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

Form 10-K

x ANNUAL
REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES Exchange Act of 1934

For the fiscal year ended: December 31, 2007OroTRANSITION REPORT PURSUANT
TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from ________ to _________

Commission file number 0-12248Daxor 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: American Stock Exchange
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 an accelerated filer (as defined in Rule 12b-2 of the
Act)

o Yes  x No


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, 2007, the last day
of the registrants most recently completed second fiscal quarter was
$22,778,757. As of February 29, 2008 there were 4,413,118 shares of the
Registrants common stock, par value $.01 per share, outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

The 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                                                                                                       |  | 3    | 
|Item 1A. |  | Risk Factors                                                                                                   |  | 22   | 
|Item 2.  |  | Properties                                                                                                     |  | 23   | 
|Item 3.  |  | Legal Proceedings                                                                                              |  | 23   | 
|Item 4.  |  | Submission of Matters to a Vote of Security Holders                                                            |  | 23   | 
|         |  |                                                                                                                |  |      | 
|         |  | PART II                                                                                                        |  |      | 
|         |  |                                                                                                                |  |      | 
|Item 5.  |  | Market for Registrants Common Equity, Related Shareholder
  Matters and Issuer Purchases of Equity Securities |  | 24   | 
|Item 6.  |  | Selected Financial Data                                                                                        |  | 25   | 
|Item 7.  |  | Managements Discussion and Analysis of Financial Condition and
  Results of Operations                        |  | 27   | 
|Item 7A. |  | Quantitative and Qualitative Disclosures about Market Risk                                                     |  | 34   | 
|Item 8.  |  | Consolidated Financial Statements and Supplementary Data Index to
  Financial Statements                       |  | 46   | 
|Item 9.  |  | Changes and Disagreements with Accountants on Accounting and
  Financial Disclosure                            |  | 74   | 
|Item 9A. |  | Controls and Procedures                                                                                        |  | 74   | 
|         |  |                                                                                                                |  |      | 
|         |  | PART III                                                                                                       |  |      | 
|         |  |                                                                                                                |  |      | 
|Item 10. |  | Directors and Executive Officers of the Registrant                                                             |  | 75   | 
|Item 11. |  | Executive Compensation                                                                                         |  | 75   | 
|Item 12. |  | Security Ownership of Certain Beneficial Owners and Management
  and Related Shareholder Matters               |  | 75   | 
|Item 13. |  | Certain Relationships and Related Transactions                                                                 |  | 75   | 
|Item 14. |  | Principal Accountant Fees and Services                                                                         |  | 76   | 
|         |  |                                                                                                                |  |      | 
|         |  | PART IV                                                                                                        |  |      | 
|         |  |                                                                                                                |  |      | 
|Item 15. |  | Exhibits and Financial Statement Schedules                                                                     |  | 76   | 

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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 describes 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
assessment 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, 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 for presurgical evaluation.
Additional possible uses include management of kidney dialysis and for use in a
comprehensive program of 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 four to eight 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. 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. Standard techniques require a technician to
prepare an exact matching set of standards, precisely and completely injecting
the tracer, collecting five timed blood samples, and then preparing the samples
in precise quantities for measurement. Due to the time required, certain
technical shortcuts were often used that reduced the accuracy of the
measurement. Therefore, the complexity and length required for achieving an
accurate blood volume result, prior to the introduction of Daxors BVA-100
Blood Volume Analyzer, reduced the use of blood volume measurements to be
performed in only a small minority of hospitals in the United States.Another technique used for
blood volume measurement, particularly the red cell volume part of the blood
volume, involves taking a sample of the patients blood and incubating it with
CR51, a radioisotope. This blood then undergoes a series of complex steps which
involves removal of the excess chromium isotope and carefully measuring the
amount of radioisotope which has attached itself to the patients red cells.
The patients chromated red blood cells are then re-transfused into the
patient. This test has been particularly used by nuclear medicine departments
for evaluation of the red cell volume in a condition called polycythemia. Polycythemia
is a condition in which the patient may have too much blood which can
predispose to thrombosis and other complications. One of the problems with this
test is that it requires re-transfusion of a patients blood and has the
potential for erroneous transfusion of another patients blood. This
complication has occurred.  Daxors BVA-100 Blood Volume Analyzer system,
which includes a prepared dose with a matched standard, eliminates the need to
re-transfuse patient blood. Historically, however, it was thought that the
chromated red blood cell method was a more accurate method to determine a
patients red blood cell volume. A recent publication in the American Journal of Medical Sciences (Am J
Med Sci 2007;334(1):37-40) compared the Chromium 51 method to Daxors method
and found the two studies to be equivalent, with significant time and ease of
use benefits with Daxors Blood Volume Analyzer BVA-100.

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At the present time blood
volume measurement is an infrequently performed test. Instead of accurate blood
volume measurement, physicians who needed to assess volume status commonly used
clinical assessment with physical examination or standard surrogate, or proxy,
tests such as hemoglobin and hematocrit. However, these methods have frequently
been found to be inadequate determinations of total blood volume. The only time
the hematocrit or hemoglobin is accurate is when the patients volume status is
normal. If the total blood volume is either expanded or contracted, then the
use of these tests can produce misguided information. Hemoglobin and hematocrit
testing measure only the thickness of the blood (percentage of red cells to
plasma within the blood) and not the actual volume. The hematocrit and
hemoglobin tests themselves may be significantly inaccurate. New York State
Department of Health proficiency tests which are required of laboratories
performing these tests will tolerate an error of 8 to 10% of the red cell
volume status and still be considered passing. A patient who has undergone a
change of red cell volume of 8 to 10% has lost a considerable amount of blood.
Physical Symptoms are not reliable indicators of blood volume status. In acute
situations, such as during surgical blood loss or after trauma, it may take as
long as 24 to 72 hours for the hematocrit to reasonably reflect the degree of
blood loss.

An additional problem with
respect to blood volume measurement is the difficulty of calculating an
accurate normal 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 has varied in relation to the degree of
deviation from ideal weight. The work was performed in the laboratory of Nobel
Prize Winner Dr. Andre Cournand. A leaner individual has a higher blood volume
percentage of body weight as compared to an obese individual. The computations
for an individuals normal expected blood volume were complex and time
consuming, and frequently simpler norms incorporating body weight or body
surface area were used. These norms, however, are known to have systematic
errors for individuals who are lean, obese, short, or tall. The combination of
difficult time consuming, sometimes inaccurate techniques for measuring blood
volume, in combination with inaccurate norms for a specific individual,
presented a formidable barrier to the implementation of blood volume
measurement for routine clinical use. It was widely understood by a significant
number of physicians that an accurate measurement of blood volume could provide
important essential information in the management of critically ill patients.

The BVA-100® Blood Volume
Analyzer enables rapid, reliable measurement of blood volume. The Companys
patented injection and collection kit, Volumex, utilizes Albumin I-131, a
classic tracer used for blood volume measurement. The kit includes two matching
standards and a pre-measured volumetric flow-through chamber that contains the
radiopharmaceutical. This kit eliminates most of the previous time consuming
steps to prepare for a blood volume as well as improving accuracy. 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 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, Tenessee to expand its research, development, and manufacturing
capabilities.

After successful beta
testing for the Blood Volume Analyzer at hospitals in the New York metropolitan
region, the Company expanded marketing efforts outside of the New York region.
The initial beta testing period can be considered to have run from
approximately early 1998 to mid 2000. The next phase of beta testing was a
change in focus to reaching out to major hospitals in the United States, such
as the Mayo Clinic, The National Institutes of Health (NIH), and the Cleveland
Clinic. This phase was marked by incorporation of the BVA-100® into various
research studies, many of which later resulted in publication. This phase,
which lasted from approximately mid 2000 to mid 2003, resulted in the first retention
of instruments by hospitals and the utilization of the instrument on a wider
scale by nationally recognized physicians and institutions. Test results from
hospital sites indicated that the Blood Volume Analyzer was accurate and
provided information that was important in a wide variety of acute and chronic
medical and surgical situations. The first results from studies began to appear
in 2000, but it was not until 2002 that we began to see publication in peer
reviewed journals of studies initiated in 2000. Often there is a gap of 2-4
years between initial contact and full publication in a peer reviewed journal.
In 2002 the Company retained a recruiting firm to develop a professional sales
team. Since 2003, we have entered a marketing phase, focusing on developing a
strong marketing team and working to transition the BVA-100® from utilization
primarily in research studies into widespread clinical use. In 2003, we also
initiated a major overhaul of the BVA-100® technology from a DOS-based system
to a Windows based system (see Research and Development).

