
the Stockholders Equity section of the Balance Sheet.

The deferred
tax expense that results from the mark-to-market adjustment for book purposes
on the short sales for 2008 is $1,896,483 and is reported in the Statement of
Operations.

The deferred
tax liability, computed at federal statutory rates of 35% in 2008 and 2007, is
composed of the following items:

|                                                                   |  |      |           |      |   |            |  
|------------------------------------------------------------------ |  | ---- | --------- | ---- | - | ---------- | -
|                                                                   |  | 2008 |           | 2007 |  
|                                                                   |  |      |           |      |  
|Deferred tax assets:                                               |  |      |           |      |   |            |  
|Net Operating loss carry forwards                                  |  | $    |          |      | $ | 3,410,396  |  
|Valuation allowance                                                |  |      |          |      |   | (3,410,396 | )
|                                                                   |  |      |           |      |   |            |  
|                                                                   |  |      |           |      |   |           |  
|                                                                   |  |      |           |      |   |            |  
|                                                                   |  |      |           |      |   |            |  
|Deferred tax Liabilities:                                          |  |      |           |      |   |            |  
|Fair market value adjustment for available
  -for -sale securities |  | $    | 6,170,340 |      | $ | 15,726,213 |  
|Mark to market short positions                                     |  |      | 1,896,483 |      |   |           |  
|                                                                   |  |      |           |      |   |            |  
|                                                                   |  |      | 8,066,823 |      |   | 15,726,213 |  
|                                                                   |  |      |           |      |   |            |  

As a result of
the implementation of FIN 48, we
recognized no material adjustment to unrecognized tax benefits. At the adoption
date of January 1, 2007, we had $3,410,396 of unrecognized tax benefits, all of
which would affect our effective tax rate if recognized.

57

---



(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
December 31, 2008, stocks representing 96.46% of the market value of common
stocks held by the Company were listed on the New York Stock Exchange (NYSE).
The Company maintains its investments in seven different brokerage accounts,
five at UBS, one at Merrill Lynch and one at JP Morgan Chase. The limits of
this insurance which is 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 December 31, 2008, the fair market value of securities in excess
of the insured limits is $17,215,801 and the cash on deposit in excess of the
insured limit is $1,829,916.

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.

In the Companys
fiscal year ended December 31, 2008, the sale of Blood Volume Kits accounted
for 57.12% of the Companys total consolidated sales. There were three
customers (hospitals) that accounted for 49.52% of the Companys sale 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
in our Form 10-Q for the period ended September 30, 2008, 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.

In response to
Medicares change in its reimbursement policy for diagnostic
radiopharmaceuticals, Daxor has lobbied CMS both individually and as a member
of the Society of Nuclear Medicines APC Task Force, which is a select group of
representatives from industry and healthcare that represents the more than
16,000 nuclear medicine professionals in the United States. One of the missions
of the APC Task Force is to work directly with the CMS in an attempt to amend
the current policy limiting the reimbursement of diagnostic
radiopharmaceuticals for outpatient diagnostic services.

Daxor has also
begun to concentrate its marketing and sales effort on inpatient diagnostic
services by demonstrating the cost savings associated with the use of the blood
volume analysis in the care of critically ill patients.

The Company
has one pending legal action which covers the normal range of its business. It
is the opinion of management that the Company has substantial legal and factual
defenses to contest this action. The Company intends to aggressively and
vigorously defend this action.

(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 annual amount of rental income
received from the President of the Company in the years ended December 31,
2008, 2007 and 2006 was $11,478, $11,022 and $10,646.

Jonathan
Feldschuh is the co-inventor of the BVA-100 Blood Volume Analyzer and is the
son of Dr. Joseph Feldschuh. In 2007 and 2008 he provided specialized consulting
services with respect to the blood volume analyzer for which he received a
salary each year of $18,720 plus benefits. He is expected to provide a limited
amount of consultative help in the filing of the additional patents in 2009.

58

---



(14) RESEARCH
AND DEVELOPMENT EXPENSES

All research
and development costs are expensed in the period they are incurred. Research
and development costs for the years ended December 31, 2008, 2007 and 2006 were
$2,438,423, $2,576,708 and $2,332,339. These amounts have been classified
according to the criteria specified in SFAS No. 2  Accounting for Research and Development Costs.

(15) INTEREST
EXPENSE AND INCOME

Interest
expense was $184,909, $210,049, and $367,651 and interest income was $37,408,
$12,838, and $3,699 in 2008, 2007, and 2006- respectively.

(16)
COMMITMENTS

(A) Operating
Leases

The Company
leases office and laboratory space in New York City. The lease agreement for
the New York City facility is a non-cancelable lease, subject to annual
increases based on the Consumer Price Index, and will expire on December 31,
2015.

The Company
subleased space in its New York facility to a related party only in 2008 and
2007 and a related party and a third party in 2008, 2007 and 2006. The amount
of rental income received for the year ended December 31, 2008, 2007 and 2006
was $11,478, $11,022 and $13,646 and is classified as other income in the
Statement of Operations.