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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. Below we describe 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
based on the condition for which they were admitted. 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, a number of
studies 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 which investigate the clinical
application of blood volume measurements in critical care, heart failure,
hypertension and pre and post-surgical applications. A recent symposium issue
from Vanderbilt University was published in the American Journal of Medical Sciences in June 2007 featuring
articles from varied institutions representing the areas in which blood volume
measurement have already achieved some measure of acceptance and utilization
and in which expanded utilization is likely.

Daxor has worked extensively
with the facilities who have published research studies to help them to
publication. Daxor has provided these facilities with use of equipment,
training, ongoing consultation and help with interpretation and display of
results. For certain research projects, Daxor has also provided the Volumex
doses and financial support. The Company believes that supporting these initial
studies will result in increased acceptance and utilization of the BVA-100
Blood Volume Analyzer.

Heart Failure

Approximately five million
individuals are treated annually for heart failure. It is estimated that $38
billion is spent annually 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), a
type of mechanical heart.

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 their usual 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 promises to 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. The guidelines are updated once
every 3 to 5 years.

This landmark study
highlights the importance of correcting a heart failure patients blood volume
to normal. The most recent revision (2005) of the Heart Failure Treatment
Guidelines of the American College of Cardiology and American Heart Association
(ACC/AHA) has cited the Androne study and has referred to the BVA-100 Blood
Volume Analyzer as an accurate method of blood volume measurement. The ACC/AHA
guidelines have, for the past 20 years, recommended blood volume assessment as
an essential component of the diagnosis and ongoing treatment of heart failure.
This study 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.

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Two earlier studies from New
York Presbyterian Medical Center and Hospital were published in the leading
cardiac journal Circulation. One study used blood volume measurement with
Daxors BVA-100, Blood Volume Analyzer to distinguish between true anemia and
hemodilution in heart failure patients. The second study examined the effects
of erythropoietin on exercise performance in anemic heart failure patients.
Senior authors were, respectively, Ana-Silvia Androne, MD, Stuart D. Katz, MD,
et al, and Donna M. Mancini, MD. These studies demonstrated that different
heart failure patients with similar physical symptoms and low hematocrits might
have true anemia (a decrease in red cell volume) or hemodilution (an increase
in plasma volume). These differences were not reliably identified without
direct blood volume measurement from the BVA-100.

Many of the patients in the
above studies were severely ill and were being considered for heart transplant
or implantation of left ventricular assistance devices. Several other studies
have recently confirmed that anemic heart failure patients may have very significant
improvement through pharmacological treatment rather than more expensive and
risky surgical interventions. Cardiac transplants are obviously available to
only a very small fraction of congestive heart failure patients. Left
ventricular assistance devices (LVAD) may be available as an interim measure
while waiting for transplantation and have been studied as a possible
destination therapy. While the mortality rate of LVAD implantation continues to
improve, the one-year mortality after LVAD implantation averages around 50%.
Further, LVAD therapy is costly (initial costs average around $200,000, with
approximately $100,000 in annual follow-up costs for surviving patients),
requires intensive follow-up, and is available at only a limited number of heart
failure care centers. The ability to effectively treat these patients
pharmacologically, without surgery, promises not only to prolong patients
lives but to be much less expensive.

In the November 2005 issue
of the American Heart Journal, Dr. Karen James and colleagues from the
Cleveland Clinic published a study utilizing the BVA-100, comparing blood
volume measurement, brain natriuretic peptide (BNP, a common test used to
measure the severity of heart failure), and hemodynamic measurements in the
short term treatment of acute heart failure. All patients had expanded volumes
at the beginning of treatment and tended to experience improvement in blood
volume and symptoms after treatment. Blood volume was a better indicator of
improvement than brain natriuretic peptide. The authors concluded that blood
volume measurement may be a better measurement to track short-term improvement
in heart failure. This is the first study of its kind in which serial direct
blood volume measurements were performed, first before treatment and then 24-36
hours after initiation of acute heart failure treatment in the cardiac ICU. The
study also documented that blood volume measurement was more accurate than
Pulmonary Artery Catheterization (PAC), Brain Natiuretic Peptide, or any other
test in determining the blood volume status of the patient. PAC is an invasive
procedure with significant risks in contrast to whole blood volume measurement,
which is a non-invasive procedure.

Dr. Matthew Maurer, et al.
at Columbia Presbyterian, recently published a study in the April 2005 issue of
the Journal
of Cardiac Failure.This study utilized the BVA-100 Blood Volume
Analyzer with other diagnostic methods to identify subgroups of patients with
diastolic heart failure. Diastolic heart failure is a major category in heart
failure that is difficult to treat. Blood volume measurement may provide
essential information for optimum treatment in these patients.

Multiple case reports from
other cardiologists using the Blood Volume Analyzer have confirmed that heart
failure patients may have serious blood volume derangements that cannot be
correctly diagnosed without direct blood volume measurement. Utilization of
blood volume measurement in heart failure treatment may significantly prolong
lives and reduce expensive and risky interventions.

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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 enable
more precise and appropriate treatment.

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. In their most recent results,
including 86 data points from 40 patients, 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 was
changed 20% of the time. Among patients who did not receive PAC measurement,
treatment was changed 45% of the time. Dr. Yu and her colleagues have presented
their findings at the Society of Critical Care 2006 and 2007 annual meetings
and their studies were featured in the November 2005 issue of Anesthesiology Newsand the January 2008 Hawaii Medical Journal. These studies are
preliminary studies that are currently being followed up by additional studies
evaluating how incorporating blood volume measurement into critical care
treatment affects outcomes. However, these initial studies showed little to no
correlation between blood volume and various pressure measurements that are
typically used in the critical care unit. However, by utilizing the BVA-100
data, altered treatment occurred 21% of the time, with a demonstrated favorable
clinical response in 83% of the patients.

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 will be
altered by incorporating blood volume measurement as a routine clinical tool in
the intensive care unit. Patients will be divided into two groups, those in whom
blood volume measurements will be performed and repeated as necessary, and
patients in whom blood volume measurements will not be used for clinical
management. This study will be the most specific of its type to document the
potential benefits in such cases. Currently decisions on treatment of critical
care patients is often made on the basis of the use of pulmonary artery
catheterization, which is an invasive technique and measures pressures, not
volume. It also has the potential of causing damage within the circulatory
system and, occasionally, death. Previous studies have shown that PAC has
previously been shown not to be an accurate substitute for a blood volume
measurement. This was first shown in a smaller previously published study from
Lutheran Medical Center using the blood volume analyzer. Dr. Yus study is
expected to be much larger and will be from a university hospital affiliated
with a medical school. The Queens Medical Center is the largest hospital in
the Hawaiian Islands.

At the annual meeting of the
Society of Critical Care Medicine in February, a study entitled Does Hematocrit Reflect Red
Cell Volume when Adjusted for Plasma Volume was presented. This study involved
370 patients who had a total of 689 separate blood volume measurements in the
intensive care units at The Queens Medical Center in Honolulu, Hawaii. Senior
authors of the study were Dr. Kurt Edwards and Mihae Yu, et al, from the
University of Hawaii. This is the largest series in medical history where
hematocrits were compared to direct blood volume measurement.

The study compared the
hematocrit, which is the proportion of a volume of a blood sample that is red
blood cells, to the result obtained when actually measuring the volume of blood
in a patient. The hematocrit is the standard test used to estimate the quantity
of blood in a person and is used in hundreds of thousands of clinical decisions
annually with respect to whether or not to transfuse a patient. Patients in the
study were critically ill, 36% had severe sepsis and/or shock; 31.2% were
trauma patients; 10% were congestive heart failure patients, and 14% were acute
kidney failure patients. 28 (5% of the cases,) patients had lost more than 40%
of their red blood cells and still had a hematocrit of 30 or better, indicating
no need for transfusions. Under usual circumstances they would have been denied
a transfusion. In 12 (2% of the patients) there was a red cell deficit of less
than 10% with a hematocrit less than 30. These were patients who clearly did
not need transfusions yet, under the usual circumstances, would have been
transfused. The authors concluded that direct measurement of blood volume
provides a more specific guide to red cell transfusion than the hematocrit test
which does not measure volume directly. Patients may be denied transfusions
that would benefit from transfusions, and some patients who do not need a
transfusion may be transfused.