Future minimum
rental payments under the non-cancelable operating lease, exclusive of future
cost of living and tax escalation increases, are as follows:

|           |  |   |         | 
|---------- |  | - | ------- | 
|2009       |  | $ | 306,420 | 
|2010       |  | $ | 306,420 | 
|2011       |  | $ | 306,420 | 
|2012       |  | $ | 306,420 | 
|2013       |  | $ | 306,420 | 
|Thereafter |  | $ | 919,260 | 

Rent expense
for all non-cancelable operating leases was $323,287, $371,561, and $352,560
for the years ended December 31, 2008, 2007 and 2006 respectively.

(17)
SUBSEQUENT EVENTS

There were no
subsequent events which took place after December 31, 2008 which required
disclosure in this Form 10-K.

(18) SEGEMENT
REPORTING

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 tables summarize the results of each segment described above for the
years ended December 31, 2008, 2007 and 2006.

59

---



|                                                            |  |                                      |            |                                    |   |                       |   |       |            |   |   |            |  
|----------------------------------------------------------- |  | ------------------------------------ | ---------- | ---------------------------------- | - | --------------------- | - | ----- | ---------- | - | - | ---------- | -
|                                                            |  | December 31, 2008                    |           
|                                                            |  |                                      |           
|                                                            |  | Equipment Sales &
  Related Services |            | Cryobanking &
  Related
  Services |   | Investment
  Activity |   | Total |           
|                                                            |  |                                      |            |                                    |   |                       |   |       |           
|                                                           
|Revenues                                                    |  | $                                    | 1,381,105  |                                    | $ | 379,950               |   |       |           |   | $ | 1,761,055  |  
|                                                            |  |                                      |            |                                    |   |                       |   |       |            |   |   |            |  
|Expenses                                                    |  |                                      |            |                                    |   |                       |   |       |            |   |   |            |  
|                                                            |  |                                      |            |                                    |   |                       |   |       |            |   |   |            |  
|Cost of sales                                               |  |                                      | 674,576    |                                    |   | 42,702                |   |       |           |   |   | 717,278    |  
|                                                            |  |                                      |            |                                    |   |                       |   |       |            |   |   |            |  
|Research and Development                                    |  |                                      | 2,257,601  |                                    |   | 180,822               |   |       |           |   |   | 2,438,423  |  
|                                                            |  |                                      |            |                                    |   |                       |   |       |            |   |   |            |  
|Selling, general and administrative
  expenses              |  |                                      | 3,085,575  |                                    |   | 726,931               |   |       |           |   |   | 3,812,506  |  
|                                                            |  |                                      |            |                                    |   |                       |   |       |            |   |   |            |  
|                                                            |  |                                      |            |                                    |   |                       |   |       |            |   |   |            |  
|Total Costs and Expenses                                    |  |                                      | 6,017,752  |                                    |   | 950,455               |   |       |            |   |   | 6,968,207  |  
|                                                            |  |                                      |            |                                    |   |                       |   |       |            |   |   |            |  
|Operating loss                                              |  |                                      | (4,636,647 | )                                  |   | (570,505              | ) |       |           |   |   | (5,207,152 | )
|                                                            |  |                                      |            |                                    |   |                       |   |       |            |   |   |            |  
|                                                            |  |                                      |            |                                    |   |                       |   |       |            |   |   |            |  
|Investment income, net                                      |  |                                      |            |                                    |   |                       |   |       |            |   |   |            |  
|                                                            |  |                                      |            |                                    |   |                       |   |       |            |   |   |            |  
|Dividends                                                   |  |                                      |           |                                    |   |                      |   |       | 2,509,966  |   |   | 2,509,966  |  
|                                                            |  |                                      |            |                                    |   |                       |   |       |            |   |   |            |  
|Gain on sales of securities, net                            |  |                                      |           |                                    |   |                      |   |       | 17,249,716 |   |   | 17,249,716 |  
|                                                            |  |                                      |            |                                    |   |                       |   |       |            |   |   |            |  
|Mark to market of short positions                           |  |                                      |           |                                    |   |                      |   |       | 5,364,215  |   |   | 5,364,215  |  
|                                                            |  |                                      |            |                                    |   |                       |   |       |            |   |   |            |  
|Administrative expenses relating to
  portfolio investments |  |                                      |           |                                    |   |                      |   |       | (99,935    | ) |   | (99,935    | )
|                                                            |  |                                      |            |                                    |   |                       |   |       |            |   |   |            |  
|Total Investment income, net                                |  |                                      |           |                                    |   |                      |   |       | 25,023,962 |   |   | 25,023,962 |  
|                                                            |  |                                      |            |                                    |   |                       |   |       |            |   |   |            |  
|                                                            |  |                                      |            |                                    |   |                       |   |       |            |   |   |            |  
|Interest expense, net, of interest
  income of $37,408      |  |                                      | (33,877    | )                                  |   |                      |   |       | (113,624   | ) |   | (147,501   | )
|                                                            |  |                                      |            |                                    |   |                       |   |       |            |   |   |            |  
|Other income                                                |  |                                      | 11,478     |                                    |   | 446                   |   |       |           |   |   | 11,924     |  
|                                                            |  |                                      |            |                                    |   |                       |   |       |            |   |   |            |  
|                                                            |  |                                      |            |                                    |   |                       |   |       |            |   |   |            |  
|Income (loss) before income taxes                           |  |                                      | (4,659,046 | )                                  |   | (570,059              | ) |       | 24,910,338 |   |   | 19,681,233 |  
|                                                            |  |                                      |            |                                    |   |                       |   |       |            |   |   |            |  
|Income tax expense                                          |  |                                      | (30,242    | )                                  |   | (133                  | ) |       | 4,588,339  |   |   | 4,557,964  |  
|                                                            |  |                                      |            |                                    |   |                       |   |       |            |   |   |            |  
|                                                            |  |                                      |            |                                    |   |                       |   |       |            |   |   |            |  
|Net income (loss)                                           |  | $                                    | (4,628,804 | )                                  | $ | (569,926              | ) | $     | 20,321,999 |   | $ | 15,123,269 |  
|                                                            |  |                                      |            |                                    |   |                       |   |       |            |   |   |            |  
|                                                            |  |                                      |            |                                    |   |                       |   |       |            |   |   |            |  
|Total assets                                                |  | $                                    | 5,449,389  |                                    | $ | 205,670               |   | $     | 71,169,122 |   | $ | 76,824,181 |  
|                                                            |  |                                      |            |                                    |   |                       |   |       |            |   |   |            |  

60

---



|                                                            |  |                                      |            |                                    |   |                       |   |       |            |   |   |             |  
|----------------------------------------------------------- |  | ------------------------------------ | ---------- | ---------------------------------- | - | --------------------- | - | ----- | ---------- | - | - | ----------- | -
|                                                            |  | December 31, 2007                    |           
|                                                            |  |                                      |           
|                                                            |  | Equipment Sales &
  Related Services |            | Cryobanking &
  Related
  Services |   | Investment
  Activity |   | Total |           
|                                                            |  |                                      |            |                                    |   |                       |   |       |           
|                                                           
|Revenues                                                    |  | $                                    | 1,453,201  |                                    | $ | 416,578               |   |       |           |   | $ | 1,869,779   |  
|                                                            |  |                                      |            |                                    |   |                       |   |       |            |   |   |             |  
|Expenses                                                    |  |                                      |            |                                    |   |                       |   |       |            |   |   |             |  
|                                                            |  |                                      |            |                                    |   |                       |   |       |            |   |   |             |  
|Cost of sales                                               |  |                                      | 634,938    |                                    |   | 47,848                |   |       |           |   |   | 682,786     |  
|                                                            |  |                                      |            |                                    |   |                       |   |       |            |   |   |             |  
|Research and Development                                    |  |                                      | 2,390,352  |                                    |   | 186,356               |   |       |           |   |   | 2,576,708   |  
|                                                            |  |                                      |            |                                    |   |                       |   |       |            |   |   |             |  
|Selling, general and administrative
  expenses              |  |                                      | 3,326,211  |                                    |   | 714,944               |   |       |           |   |   | 4,041,155   |  
|                                                            |  |                                      |            |                                    |   |                       |   |       |            |   |   |             |  
|                                                            |  |                                      |            |                                    |   |                       |   |       |            |   |   |             |  
|Total Costs and Expenses                                    |  |                                      | 6,351,501  |                                    |   | 949,148               |   |       |            |   |   | 7,300,649   |  
|                                                            |  |                                      |            |                                    |   |                       |   |       |            |   |   |             |  
|Operating loss                                              |  |                                      | (4,898,300 | )                                  |   | (532,570              | ) |       |           |   |   | (5,430,870  | )
|                                                            |  |                                      |            |                                    |   |                       |   |       |            |   |   |             |  
|                                                            |  |                                      |            |                                    |   |                       |   |       |            |   |   |             |  
|                                                            |  |                                      |            |                                    |   |                       |   |       |            |   |   |             |  
|                                                            |  |                                      |            |                                    |   |                       |   |       |            |   |   |             |  
|Investment income, net                                      |  |                                      |            |                                    |   |                       |   |       |            |   |   |             |  
|                                                            |  |                                      |            |                                    |   |                       |   |       |            |   |   |             |  
|Dividends                                                   |  |                                      |           |                                    |   |                      |   |       | 2,419,476  |   |   | 2,419,476   |  
|                                                            |  |                                      |            |                                    |   |                       |   |       |            |   |   |             |  
|Gain on sales of securities, net                            |  |                                      |           |                                    |   |                      |   |       | 14,853,934 |   |   | 14,853,934  |  
|                                                            |  |                                      |            |                                    |   |                       |   |       |            |   |   |             |  
|Mark to market of short positions                           |  |                                      |           |                                    |   |                      |   |       | 357,337    |   |   | 357,337     |  
|                                                            |  |                                      |            |                                    |   |                       |   |       |            |   |   |             |  
|Administrative expenses relating to
  portfolio investments |  |                                      |           |                                    |   |                      |   |       | (55,538    | ) |   | (55,538     | )
|                                                            |  |                                      |            |                                    |   |                       |   |       |            |   |   |             |  
|                                                           
|Total Investment income, net                                |  |                                      |           |                                    |   |                      |   |       | 17,575,209 |   |   | 17,575,209  |  
|                                                            |  |                                      |            |                                    |   |                       |   |       |            |   |   |             |  
|                                                            |  |                                      |            |                                    |   |                       |   |       |            |   |   |             |  
|Interest expense, net, of interest
  income of $12,838      |  |                                      | (33,169    | )                                  |   |                      |   |       | (164,042   | ) |   | (197,211    | )
|                                                            |  |                                      |            |                                    |   |                       |   |       |            |   |   |             |  
|Other income                                                |  |                                      | 11,022     |                                    |   | 90                    |   |       | 0          |   |   | 11,112      |  
|                                                            |  |                                      |            |                                    |   |                       |   |       |            |   |   |             |  
|                                                            |  |                                      |            |                                    |   |                       |   |       |            |   |   |             |  
|Income (loss) before income taxes                           |  |                                      | (4,920,447 | )                                  |   | (532,480              | ) |       | 17,411,167 |   |   | 11,958,240  |  
|                                                            |  |                                      |            |                                    |   |                       |   |       |            |   |   |             |  
|Income tax expense                                          |  |                                      | 56,328     |                                    |   | 563                   |   |       | 1,254,133  |   |   | 1,311,024   |  
|                                                            |  |                                      |            |                                    |   |                       |   |       |            |   |   |             |  
|                                                            |  |                                      |            |                                    |   |                       |   |       |            |   |   |             |  
|Net income (loss)                                           |  | $                                    | (4,976,775 | )                                  | $ | (533,043              | ) | $     | 16,157,034 |   | $ | 10,647,216  |  
|                                                            |  |                                      |            |                                    |   |                       |   |       |            |   |   |             |  
|                                                            |  |                                      |            |                                    |   |                       |   |       |            |   |   |             |  
|Total assets                                                |  | $                                    | 4,594,491  |                                    | $ | 146,990               |   | $     | 97,819,019 |   | $ | 102,560,500 |  
|                                                            |  |                                      |            |                                    |   |                       |   |       |            |   |   |             |  