At the same conference Dr.
Yu presented a second study on the use of the BNP test for assessing the volume
status of the patient entitled Does Blood Volume and BNP Correlate? to
determine if there is any correlation between BNP levels and blood volume
measurements in critically ill patients. The study reported on 38 surgical
intensive care unit patients who had a total of 58 blood volume measurements
obtained simultaneously with BNP measurements. The diagnosis of the patients
included septic shock, trauma, and hemorrhagic shock. The study concluded that
there was no correlation between BNP levels and the blood volume status of the
patient. This is the largest study reported to date where blood volumes were
actually measured simultaneously with BNP levels in critically ill patients.
The authors concluded that blood volume measurements may guide in optimizing
fluid measurements when there is uncertainty about the intravascular volume
status of complex patients.

A fundamental goal of the
Company is to make blood volume measurement a standard of care in critically
ill patients in the intensive care unit. In order to achieve this goal, it is
necessary to have basic studies that can document that there is a significant
improvement in both patient outcomes and reduction of costs.

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Syncope

The Cleveland Clinic
Cardiovascular Department is ranked #1 in the United States by the annual
survey in the U.S. World & New Report. There have been more blood volumes
performed at the Cleveland Clinic 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 Section in the Cardiovascular Department of the Cleveland Clinic has
been utilizing the BVA-100® for help 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 diagnosed
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 in the diagnostic work-up of a
syncope patient to guide therapy.

An
important condition related to syncope is orthostatic hypotension, which has
been estimated to be present in one out of every three elderly patients.
Orthostatic hypotension is a sudden drop in blood pressure that occurs when an
individual rises to a standing position. It may cause dizziness, loss of
balance, or a complete loss of consciousness. If an episode of orthostatic
hypotension precipitates a fall, the person may suffer severe injuries, such as
a broken hip. One in eight elderly Americans experiences a hip fracture.

Effective treatment of
syncope requires an understanding of the underlying causes in each individual.
Among other possible causes, a low blood volume can contribute to a
predisposition to syncope. Some pharmacological treatments include
fludrocortisone, which increases the plasma volume, and midodrine, which causes
increased constriction of the blood vessels. The safety and effectiveness of
these medications can be affected by blood volume derangements.

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 (excessive
increase in hear rate [>30 bpm] on standing, associated with orthostatic
symptoms in the absence of orthostatic hypotension) can produce substantial
disability among otherwise healthy people. Vanderbilt University Medical
School published a study in Circulation, 2005;111:1574-1582utilizing
the blood volume analyzer. Senior authors were Satish R. Raj, M.D,
David Robertson, M.D, et al. This study was initiated in October 2002 and
reported in 2005. Patients with these conditions, particularly those with rapid
heart beats, are sometimes diagnosed as having panic attacks and treated
inappropriately with psychiatric medications. These are two of the first
studies to provide clear evidence that low blood volume may play a major role
in many of these cases and provide an opportunity for specific corrective
therapy. This study, using the BVA-100, demonstrated that many of these
patients have a marked reduction in their plasma volume and that they also have
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.
Another study from the same institution entitled Postural Pseudoanemia:
Posture-Dependent Change in Hematocrit was published in the Mayo Clinic
Proceedings 2005;80(5):611-614. Senior authors were Drs. Geris Jacob, David
Robertson, et al. These authors demonstrated that Changes in posture can lead
to substantial changes in hematocrit, which may be attributed mistakenly to
blood loss or acute anemia and result in a cascade of unnecessary diagnostic
costs. In reality, these changes represent postural pseudoanemia, a normal
physiological response to a change in their position from standing to lying and
vice versa.

Transfusion Decisions in Surgery

Effective use of transfusion
in surgical situations requires accurate assessment of a patients need for
transfusion. Knowing whether and when to transfuse blood depends on effectively
balancing the benefits and risks of transfusion for each patient at any given
time. The risks of donor transfusion, such as infectious disease transmission
and transfusion reactions, are well documented, and physicians frequently
attempt to avoid these risks by withholding transfusion until a patient is
severely anemic. Under current transfusion practices, patients may undergo
major surgery with half the concentration of normal red cells. This level of
anemia, however, has its own risks. There have been recent reports in 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.

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Dr K Shevde and colleagues
from Maimonides Medical Center in Brooklyn published a report in the November
2002 issue of the Journal of Clinical Anesthesia that evaluated blood volume
measurement results with the BVA-100 to compare transfusion requirements in
males and females undergoing coronary bypass graft surgery. They found that
women, on average, had lower blood volumes than men prior to surgery and
received more transfusions despite losing the same amounts of blood. This is
the first study to document the reasons why women are at increased risk for
requiring a transfusion when undergoing cardiac bypass 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. SJ 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. In this study, patients in the critical care unit
received pulmonary artery catheterization as well as blood volume measurement
with the BVA-100, and results were compared. There was some correlation between
blood volume and cardiac output, but otherwise measurements using the pulmonary
artery catheter and blood volume results were not related to each other. This
indicates that, in addition to being invasive, pulmonary artery catheterization
does not provide an accurate estimate of blood volume. Direct blood volume measurement
is less invasive and more accurate

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 findings support the reliability and improved
feasibility of the BVA-100 for clinical use. Results from this study were
published in the June 2007 American Journal
of Medical Sciences. Dr. Dworkins paper demonstrated that
preliminary blood volume results could be obtained in under 45 minutes

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

Below are examples of some
other major conditions for which blood volume measurement promises to improve
diagnosis and treatment. While no research studies have been published focusing
specifically on these conditions, some users of the BVA-100 utilize blood
volume measurement in their treatment of these and other conditions.

Hypertension

A recent study by the Mayo
Clinic estimated that 50 million Americans have hypertension (high blood
pressure). It is reported that 70% of hypertensive patients have their blood
pressures inadequately controlled. Hypertension is caused primarily by two
variables: abnormal expansion of blood volume or excessive constriction of the blood
vessels. Hypertension treatments are aimed at reducing blood volume (such as
with diuretics) or relaxing the blood vessels (such as with vasodilators), but
for any individual patient, the specific choice of treatment is determined on a
trial and error basis. With blood volume measurement, blood volume expansion
can be confirmed or ruled out, allowing a physician to choose treatment more
precisely and avoid the risks of inappropriate treatment.

One of the most serious
complications of hypertension is loss of kidney function (renal failure), which
may result in a patient requiring permanent renal dialysis. The kidney is
particularly vulnerable to low blood volume. Certain medications, such as
diuretics, can cause blood volume to decrease and, when inappropriately
prescribed, can increase the possibility of kidney failure. The measurement of
blood volume in the treatment of hypertension may help prevent these types of
complications.

African-Americans are
disproportionately at risk for hypertension and have been reported to have
significantly higher rates of kidney failure as a complication of hypertension.  While no studies have yet to be published on the use of the BVA-100 in
hypertension, the Company is currently engaged in negotiating with leading medical
institutions to conduct such studies. Currently, several medical facilities
have been using the BVA-100 on a clinical basis in the diagnosis and treatment
of hypertension. The Mayo Clinic, which purchased the BVA-100 in 2003, has
reported that blood volume measurement can be helpful in defining therapy.

While no studies have been
published on the use of the BVA-100 in hypertension, several medical facilities
have been using the BVA-100 on a clinical basis in the diagnosis and treatment
of hypertension. The Mayo Clinic, which purchased the BVA-100 in 2003, has
reported that blood volume measurement can be helpful in defining therapy.

Anemia

Studies have been published
documenting the usefulness of the BVA-100 in diagnosing anemia in heart
failure, but the ability to accurately diagnose anemia has much wider
implications. Anemia is common in a wide number of conditions, including
chemotherapy for cancer, HIV and chronic fatigue syndrome. Frequently, the
presence of anemia is associated with poorer outcomes, and in some conditions
successful treatment of anemia leads to improved outcomes.