61

---



|                                                              |  |                                      |            |                                    |   |                       |   |       |            |   |   |            |  
|------------------------------------------------------------- |  | ------------------------------------ | ---------- | ---------------------------------- | - | --------------------- | - | ----- | ---------- | - | - | ---------- | -
|                                                              |  | December 31, 2006                    |           
|                                                              |  |                                      |           
|                                                              |  | Equipment Sales &
  Related Services |            | Cryobanking &
  Related
  Services |   | Investment
  Activity |   | Total |           
|                                                              |  |                                      |            |                                    |   |                       |   |       |           
|                                                             
|Revenues                                                      |  | $                                    | 1,055,706  |                                    | $ | 430,743               |   | $     |           |   | $ | 1,486,449  |  
|                                                              |  |                                      |            |                                    |   |                       |   |       |            |   |   |            |  
|Expenses                                                      |  |                                      | 585,742    |                                    |   | 45,825                |   |       |           |   |   | 631,567    |  
|                                                              |  |                                      |            |                                    |   |                       |   |       |            |   |   |            |  
|Cost of sales                                                 |  |                                      |            |                                    |   |                       |   |       |            |   |   |            |  
|Research and Development                                      |  |                                      | 2,195,371  |                                    |   | 137,028               |   |       |           |   |   | 2,332,399  |  
|Selling, general and administrative
  expenses                |  |                                      | 3,645,655  |                                    |   | 301,749               |   |       |           |   |   | 3,947,404  |  
|                                                              |  |                                      |            |                                    |   |                       |   |       |            |   |   |            |  
|Total Costs and Expenses                                      |  |                                      | 6,426,768  |                                    |   | 484,602               |   |       |            |   |   | 6,911,370  |  
|                                                              |  |                                      |            |                                    |   |                       |   |       |            |   |   |            |  
|Operating loss                                                |  |                                      | (5,371,062 | )                                  |   | (53,859               | ) |       |           |   |   | (5,424,921 | )
|                                                              |  |                                      |            |                                    |   |                       |   |       |            |   |   |            |  
|                                                              |  |                                      |            |                                    |   |                       |   |       |            |   |   |            |  
|Investment income                                             |  |                                      |            |                                    |   |                       |   |       |            |   |   |            |  
|Dividends                                                     |  |                                      |           |                                    |   |                      |   |       | 2,273,737  |   |   | 2,273,737  |  
|                                                              |  |                                      |            |                                    |   |                       |   |       |            |   |   |            |  
|Gain on sales of securities, net                              |  |                                      |           |                                    |   |                      |   |       | 3,316,710  |   |   | 3,316,710  |  
|                                                              |  |                                      |            |                                    |   |                       |   |       |            |   |   |            |  
|Mark to market of short positions                             |  |                                      |           |                                    |   |                      |   |       | (544,629   | ) |   | (544,629   | )
|                                                              |  |                                      |            |                                    |   |                       |   |       |            |   |   |            |  
|Administrative expenses relating to
  portfolio investments   |  |                                      |           |                                    |   |                      |   |       | (44,564    | ) |   | (44,564    | )
|                                                              |  |                                      |            |                                    |   |                       |   |       |            |   |   |            |  
|                                                              |  |                                      |            |                                    |   |                       |   |       |            |   |   |            |  
|Total                                                         |  |                                      |            |                                    |   |                       |   |       |            |   |   |            |  
|Investment income, net                                        |  |                                      |           |                                    |   |                      |   |       | 5,001,254  |   |   | 5,001,254  |  
|                                                              |  |                                      |            |                                    |   |                       |   |       |            |   |   |            |  
|                                                              |  |                                      |            |                                    |   |                       |   |       |            |   |   |            |  
|Interest income (expense), net of
  interest income of $3,699 |  |                                      |           |                                    |   | (258                  | ) |       | (363,694   | ) |   | (363,952   | )
|Other income                                                  |  |                                      | 13,652     |                                    |   | 186                   |   |       |           |   |   | 13,838     |  
|                                                              |  |                                      |            |                                    |   |                       |   |       |            |   |   |            |  
|Income (loss) before income taxes                             |  |                                      | (5,357,410 | )                                  |   | (53,931               | ) |       | 4,637,560  |   |   | (773,781   | )
|                                                              |  |                                      |            |                                    |   |                       |   |       |            |   |   |            |  
|Income tax expense                                            |  |                                      | 11,350     |                                    |   | 400                   |   |       |           |   |   | 11,750     |  
|                                                              |  |                                      |            |                                    |   |                       |   |       |            |   |   |            |  
|                                                              |  |                                      |            |                                    |   |                       |   |       |            |   |   |            |  
|Net income (loss)                                             |  | $                                    | (5,368,760 | )                                  | $ | (54,331               | ) | $     | 4,637,560  |   | $ | (785,531   | )
|                                                              |  |                                      |            |                                    |   |                       |   |       |            |   |   |            |  
|                                                              |  |                                      |            |                                    |   |                       |   |       |            |   |   |            |  
|Total assets                                                  |  | $                                    | 3,978,385  |                                    | $ | 116,718               |   |       | 74,071,209 |   | $ | 78,166,312 |  
|                                                              |  |                                      |            |                                    |   |                       |   |       |            |   |   |            |  