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Clinical assessment with
physical examination and the use of surrogate tests such as hematocrit
measurement does not reliably detect anemia. In some cases a patient may have a
pseudoanemia, or a normal red cell volume with an expanded plasma volume. In
other cases, a patient may have a hidden anemia, in which both the red cell
and the plasma volume are low. A hematocrit or hemoglobin test would not
indicate the presence or the true severity of the patients anemia.

Epogen and Procrit can be
used to treat certain types of anemia. These medications are manufactured by
the Amgen Corporation, and Procrit is distributed by the Ortho Division of
Johnson & Johnson. Blood volume measurement can be a key test in
determining the need for and evaluating the effectiveness of these types of
treatments. These drugs have recently received significant criticism because of
studies that have implicated them in higher incidence of thrombosis resulting
in strokes and heart attacks. The Company has been in discussions with
representatives of Amgen to conduct studies which could demonstrate that blood
volume measurement would provide for a more definitive and accurate type of
treatment. In some of these studies that were reported, there was a significant
overshoot of the targeted hematocrit which may have been a factor in the
increased incidence of thrombosis. In a published study entitled Hemodilution
is Common in Patients with Advanced Heart Failure (Circulation, 2002) it was
demonstrated that in these anemic patients, a blood volume measurement was
necessary to differentiate patients who were truly anemic from those who had an
expanded blood volume and who could suddenly have a marked overshoot of their
hematocrit. These patients were termed pseudo anemic.

Renal Dialysis

Renal dialysis patients
undergo major fluid shifts during dialysis. Anecdotal evidence suggests that
approximately 25% of dialysis patients experience significant episodes of
hypotension (sudden drop in blood pressure) during the course of treatment.
Hypotensive episodes may have consequences ranging from nausea and
lightheadedness to myocardial infarction and death.

Blood volume measurement may
be used as a way to establish a patients baseline blood volume; hematocrit
measurements can then be used to track fluid shifts during dialysis. This can
enable physicians to more precisely determine how much fluid can be safely
removed during dialysis.

The Company has discussed
the use of the BVA-100® with several dialysis centers. While some individual
patients undergoing dialysis receive blood volume measurement, no large-scale
agreement has yet been reached with any dialysis centers.

Blood Substitutes

Blood substitutes have been
proposed for over a decade as a desirable alternative to donor blood
transfusion. Ideally, blood substitutes would increase the oxygen carrying
capacity of blood without exposing the patient to the risks of donor blood
transfusion. They could have the added benefit of having longer shelf lives and
being sterilizable, and could be carried in emergency medical vehicles for
immediate availability in emergency situations.

Several manufacturers,
including Northfield Laboratories, Biopure, and Hemosol Corporation, have
tested different types of blood substitutes. To date, despite many attempts by
these companies, none have received FDA approval for these procedures. In blood
substitute studies, patients were treated without the treating physicians
knowing the patients blood volumes prior to or after administration of the
blood substitute. Even in standard transfusion situations, patient outcomes can
vary greatly depending on the need for transfusion and on whether an
appropriate amount of blood was transfused. Lack of this type of basic
information may obscure results on the effectiveness and safety of blood
substitutes and may be one of the factors behind the FDAs unwillingness over
the past 10 years to license any of these types of blood substitutes.

Additionally, blood
substitutes have a very short half life of 24-28 hours, as opposed to 20-30
days for transfused red blood cells. Thus, transfusion of a blood substitute
without follow-up blood management may only delay the consequences of lost
blood by a day or two. Blood volume measurement could also be helpful in
guiding longer-term blood management decisions.

The Company had extensive
discussions about incorporating blood volume measurement into blood substitute
studies with the Hemosol Corporation, and one of the medical directors had
indicated a willingness to use a Blood Volume Analyzer. However, the company
developed a financial crisis and was unable to continue their studies. The
company has discontinued almost all its operations. At the present, only Northfield
Laboratories appears to be actively engaged in testing a blood substitute.
Northfield recently had increased incidence of death and complications in
patients receiving their blood substitute. The Company believes that one of the
reasons these negative results occur is because treating physicians do not have
an accurate assessment of the amount of blood the patient has lost or an
accurate assessment of the amount of blood the patient has after the blood
substitute is no longer effective. The Company has contacted an FDA official
about the potential benefits of incorporating blood volume measurement into
future protocols to more accurately assess any potential benefits from blood
substitutes, as well as their inherent risks.

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SCIENTIFIC
MEDICAL SYSTEMS SUBSIDIARY (wholly owned by Daxor)

Scientific Medical Systems
is a subsidiary wholly owned by Daxor that engages in cryobanking of frozen
blood and semen (sperm). Idant is a division of the Scientific Medical Systems
subsidiary that offers sperm 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 six billion dollars. 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 four million
patients. The present donor system of blood transfusions presents risks to
individuals receiving blood. Despite improved testing, infectious diseases such
as HIV, hepatitis, and West Nile Virus may be transmitted through donor blood.
For HIV and hepatitis, there is a window period of 3-6 months between initial
infection and when an individual develops detectable antibodies. The FDA is
particularly cautious and will not permit an individual who received a
transfusion to donate blood for up to one year following the transfusion.
Additional risks of donor blood include adverse reactions to incorrectly or
incompletely matched blood and suppression of the immune system.

In an effort to avoid the
risks of donor transfusion, physicians frequently withhold blood from severely
anemic patients. It is a common medical practice to replace the first three
pints of lost blood with three pints of sterile water or the equivalent. When
patients are under the stress of illness and surgery, they are even more
vulnerable to ill effects of decreased perfusion and oxygen delivery than healthy
individuals. Multiple studies have shown increased complications, such as
shock, kidney failure, myocardial infarction, stroke, and death, in people
undergoing surgical procedures who develop extremely low hematocrits (red cell
concentration). The number of patients who suffer major complications,
including sudden death from under-transfusion, is unknown but significant. This
problem has not been brought to the publics attention, but it is widely known
among physicians who have treated patients who have lost blood.

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 (self-storage) blood banking. The Companys frozen blood bank is the
only blood bank in New York that allows people to store their own blood for up
to ten years. Utilizing cryobiology technology, frozen blood has been shown to
be capable of being stored for up to 37 years; however, the current legal limit
is 10 years for red cell cryostorage.

The Company believes that an
educational process can establish the advantages of frozen autologous blood
storage. Education can also overcome opposition to any change in the current
blood banking system from established tax-exempt (non-profit) and profit-making
entities. The Company believes that it can work with some voluntary blood banks
and hospitals to establish joint marketing of long term frozen personal blood
storage programs. 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.

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
freezing temperatures can be maintained. The previous system can theoretically
withstand more than 48 hours without electricity without irreversible loss of
the frozen blood. The new system provides for a 2  3 week frozen capability
without electricity. Freezing blood requires highly sophisticated technology to
enable a sterile cryo protective agent to be mixed into the blood prior to
freezing. Freezing blood directly destroys the red blood cells. When the blood
is ready for use, the process is reversed and the special cryo protective agent
is removed, utilizing special sterile technologies, from the frozen blood after
thawing.

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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 page 12) 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, donate blood to be frozen, and then be retested after six months of
the donation. This blood can then be used as donor blood with markedly reduced
risk of infectious disease transmission. These types of safety procedures are
standard with frozen donor semen, which is much less infectious than blood. In
contrast, standard donor blood is tested only once, refrigerated, and used
within weeks of collection.

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. 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.

The underlying principal of
the BOP is to enable patients undergoing elective surgery to store frozen blood
in advance of surgery at a time and frequency that will be determined with the
help of blood volume measurement. If a patient does not donate his or her own
blood at all, then he or she faces the risks that come from donor transfusion.
The only truly safe blood is ones own blood. However, patients who donate
their own blood just prior to surgery are frequently anemic and at a higher
risk for complications than they would be had they not donated blood. Patients
who store blood 28 to 35 days prior to surgery may be able to restore one to
two pints of blood, but blood that is refrigerated for 28 to 35 days has been
shown to undergo significant deterioration, decreasing the effectiveness of
transfusion. Frozen blood does not suffer such deterioration and thus is more
effective than refrigerated blood that has been stored for several weeks.
Because of its reliable quality and improved safety, infants who require
transfusion usually receive only fresh frozen blood which is thawed and
reconstituted just prior to use.