62

---



(19) SELECTED
FINANCIAL DATA

Summary of
Quarterly Financial Data (Unaudited) for the Year Ended December 31, 2008

|                                           |  |                            |           |                            |   |                            |  |                            |           |  |   |           |  
|------------------------------------------ |  | -------------------------- | --------- | -------------------------- | - | -------------------------- |  | -------------------------- | --------- |  | - | --------- | -
|Description                                |  | Quarter
  ended
  03/31/08 |           | Quarter
  ended
  06/30/08 |   | Quarter
  ended
  09/30/08 |  | Quarter
  ended
  12/31/08 |          
|                                           |  |                            |           |                            |   |                            |  |                            |          
|Operating Revenues                         |  | $                          | 420,913   |                            | $ | 556,587                    |  | $                          | 451,253   |  | $ | 332,302   |  
|Operating Expenses including Cost of Sales |  | $                          | 1,689,714 |                            | $ | 1,780,838                  |  | $                          | 1,672,976 |  | $ | 1,824,679 |  
|                                           |  |                            |           |                            |   |                            |  |                            |           |  |   |           |  
|Other Income                               |  | $                          | 8,589,809 |                            | $ | 3,129,093                  |  | $                          | 9,948,065 |  | $ | 3,221,418 |  
|Income Taxes                               |  |                            |          |                            | $ | 400,000                    |  | $                          | 2,325,000 |  | $ | 1,832,964 |  
|                                           |  |                            |           |                            |   |                            |  |                            |           |  |   |           |  
|Net Income(Loss)                           |  | $                          | 7,321,008 |                            | $ | 1,504,842                  |  | $                          | 6,401,342 |  | $ | (103,923  | )
|Income(Loss) Per Share-Basic               |  | $                          | 1.66      |                            | $ | 0.35                       |  | $                          | 1.48      |  | $ | ($0.01    | )
|Income(Loss)Per Share-Diluted              |  | $                          | 1.66      |                            | $ | 0.34                       |  | $                          | 1.47      |  | $ | ($0.01    | )

Summary of
Quarterly Financial Data (Unaudited) for the Year Ended December 31, 2007

|                                           |  |                            |           |                            |   |                            |  |                            |           |  |   |           | 
|------------------------------------------ |  | -------------------------- | --------- | -------------------------- | - | -------------------------- |  | -------------------------- | --------- |  | - | --------- | 
|Description                                |  | Quarter
  ended
  03/31/07 |           | Quarter
  ended
  06/30/07 |   | Quarter
  ended
  09/30/07 |  | Quarter
  ended
  12/31/07 |          
|                                           |  |                            |           |                            |   |                            |  |                            |          
|Operating Revenues                         |  | $                          | 505,882   |                            | $ | 545,318                    |  | $                          | 349,547   |  | $ | 469,032   | 
|Operating Expenses including Cost of Sales |  | $                          | 1,711,749 |                            | $ | 1,779,579                  |  | $                          | 1,918,386 |  | $ | 1,890,935 | 
|                                           |  |                            |           |                            |   |                            |  |                            |           |  |   |           | 
|Other Income                               |  | $                          | 4,265,861 |                            | $ | 3,574,176                  |  | $                          | 3,524,442 |  | $ | 6,024,631 | 
|Income Taxes                               |  |                            |          |                            |   |                           |  |                            |          |  | $ | 1,311,024 | 
|                                           |  |                            |           |                            |   |                            |  |                            |           |  |   |           | 
|Net Income                                 |  | $                          | 3,059,994 |                            | $ | 2,339,915                  |  | $                          | 1,955,603 |  | $ | 3,291,704 | 
|Income Per Share-Basic                     |  | $                          | 0.66      |                            | $ | 0.51                       |  | $                          | 0.43      |  | $ | 0.73      | 
|Income Per Share-Diluted                   |  | $                          | 0.66      |                            | $ | 0.51                       |  | $                          | 0.43      |  | $ | 0.73      | 