Under the Blood Optimization
Program, a patient can donate blood well in advance of surgery and store it in
a frozen state, with sufficient time to restore a normal amount of blood before
entering surgery. Additionally, blood volume measurement prior to surgery can identify
patients with existing blood volume deficits, which can be treated with
medications such as erythropoietin.

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.

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.

Semen stored at -321 degrees
Fahrenheit (immersed in liquid nitrogen) has shown minimal change after as long
as 30 years of storage. Idant stores semen for donor insemination as well as
for personal storage by men facing infertility. The Company also provides, on
request, special screening for rare hereditary recessive genetic traits.

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 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 may 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 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 treatments. The Company receives referrals for these services from
multiple sources, primarily physicians.

Idant has been a pioneer in
the safety of anonymous sperm 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 six months after donation,
the risk of Hepatitis and HIV transmission can be virtually eliminated. Four
years later, in 1989, New York and a number of other states enacted laws
requiring sperm banks to quarantine frozen sperm for a minimum of six months.

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Idant utilizes the most
reliable and effective cryopreservation technology available. The FDA does not
currently have specific standards for reporting the effectiveness of semen
storage, so there is no assurance that a given semen bank uses the best
available technology to ensure the longest possible viability of frozen sperm.
The Company uses a customized carousel canister system in its sperm bank
storage system. This permits retrieval of specimens from lower levels without
removal of upper specimens, thereby avoiding any exposure of other specimens to
room temperature air. Even brief exposure to room temperature may result in
long-term loss of viability of frozen sperm. Most other banks use a rack and
cane pull-up system, which requires removal of upper specimens from the tank
to retrieve specimens at lower levels. In such a bank, a specimen may be
exposed to a temperature change from liquid nitrogen (-321oF) to room
temperature (72oF) more than 100 times during its storage lifetime. This will
result in a gradual degradation of the specimen. In the Idant system the
specimen remains immersed in liquid nitrogen almost continuously while in
storage. The Company is aware of only one other semen bank that uses the
carousel system for long-term storage of semen.

Idant also uses a system of
storing semen in sealed special plastic straws. Almost all other human semen
banks use a system of storing semen in vials with a screw cap. Semen stored in
straws can be heat sealed. This makes the contents of the straws impermeable to
any viruses which may be present in the liquid nitrogen. In contrast, semen
stored in screw top vials cannot be heat sealed. Changes in temperature when
vials are removed from the liquid nitrogen and then replaced can result in some
liquid nitrogen being sucked into the vial. There have been reports of
contamination of stored semen from storage in liquid nitrogen tanks when screw
top vials have been used. This type of contamination is impossible when using
heat sealed straws.

In 2004 Idant received
confirmation of two successful conceptions utilizing sperm stored at Idant for,
respectively, 21 and 29 years. This was the longest successful cryopreservation
of sperm in medical history. The case report was published in the October 2005
issue of Fertility
and Sterility, a major journal. The pregnancies were notable because
they were achieved by artificial insemination. The previous record was for 20
years and was achieved by the considerably more expensive in vitro
fertilization method. The Company believes that its unique storage system for
human sperm is responsible for this extraordinary success.

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 our ability to expand our
research and development and be prepared, in the future, for increased demand
for our products.

In
2006, we released version 5.3 of WINBVA. This software release included
enhanced capabilities for quality assurance, allowing the end users to have
increased flexibility should they fail daily quality control. In the previous
release of the software, if a customer failed daily quality control, they would
need to correct the problem and then re-run the 40 minute test. The updated
version allows the user to correct the issue, and then re-run the subset of
quality control, thus decreasing the length of time to achieve the required
full Pass of daily quality control, which is needed in order to run patient
samples. In addition to the changes to quality control, there were numerous
coding changes that occurred in this version of the software. Most of these
changes are invisible to the end user; however, they either correct small
coding errors from previous versions or enhance speed and performance of the
internal software.

Although blood volume
measurement has been available for over 50 years, the test was rarely performed
because of cumbersome requirements that made the procedure difficult. When
Daxor Corporation developed the first semi-automated system ever approved by
the FDA, it encountered a generation of physicians who had little or no direct
experience with blood volume measurements, with the exception of hematologists
who used the test for a single condition, polycythemia vera (elevated red cell
volume) and preferred to use another method (Chromium 51) that measured red
cell volume. That method required 4 - 6 hours to perform and included
re-transfusion of the patients blood cells after they were tagged with
Chromium 51. This technique exposed the patient to the risk of a potential mismatched
transfusion, which has occurred.

Daxor presumed that the
benefits of an automated system which involved no transfusion risks and
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 administration
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, which can be quite inaccurate, can be performed for
$5 - $10. The company had and has to demonstrate that the savings in lives 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 from the new sales staff that in
addition to opposition to the instrument because of cost, 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. For example, the system could not be altered to
provide a graphic display of the results in addition to numerical results. It
also prevented the incorporation of enhancements that potential users desired.
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.

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By 2003 the company sold
only five instruments despite multiple trials. It had become clear that major
changes were needed. By early 2004 the company had 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.

The following is an
enumeration of a significant number of the engineering changes that were
included in converting the BVA-100D (DOS version) into BVA-100W (Windows
version).

Hardware

|         |   |                                                                                                                                                                                                                                                                      
|-------- | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|         | · | The computer interface was
  upgraded from a separate CPU, CRT monitor, and keyboard to a panel PC with a
  mouse and touch screen.                                                                                                                                  
|         |   |                                                                                                                                                                                                                                                                      
|         | · | Color printers were
  installed.                                                                                                                                                                                                                                     
|         |   |                                                                                                                                                                                                                                                                      
|         | · | A USB connection for the
  multi channel analyzer (MCA) was installed.                                                                                                                                                                                               
|         |   |                                                                                                                                                                                                                                                                      
|         | · | A new control data board
  was installed.                                                                                                                                                                                                                            
|         |   |                                                                                                                                                                                                                                                                      
|         | · | A new dust cover design
  resulted in a decreased height requirement.                                                                                                                                                                                                
|         |   |                                                                                                                                                                                                                                                                      
|         | · | The internal housing was
  redesigned.                                                                                                                                                                                                                               
|         |   |                                                                                                                                                                                                                                                                      
|         | · | New sky shield housing,
  with added finger guards, was added.                                                                                                                                                                                                       
|         |   |                                                                                                                                                                                                                                                                      
|         | · | The carousel which holds
  the samples was changed from Plexiglas to metal.                                                                                                                                                                                          
|         |   |                                                                                                                                                                                                                                                                      
|         | · | A guide for the placement
  of samples was added on top of the carousel.                                                                                                                                                                                             
|         |   |                                                                                                                                                                                                                                                                      
|         | · | A rear Plexiglas plate was
  added for safety purposes.                                                                                                                                                                                                              
|         |   |                                                                                                                                                                                                                                                                      
|         | · | The manual sensor used to
  determine the position of the carousel was upgraded to an optical sensor.                                                                                                                                                                
|         |   |                                                                                                                                                                                                                                                                      
|         | · | The carousel advance
  button was moved to the rear of the instrument.                                                                                                                                                                                               
|         |   |                                                                                                                                                                                                                                                                      
|         | · | The motor was converted
  from AC to DC to create the potential for worldwide placement of the system.                                                                                                                                                               
|         |   |                                                                                                                                                                                                                                                                      
|         | · | The electrical grounding
  was improved                                                                                                                                                                                                                              
|         |   |                                                                                                                                                                                                                                                                      
|         | · | All internal mechanical
  parts were re-engineered to a tolerance of 5/1000.                                                                                                                                                                                         
|         |   |                                                                                                                                                                                                                                                                      
|         | · | A new lead design with
  better tolerance was installed.                                                                                                                                                                                                             
|         |   |                                                                                                                                                                                                                                                                      
|Software
|         |   |                                                                                                                                                                                                                                                                      
|         | · | The system was designed to
  be both HIPPA and CLIA compliant.                                                                                                                                                                                                       
|         |   |                                                                                                                                                                                                                                                                      
|         | · | The operating system was
  upgraded from DOS to Windows XP, using C-Sharp and Visual Basic, with over
  500,000 lines of code and an additional 750,000 lines of hidden code in
  Visual Basic.                                                                      
|         |   |                                                                                                                                                                                                                                                                      
|         | · | Text commands in the DOS
  system were replaced with screen options and easy to use on-screen buttons,
  resulting in easier navigation.                                                                                                                             
|         |   |                                                                                                                                                                                                                                                                      
|         | · | A touch screen keyboard
  was added for easily entering patient demographics.                                                                                                                                                                                        
|         |   |                                                                                                                                                                                                                                                                      
|         | · | Software for calibrating
  and adjusting the sensitivity of the touch screen was installed.                                                                                                                                                                          
|         |   |                                                                                                                                                                                                                                                                      
|         | · | User friendly instructions
  were added to guide the user through entering data and placing the samples
  into the instrument.                                                                                                                                       
|         |   |                                                                                                                                                                                                                                                                      
|         | · | Warnings/flags were
  provided to inform users of errors or questionable data, thus helping the end
  user generate statistically accurate results.                                                                                                                  
|         |   |                                                                                                                                                                                                                                                                      
|         | · | The time required for
  aberrant point elimination was reduced from over 25 minutes to 5 seconds.
  Instead of requiring the user to re-enter data and recalculate the entire
  blood volume, results are instantly recalculated with the erroneous point
  excluded.
|         |   |                                                                                                                                                                                                                                                                      
|         | · | A color screen and
  graphical software were added to graphically present results, including a bar
  graph of results and a color regression chart of blood volume points. A print
  screen function was added to enable color printing of results.                  
|         |   |                                                                                                                                                                                                                                                                      
|         | · | A 30 Gb hard drive, which
  can store a few hundred thousand patient tests and quality control tests, was
  added. This replaced a much smaller previous hard drive that could only store
  200 patient tests. Data can also be backed up on a CD and restored.      
|         |   |                                                                                                                                                                                                                                                                      
|         | · | Options were added
  allowing results to be saved as HTML, PDF, ASCII, Word and Excel files.                                                                                                                                                                         
|         |   |                                                                                                                                                                                                                                                                      
|         | · | Options were added
  allowing BVA tests to be sorted by 6 different fields, 2 of which are
  customizable by the end user, thus making it easier to find saved tests.                                                                                                
|         |   |                                                                                                                                                                                                                                                                      
|         | · | A program for daily
  Quality Control (QC) was installed that greatly simplifies and speeds up
  quality control                                                                                                                                                     

| |    |                                                                                         |                                                                                                                                                                                                                                                                    
| | -- | --------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1. | QC requires only two
  minutes of technician time and is completed in about 40 minutes.
| |    |                                                                                        
| | 2. | Utilizes 4 barium sources
  that are at the nano curie level.                          
| |    |                                                                                        
| |    | -                                                                                       | Checks for background
  radiation.                                                                                                                                                                                                                                 
| |    |                                                                                        
| |    | -                                                                                       | Checks each well for
  contamination.                                                                                                                                                                                                                              
| |    |                                                                                        
| |    | -                                                                                       | Compares and contrasts
  matched standards provided with the Volumex injection kit.                                                                                                                                                                                
| |    |                                                                                        
| |    | -                                                                                       | Checks the gamma counter
  for centroid and full width half max (FWHM), the shape of the peak of the
  centroid, which cannot be to broad or too narrow.                                                                                                           
| |    |                                                                                        
| |    | -                                                                                       | Checks for linearity of
  the system. Each barium source is at a decrease in strength and therefore
  each source has its own rate of counts per minute. The decreasing rate of
  counts should be proportional to the strength of the check source (the
  barium).

14

---



| |   |                                                                                                                                                                                                                                                              
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | · | An automatic system for
  calibrating the gamma counter was added. The user pushes two buttons and
  enters his or her initials, and the system performs the calibration and
  prints out a final report.                                                    
| |   |                                                                                                                                                                                                                                                              
| | · | New software decreased the
  time required to install software upgrades.                                                                                                                                                                                     
| |   |                                                                                                                                                                                                                                                              
| | · | New software, which
  performs preventative maintenance and contains diagnostic features for
  service calls, was installed.                                                                                                                                 
| |   |                                                                                                                                                                                                                                                              
| | · | A new manual calibration
  screen for Daxor technicians was added.                                                                                                                                                                                           
| |   |                                                                                                                                                                                                                                                              
| | · | Programming was added to
  automatically adjust for daylight savings time and leap years. A separate
  section was also included in which date and time corrections can be entered
  with the mouse.                                                         
| |   |                                                                                                                                                                                                                                                              
| | · | Individually customized
  laboratory operations manual (Standard Operating Procedures Manual  SOPM)
  and laminated flip charts were designed and are provide to all users, along
  with the Quick Users Guide, an abbreviated laboratory operations manual.

As a result of these
improvements, especially the upgrade to a Windows operating system, the new
BVA-100 system was categorized by CLIA as a medium complexity instrument,
enabling a wider range of facilities to utilize it. In addition, the many
improvements allow the system to better meet users needs. This upgrade was
essential to helping establish the necessity, reliability, and cost
effectiveness of accurate, rapid blood volume measurement. A primary goal of
clinical research studies is to provide evidence from peer review journals that
will support and document that blood volume measurement should be a standard of
care in specific conditions. 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, Dr. Joseph Feldschuh, as well as Dr. Gary Fischman,
PhD, Director of Research. Additional staff, including the Vice President of
Marketing and a medical writer and statistician, devotes part or all of their
time to supporting the development, completion, and publication of clinical
studies. The Company continues to provide support for studies at various
institutions. Support may consist of free use of blood volume analyzer
equipment, Volumex kits, and support services from Daxor staff. The Company
expects that there will be additional studies published in 2008 on research
studies it has previously helped support. Previously published studies have
documented the benefit of blood volume measurement in the intensive care unit
and in cardiology. However, additional studies are needed for other
institutions to provide further backup. For example, heart failure studies are
continuing at Columbia Presbyterian Medical Center. The Company has unpublished
data documenting the benefit of blood volume measurement using the BVA-100 in hypertension.
Based on this data, we believe that African American patients, in particular,
will benefit from the use of blood volume measurement in determining choice of
therapy. (Refer to previous sections on clinical conditions utilizing blood
volume measurement.)

Blood Banking

Scientific Medical Systems
blood bank has devoted a significant amount of its resources to improvements
and upgrades. The Company installed a system that enables thawed frozen blood
to be used for up to 14 days, as well as a new freezer system that can maintain
blood in a frozen state for 2-3 weeks without electricity.

The Company also devoted a
significant amount of time to developing the Blood Optimization Program, a
method for using both autologous frozen blood and the BVA-100 to optimize
transfusion safety and minimize anemia during surgery (see Blood Banking
discussion on page 11).

In February 2007 the Company
filed a methods patent on its Blood Optimization Program (BOP). In 2007 the
Company signed an agreement with New York University Medical Center to
implement the Blood Optimization Program. The Program incorporates the concept
of blood volume measurement prior to surgery, treatment with blood stimulants
such as epoietin alfa to correct anemia, donation and frozen storage of ones
own blood well in advance of elective surgery, use of autologous blood during
and post surgery, followed up with another blood volume where indicated. The
Program has the ability to fundamentally alter transfusion practices. At the
present time it is not uncommon for patients in their 60s, 70s, 80s, and even
90s, to be permitted to remain in a condition where almost half of their lost
blood is not replaced except with sterile water. There have been published
studies, particularly from Duke University and other institutions,
demonstrating that as much as 40 to 50% of patients undergoing cardiac bypass
surgery, have measurable memory loss. Similar findings have been published in
regard to major orthopedic surgery such as hip replacement. There are numerous
published studies that have demonstrated that there is higher mortality and
morbidity the more anemic patients are. There are many so-called bloodless
surgery programs which advocate very limited blood transfusion replacement. We
are not aware of any study, however, in these programs, which has measured the
degree of memory loss in these programs as compared to patients who undergo a
more liberal transfusion policy.

15

---



A major study published in
the New York Times from Duke and Columbia Universities in June, 2006 entitled
Age of Transfused Blood May Play Part in Recovery demonstrated that patients
who receive older blood have increased mortality and morbidity. Blood can be
stored in a refrigerated state for up to 42 days. Blood banks routinely use the
oldest blood first. Blood stored for more than 20 days already demonstrate
considerable loss of ability to transport oxygen and remove carbon dioxide.
Newborn infants requiring a transfusion are routinely transfused only with
frozen blood. Blood that is frozen within 24 hours after collection does not
show the deterioration of critical oxygen transporting enzymes that occur with
refrigerated blood. A major advantage of the Blood Optimization Program is that
not only will the patient be receiving their own blood, but will be receiving
blood that has been frozen within 24 to 48 hours, and than defrosted when it is
needed.