63

---



The consolidated
statements of operations data for the years ended December 31, 2008, 2007, 2006
and 2005 are derived from our audited consolidated financial statements that
are included herein. The consolidated statements of operations data for the
year ended December 31, 2004 has been derived from audited consolidated
financial statements that are not included in this report.. Operations Data:

|                                                               |  |                         |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|-------------------------------------------------------------- |  | ----------------------- | ---------- | ---- | - | ---------- | - | ---- | ---------- | ---- | - | ---------- | - | - | ---------- | -
|                                                               |  | Year Ended December 31, |           
|                                                               |  | 2008                    |            | 2007 |   | 2006       |   | 2005 |            | 2004 |  
|                                                               |  |                         |            |      |   |            |   |      |            |      |  
|                                                               |  |                         |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|Operating revenues                                             |  | $                       | 1,761,055  |      | $ | 1,869,779  |   | $    | 1,486,449  |      | $ | 1,343,538  |   | $ | 1,066,314  |  
|                                                               |  |                         |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|Total revenues                                                 |  |                         | 1,761,055  |      |   | 1,869,779  |   |      | 1,486,449  |      |   | 1,343,538  |   |   | 1,066,314  |  
|                                                               |  |                         |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|                                                               |  |                         |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|Costs and expenses:                                            |  |                         |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|                                                               |  |                         |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|Operations of laboratories & costs of
  production             |  |                         | 717,278    |      |   | 682,786    |   |      | 631,567    |      |   | 565,742    |   |   | 251,622    |  
|Research and Development                                       |  |                         | 2,438,423  |      |   | 2,576,708  |   |      | 2,332,399  |      |   | 2,152,261  |   |   | 1,566,115  |  
|                                                               |  |                         |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|                                                               |  |                         |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|Selling, general and administrative                            |  |                         | 3,812,506  |      |   | 4,041,155  |   |      | 3,947,404  |      |   | 3,528,560  |   |   | 2,790,444  |  
|                                                               |  |                         |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|Total costs and expenses                                       |  |                         | 6,968,207  |      |   | 7,300,649  |   |      | 6,911,370  |      |   | 6,246,563  |   |   | 4,608,181  |  
|                                                               |  |                         |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|                                                               |  |                         |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|Loss from operations                                           |  |                         | (5,207,152 | )    |   | (5,430,870 | ) |      | (5,424,921 | )    |   | (4,903,025 | ) |   | (3,541,867 | )
|                                                               |  |                         |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|                                                               |  |                         |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|Other Income and Expenses:                                     |  |                         |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|Dividend income                                                |  |                         | 2,509,966  |      |   | 2,419,476  |   |      | 2,273,737  |      |   | 2,511,054  |   |   | 1,990,669  |  
|Gains on sale of investments                                   |  |                         | 17,249,716 |      |   | 14,853,934 |   |      | 3,316,710  |      |   | 1,515,653  |   |   | 989,599    |  
|Mark to Market of Short Positions                              |  |                         | 5,364,215  |      |   | 357,337    |   |      | (544,629   | )    |   | (204,225   | ) |   | 266,807    |  
|Other revenues                                                 |  |                         | 11,924     |      |   | 11,112     |   |      | 13,838     |      |   | 14,686     |   |   | 15,245     |  
|Investment Recovery                                            |  |                         |           |      |   |           |   |      |           |      |   | 75,000     |   |   |           |  
|Admin Expense relating to portfolio
  investments              |  |                         |            |      |   | (99,935    | ) |      | (55,538    | )    |   | (44,564    | ) |   | (1,126     | )
|                                                               |  |                         |            |      |   |            |   |      |            |      |   | (36,842    | ) |   |            |  
|Interest expense, net of Interest Income                       |  |                         | (147,501   | )    |   | (197,211   | ) |      | (363,952   | )    |   | (296,114   | ) |   | (108,949   | )
|                                                               |  |                         |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|Total Other Income and Expenses                                |  |                         | 24,888,385 |      |   | 17,389,110 |   |      | 4,651,140  |      |   | 3,579,212  |   |   | 3,152,245  |  
|                                                               |  |                         |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|                                                               |  |                         |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|Income (Loss) before income taxes                              |  |                         | 19,681,233 |      |   | 11,958,240 |   |      | (773,781   | )    |   | (1,323,813 | ) |   | (389,622   | )
|                                                               |  |                         |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|                                                               |  |                         |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|Provision for income taxes                                     |  |                         | 4,557,964  |      |   | 1,311,024  |   |      | 11,750     |      |   | 12,168     |   |   |           |  
|                                                               |  |                         |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|                                                               |  |                         |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|Net Income (Loss)                                              |  | $                       | 15,123,269 |      | $ | 10,647,216 |   | $    | (785,531   | )    | $ | (1,335,981 | ) | $ | (389,622   | )
|                                                               |  |                         |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|                                                               |  |                         |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|Weighted average number of common shares
  outstanding - basic |  |                         | 4,350,951  |      |   | 4,572,119  |   |      | 4,625,168  |      |   | 4,638,384  |   |   | 4,615,993  |  
|                                                               |  |                         |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|Weighted average number of common shares
  outstanding- basis  |  |                         | 4,375,623  |      |   | 4,572,119  |   |      | 4,625,168  |      |   | 4,638,384  |   |   | 4,615,993  |  
|                                                               |  |                         |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|                                                               |  |                         |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|Income (Loss) per common equivalent share -
  basic            |  | $                       | 3.48       |      | $ | 2.33       |   | $    | (0.17      | )    | $ | (0.29      | ) | $ | (0.08      | )
|                                                               |  |                         |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|Income (Loss) per common equivalent share -
  diluted          |  | $                       | 3.46       |      | $ | 2.33       |   | $    | (0.17      | )    | $ | (0.29      | ) | $ | (0.08      | )
|Dividends Per Common Share                                     |  | $                       | 1.50       |      |   |           |   |      |           |      |   |           |   |   |           |  
|                                                               |  |                         |            |      |   |            |   |      |            |      |   |            |   |   |            |  