MARKETING

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

Initial Beta Testing (1999-2000)

After FDA approval for the
instrument and its associated kit, in 1999 the Company began beta testing the
BVA-100 at local hospitals. 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 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 results in peer reviewed
journals. Some of these early studies clearly demonstrated that invasive
techniques such as pulmonary artery catheterization were not as accurate as
direct measurement of blood volume for assessing a patients volume status. In
some cases, the hospitals performed studies but were unsuccessful in publishing
results.

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

Later Beta Testing (2000-2002)

As a result of feedback from
the initial testing, the Company recognized that it was essential for the
instrument next to be placed in nationally recognized facilities. These
facilities, because they worked with more complex conditions and had wider name
recognition, were more likely to recognize the benefits of blood volume
measurement and to publish study 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 NYU Medical Center. US News and World Report
publishes an annual ranking of 6200 Hospitals in the United States. The Mayo
Clinic and The Cleveland Clinic ranked respectively 2 and 3 in the annual
ranking of hospitals. The Cleveland Clinic Cardiovascular Department ranked
number 1 in the US. After trial periods lasting more than one year, these
facilities purchased their instruments and paid for 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 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 markedly improved in order to provide sufficient
features and flexibility to meet users needs (see Research and Development
page 13).

It has been an ongoing goal
of the Company to partner with medical facilities to develop studies that will
result in publication 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 published
in 2004 and later. In addition to the time needed to complete the study itself,
it can take a year or more from submission to 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 determined that the best program was a National Sales Manager
with regional sales representatives. John Reyes-Guerra, one of the original
regional vice presidents, was made Vice President of Sales and Marketing.

16

---



The marketing team has made
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.
Primarily, users are expected to be 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. The Companys website (http://
www.daxor.com) contains extensive detail about the BVA-100® Blood Volume
Analyzer as well as examples of actual cases (with patient identities removed).
The website permits rapid communication between researcher, marketing
personnel, and potential users prior to an onsite visit. In 2007 the Company
exhibited at a total of 20 national, local and regional trade shows.

Despite its success with 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 research.
Towards this goal, presentations and studies developed in 2005 and 2006
utilizing the BVA-100 blood volume analyzer are (1) 2005 - AHA CHF Guidelines
Updated Guidelines for the Treatment of Adults with Heart Failure - Included
Katz/Androne data concerning 50% unrecognized volume status. (ref. Hunt SA, et
al. ACC/AHA 2005 Guideline Update for the Diagnosis and Management of Chronic
Heart Failure in the Adult: A report of the American College of Cardiology/American
Heart Association Task Force on Practice Guidelines.) (2) American Heart Journal - Published BNP vs. BVA - Pilot Study from
Cleveland Clinic - James, K et al. (ref. Am Heart J 2005;150:984.e1-984.e6,
Blood Volume and Brain Natriuretic Peptide in Congestive Heart Failure: A Pilot
Study.) (3) 2006 HFSA Poster Presentations - Columbia Presbyterian College of
Surgeons and Physicians - Anemia in Patients with a Normal Ejection Fraction -
Patients are often women and are anemic and not hemodiluted. (ref. Cohen, R et
al. 2006 Heart Failure Society of America Scientific Session - Poster
Presentation, Anemic Patients with NFHEF have a reduced red cell volume, true
anemia and concomitant plasma volume expansion.) (4) 2006 HFSA Poster
Presentations - Columbia Presbyterian College of Surgeons and Physicians -Is
EPO safe and effective in patients with Diastolic HF - EPO is safe and provide
improved quality of life. (ref. Cohen, R et al. 2006 Heart Failure Society of
America Scientific Session - Poster Presentation, The Administration of
subcutaneous erythropoietin in elderly patients with heart failure and normal
ejection fraction over three month is safe and effective.) (5) Plasma catecholamines and blood volume in
native Andeans during hypoxia and normoxia. (ref. Alfredo Gamboa et al. Clinical Autonomic Research;2006 - 16:40-45) (6) Society of Critical
Care Medicine - 2006 - Yu & Biuk - BVA and the Impact on Fluid Management -
Change in fluid management 45% of the time. (ref. Biuk-Aghai, E, et al. 2006
Society of Critical Care Medicine Scientific Session  Poster Presentation,
Blood Volume Measurements: Impact on Fluid Management.)

One of the barriers to
acceptance of the BVA-100 is that despite the fact that blood volume
measurement is important in so many different medical and surgical situations,
very few physicians have any previous experience utilizing direct blood volume
measurement. Instead, they have relied on surrogate tests such as hematocrit or
hemoglobin measurement, despite the proven inaccuracy of these tests. Even
among institutions that utilize the Blood Volume Analyzer, physicians
frequently have questions regarding the interpretation of blood volume results
and how to best use the results to guide treatment. The Company has instituted
a program of educational representatives to help educate physicians about the
use of blood volume measurement and to act as a liaison between the Company and
users of the BVA-100®. The Company also provides unlimited clinical assistance
through the services of its Chief Scientist and CEO, and its Director of
Research. The Companys Vice President of Marketing spends a significant
portion of time working with facilities to develop research projects, and the
Company employs a medical statistician to help with the interpretation of
research data and preparation of results for publication.

Another barrier is the
perceived cost effectiveness of the tests and the ability of hospitals to
obtain appropriate insurance reimbursement. Hospitals and health facilities are
exceedingly cost conscious in regard to acquiring additional medical
technology. Blood volume measurement is an approved and reimbursable Medicare
test. The Company expends great time and effort to ensure that insurance
companies reimburse hospitals correctly for the cost of the radiopharmaceutical
kit as well as for the performance of the test. The Company also provides
assistance to hospitals and physicians to utilize correct codes and indications
for blood volume measurement. Some of the research projects performed by the
Companys clients are focused on developing cost benefit analysis studies. Such
studies are particularly important to HMOs, which focus on avoiding
hospitalization when possible.

The Companys
representatives undergo a training program in basic medical physiology to
enable them to interact with both physicians and administrators to explain cost
benefit factors.

Blood Optimization Program

In 2005 the Company hired an
individual with marketing experience to work on a new program called 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.
The Company has signed agreements with four hospitals who participate in this
program (see page 11 for a discussion of the Blood Bank Program).

17

---



PATENT AND
COPYRIGHT PROTECTION

Existing Patents

The Company has received
separate United States patents on its Blood Volume Analyzer BVA-100® and on its
Volumex® injection kit. These are the only US patents ever issued for an
automated instrument dedicated to the measurement of total human blood volume
for a specific individual. The Company 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 uneconomical and it is unlikely that a purchaser of
the instrument would use it without purchasing the reagent kit. This is the
first U.S. patent ever issued for a system that permits a fixed quantitative
amount of isotope to be injected for diagnostic purposes. The injection system
was specifically designed for use with the BVA-100®. However, it can be used
for other diagnostic test purposes where a precise complete quantitative
injection of a diagnostic reagent is required.

The blood bank has received
two recent trademarks. One is for Quality Assured Blood, which would
incorporate the same type of double testing currently used to ensure the safety
of donated semen (see Blood Banking pages 11 and 15). The other is for the
Blood Optimization Program® (BOP), a method for maximizing blood safety during
surgery using a combination of blood volume measurement, presurgical treatment
of blood volume deficits, and frozen autologous blood transfusion. 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. At the present time many
patients enter surgery in an anemic or blood depleted state. This can result
from donating blood one to four weeks prior to surgery, it can also result from
chronic conditions which result in patients being anemic. Entering surgery in a
blood depleted state reduces the chances for a positive outcome. At the present
time the majority of patients who donate blood to themselves prior to surgery
enter surgery in a blood depleted state. The blood optimization program is
ideally suited for patients undergoing elective surgery where there is adequate
time to treat patients who are anemic and also to have the patient donate blood
far enough in advance of surgery so that the patient is not anemic. An
additional problem is that women have 18% less red cell volume than a man of
equal height and weight. In New York, the New York State Department of Health,
and the New York City Department of Health, sent out warnings to all physicians
about the unacceptable death rate in patients during and after childbirth from
blood loss. Patients contemplating pregnancy or in the early stages of
pregnancy are ideal candidates to store their own blood. Some programs have
pregnant patients donating blood to themselves two to four weeks prior to their
expected delivery date. This is likely to cause the patient to be anemic at the
time of delivery.