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For the Year
Ended December 31, 2008, the Company paid total dividends of $6,452,502 or
$1.50 per share on its Common Stock. The dividend of $1.50 per share was paid
as follows: $0.25 per share on August 26th, $0.25 per share on
November 26th and a special dividend of $1.00 per share on December
30, 2008.

This is the
first time the Company has paid dividends since a single cash dividend of $0.50
per share on the Common Stock in 1997. No dividends have been declared or paid
in 2009 and any future dividends will be dependent upon the Companys earnings,
financial condition and other relevant factors.

Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.

None
to report.

Item 9A. Controls and Procedures

Evaluation of Disclosure Controls and
Procedures

Item 9A.
CONTROLS AND PROCEDURES

(a) Evaluation
a/Disclosure Controls and Procedures:

We maintain
disclosure controls and procedures, as such term is defined in Rule 13a-15(e)
and Rule 15d-15(e) under the Securities Exchange Act of 1934 (the Exchange
Act), that are designed to ensure that information required to be disclosed in
reports we file or submit under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in Securities and
Exchange Commission rules and forms, and that such information is collected and
communicated to management, including our Chief Executive Officer and Chief
Financial Officer, as appropriate, to allow timely decisions regarding required
disclosure.

In designing
and evaluating our disclosure controls and procedures, management recognized
that no matter how well conceived and operated, disclosure controls and
procedures can provide only reasonable, not absolute, assurance that the
objectives of the disclosure controls and procedures are met. Our disclosure
controls and procedures have been designed, and management believes that they
meet, reasonable assurance standards. Based on their evaluation as of the end
of the period covered by this Annual Report on Form 10-K, the Chief Executive
Officer and the Chief Financial Officer have concluded that, subject to the
limitations noted above, our disclosure controls and procedures were effective.

65

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(b)
Managements Report on Internal Control Over Financial Reporting

The management
of the Company is responsible for establishing and maintaining adequate
internal control over financial reporting. Our internal control system was
designed to provide reasonable assurance to our management and board of
directors regarding the preparation and fair presentation of published
financial statements. All internal control systems, no matter how well
designed, have inherent limitations. Therefore, even those systems determined
to be effective can provide only reasonable assurance with respect to financial
statement preparation and presentation.

Our management
assessed the effectiveness of our internal control over financial reporting as
of December 31, 2008. In making this assessment, we used the criteria set forth
in Internal Control - Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission. Based on our assessment,
we believe that, as of December 31, 2008, the companys internal control over
financial reporting was effective based on those criteria. This annual report
does not include an attestation report of the Companys registered public
accounting firm pursuant to temporary rules of the Securities and Exchange
Commission that permit the Company to provide only managements report in this
annual report

(c) Changes in
Internal Control Over Financial Reporting

As of the year
ended December 31, 2008, there were no changes in our internal control over
financial reporting (as defined in Rule 13a-15(J) under the Exchange Act) that
have materially affected, or are reasonably likely to affect, our internal
control over financial reporting.

PART III

Item 10. Directors and Executive Officers of the Registrant.

The
information required by item 10 is incorporated by reference to our proxy
statement for our 2009 Annual Meeting of Shareholders, which will be filed with
the Securities and Exchange Commission within 120 days after the close of our
2008 year end.

Item 11. Executive Compensation.

The
information required by item 11 is incorporated by reference to our proxy
statement for our 2009 Annual Meeting of Shareholders, which will be filed with
the Securities and Exchange Commission within 120 days after the close of our
2008 year end.

Item 12. Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters.

This
information required by item 12 is incorporated by reference to our proxy
statement for our 2009 Annual Meeting of Shareholders, which will be filed with
the Securities and Exchange Commission within 120 days after the close of our
2008 year end.

Item 13. Certain Relationships and Related Transactions.

There are no
relationships or related transactions beyond those which have been disclosed in
the 10-K.

Item 14. Principal Accounting Fees and Services.

For the years
ended December 31, 2008 and December 31, 2007, the Company paid (or will pay)
the following fees to Rotenberg Meril Solomon Bertiger & Guttilla, PC, its
independent registered accounting firm, for services rendered during the year
or for the audit in respect of those years:

|               |  |      |         |      |   |         | 
|-------------- |  | ---- | ------- | ---- | - | ------- | 
|Fee Type       |  | 2008 |         | 2007 |  
|               |  |      |         |      |  
|               |  |      |         |      |   |         | 
|Audit Fees (1) |  | $    | 125,650 |      | $ | 104,863 | 
|Tax Fees (2)   |  |      | 19,066  |      |   | 10,346  | 
|All Other Fees |  |      | 3,630   |      |   | 2,565   | 
|               |  |      |         |      |   |         | 
|               |  |      |         |      |   |         | 
|Total          |  | $    | 148,346 |      | $ | 117,774 | 
|               |  |      |         |      |   |         | 

66

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| |     |                                                                                                                                                                                          
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) | Fees paid
  for professional services rendered in connection with the audit of the annual
  financial statements and review of the quarterly financial statements for
  each fiscal year.
| |     |                                                                                                                                                                                          
| | (2) | Represents
  fees paid for tax compliance, tax planning and related tax services.                                                                                                        

Audit Committee Pre-Approval of Audit and
Permissible Non-Audit Services of Independent Auditors

The Audit
Committee pre-approves all audit and permissible non-audit services provided by
the independent auditors. These services may include audit services,
audit-related services, tax services and other services. The Audit Committee
has adopted a policy for the pre-approval of services provided by the
independent auditors.

PART IV

Item 15. Exhibits and Financial Statement Schedules.

67

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SIGNATURES

Pursuant to
the requirements of Section 13 or 15(d) of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereto duly authorized.

DAXOR CORPORATION

|                        |                          | 
|----------------------- | ------------------------ | 
|                        |                          | 
|                        | by: /s/ Joseph Feldschuh | 
|                        |                          | 
|                        | Joseph
  Feldschuh, M.D  | 
|                        | President
  and Chief    | 
|                        | Executive
  Officer      | 
|                        | Chairman
  of the Board  | 
|                        |                          | 
|Dated:
  March 19, 2009 |                          | 

Pursuant to
the requirements of the Securities and Exchange Act of 1934, this report has
been signed below by the following persons on behalf of the Registrant and in
the capacities and on the dates indicated.

|                       |  |                         |  |               
|---------------------- |  | ----------------------- |  | --------------
|Signature              |  | Title                   |  | Date          
|                       |  |                         |  |               
|                       |  |                         |  |               
|/s/ Joseph Feldschuh   |  | President and Director  |  | March 19, 2009
|                       |  |                         |  |               
|Joseph Feldschuh, M.D. |  | Chief Executive Officer |  |               
|                       |  |                         |  |               
|/s/ Stephen Feldschuh  |  | Chief Operating Officer |  | March 19, 2009
|                       | 
|Stephen Feldschuh      |  |                         |  |               
|                       |  |                         |  |               
|/s/ David Frankel      |  | Chief Financial Officer |  | March 19, 2009
|                       |  |                         |  |               
|David Frankel          |  |                         |  |               
|                       |  |                         |  |               
|/s/ Diane M. Meegan    |  | Corporate Secretary     |  | March 19, 2009
|                       |  |                         |  |               
|Diane M. Meegan        |  |                         |  |               
|                       |  |                         |  |               
|/s/ Robert Willens     |  | Director                |  | March 19, 2009
|                       |  |                         |  |               
|Robert Willens         |  |                         |  |               
|                       |  |                         |  |               
|/s/ James Lombard      |  | Director                |  | March 19, 2009
|                       |  |                         |  |               
|James Lombard          |  |                         |  |               
|                       |  |                         |  |               
|/s/ Martin Wolpoff     |  | Director                |  | March 19, 2009
|                       |  |                         |  |               
|Martin Wolpoff         |  |                         |  |               
|                       |  |                         |  |               
|/s/ Mario Biaggi       |  | Director                |  | March 19, 2009
|                       |  |                         |  |               
|Mario Biaggi, ESQ      |  |                         |  |               
|                       |  |                         |  |               
|/s/ Bernhard Saxe      |  | Director                |  | March 19, 2009
|                       |  |                         |  |               
|Bernhard Saxe, ESQ     |  |                         |  |               
|                       |  |                         |  |               
|/s/ Stanley Epstein    |  | Director                |  | March 19, 2009
|                       |  |                         |  |               
|Stanley Epstein, M.D.  |  |                         |  |               

68

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|                          |  |                           
|------------------------- |  | --------------------------
|Board of Directors:       |  |                           
|                          |  |                           
|Name                      |  | Title                     
|                          |  |                           
|Dr. Joseph Feldschuh      |  | Chairman, President, & CEO
|James Lombard             |  | Director                  
|Martin Wolpoff            |  | Director                  
|Robert Willens            |  | Director                  
|Mario Biaggi, ESQ         |  | Director                  
|Bernhard Saxe, ESQ        |  | Director                  
|Dr. Stanley Epstein, M.D. |  | Director                  

69

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