The Blood Optimization
Program is the first program that specifically targets these problems. Included
among the problems is the fact that the standard test, the hematocrit, used to
detect blood loss, only measures the thickness or ratio of red cells to plasma
and is a lagging indicator. This is one of the reasons that some pregnant
patients die suddenly after childbirth because the full extent of their blood
loss is not recognized.

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
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 from 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 receive any blood but their own; 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, patients in their 60s, 70s, 80s, and 90s are sometimes
permitted to remain with red cell volume deficits as great as 50% without
replacement transfusions.

The Blood Optimization
Methods Program Patent is designed to eliminate, where possible, these types of
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. For further discussion, see reference to the Duke University study on
Page 20.

Future Projects and Potential Patents

The Company expects to file
additional patents for tests associated with the BVA-100® in the near future.

18

---



Glomerular Filtration Rate

The Company is working on an
instrument that will automate the measurement of glomerular filtration rate
(GFR). This GFR is a very important and sensitive test of kidney function. At
the present this test is infrequently performed because of the difficulty in
the current methodology. The situation is analogous to blood volume measurement
which is rarely performed because of the difficulty of performing the test. The
BVA-100 has significantly shortened the time required, as well as improved the
accuracy of the test. The Company believes that it can automate the glomerlular
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 circulation 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 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. 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.

UL and CE Mark

In
March, 2007, Daxor finished the final phase, which was the inspection part, 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 (electro magnetic 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. Most of the time countries require
the existing documentation that Daxor provides with the BVA-100 to be
translated into the countrys specific 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 the Banks operations, it has never had a mix-up in any
stored specimen.

CUSTOMERS

In the Companys fiscal year
ended December 31, 2007 there were three customers (hospitals) that accounted
for 32% of the Companys total consolidated sales. 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.

19

---



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, such as 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 on a
cost effective basis. There are several layers of acceptance required for a
sale to be completed. The hospital administration must first see a need for the
instrument, and then the nuclear medicine department must also see this need
and be willing to perform the tests. Physicians treating patients with the
conditions described previously must understand the need for, use of, and possible
interpretation of blood volume measurement for their patients. Then the
hospital administration must also accept the instrument on the basis of pure
cost effectiveness. The Company believes that the one-time cost of the
instrument and the ongoing costs of test kits are modest relative to the
benefits of the critical information derived from the test.

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. A major disadvantage of the use
of frozen blood was that it had to be used within 24 hours after it was thawed.
Frozen blood can be stored for up to 10 years in contrast to refrigerated
blood, which has a maximum shelf life of 35 to 42 days. The requirement that
blood had to be used within 24 hours of thawing placed significant limitations
on the timing of transfusions. However, the Company has recently begun to
utilize a new FDA-approved technology, manufactured by another company, which
enables thawed frozen blood to be used up to 14 days after thawing. The Company
is not aware of any other facility in New York State that is using this
technology.

The Company believes that
this additional technology 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, in a similar
fashion to how sperm donors are tested before and then six months after initial
freezing and storage. This additional safety procedure is particularly
appropriate for donated blood, since transfused blood is more infectious for
many diseases than semen.

In the past, the Company has
experienced significant opposition from some non-profit blood banking
organizations that viewed frozen autologous blood as a potential loss of income
from 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 on page 18.

In February 2007 the Company
filed a methods patent on its Blood Optimization Program (BOP). The Program incorporates
the concept of blood volume measurement prior to surgery, treatment with blood
stimulants such as epoietin alfa to correct anemia, donation and frozen storage
of ones own blood well in advance of elective surgery, use of autologous blood
during and post surgery, followed up with another blood volume where indicated.
The Program has the ability to fundamentally alter transfusion practices. At
the present time it is not uncommon for patients in their 60s, 70s, 80s, and
even 90s, to be permitted to remain in a condition where almost half of their
lost blood is not replaced except with sterile water. There have been published
studies, particularly from Duke University and other institutions,
demonstrating that as much as 40 to 50% of patients undergoing cardiac bypass
surgery, have measurable memory loss. Similar findings have been published in
regard to major orthopedic surgery such as hip replacement. There are numerous
published studies that have demonstrated that there is higher mortality and
morbidity the more anemic patients are. There are many so-called bloodless
surgery programs which advocate very limited blood transfusion replacement. We
are not aware of any study, however, in these programs, which has measured the
degree of memory loss in these programs as compared to patients who undergo a
more liberal transfusion policy.

20

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A major study published in
the New York Times from Duke and Columbia Universities in June, 2006 entitled
Age of Transfused Blood May Play Part in Recovery demonstrated that patients
who receive older blood have increased mortality and morbidity. Blood can be
stored in a refrigerated state for up to 42 days. Blood banks routinely use the
oldest blood first. Blood stored for more than 20 days already demonstrate
considerable loss of ability to transport oxygen and remove carbon dioxide.
Newborn infants requiring a transfusion are routinely transfused only with
frozen blood. Blood that is frozen within 24 hours after collection does not
show the deterioration of critical oxygen transporting enzymes that occur with
refrigerated blood. A major advantage of the Blood Optimization Program is that
not only will the patient be receiving their own blood, but will be receiving
blood that has been frozen within 24 to 48 hours, and than defrosted when it is
needed.

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 a successful
conception occurring from the longest-term frozen stored semen in medical
history, will help it in expanding its marketing efforts. The Companys use of
storing sperm in straws, and the unique carousel storage system which allows
the frozen semen to constantly remain in the liquid nitrogen, avoids any type
of cross contamination with other samples.

The Company has developed a
web site (www.Idant.com) that will be helpful for marketing purposes.

WARRANTEES

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
warrantee period purchased by the consumer. With respect to semen banking and
blood banking, the Company warrantees 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
in regard to the BVA-100 are subject to continuing FDA regulations and
inspections.

The New York State
Department of Health regulates the Companys Idant Semen and Blood Bank within
New York State. The Idant Semen Bank and Blood Bank are divisions of Scientific
Medical Systems, which is 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 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 29, 2008, the
Company had a labor force of 40, 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 in
Oak Ridge, Tennessee, and a technology support group. The Company believes that
its labor force relations are good.

21

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

In the Companys fiscal year
ended December 31, 2007 there were three customers (hospitals) that accounted
for 32% of the Companys total consolidated sales. 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, 2007, 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.

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

At December 31, 2007,
approximately 95% 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, 2007, the
Companys investment portfolio consisted of 63 separate stocks. The top five
holdings at December 31, 2007 comprised approximately 58% of the value of the
investment portfolio. These same five holdings accounted for approximately 47%
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.

As discussed in our Form
10-K for the year ended December 31, 2006, by a letter dated February 8, 2007,
the staff of the Northeast Regional Office of the United States Securities and
Exchange Commission advised Dr. Joseph Feldschuh, the President and Chief
Executive Officer of Daxor that it is recommending that the Commission bring
action against Dr. Feldschuh and Daxor Corporation for violation of Section
7(a) of the Investment Company Act. The company responded to the Securities and
Exchange Commission on March 9, 2007.

22

---



The company received a
notice from the SEC in November of 2005 about whether or not it should be
designated as an investment company. The company responded to this notice on
January 13, 2006. The Company has provided extensive documentation directly to
the SEC and in the 10-K filing for the year ended December 31, 2006 as to why
it is primarily an operating company and not primarily an investment company.

As disclosed in our Forms
10-Q for the quarters ended September 30, 2007 and June 30, 2007, the Company
received a verbal request from the Northeast Regional Office of the United States
Securities and Exchange Commission (SEC) in June of 2007 for information
pertaining to discussions that had taken place at previous meetings with
representatives of the SEC in 1984 and 1992. The Company has complied with that
request.

The company cannot determine
whether the Commission will decide to bring an enforcement action against
either the Company or its Chief Executive Officer, nor can the Company
determine the nature or amount of any legal or other regulatory penalties or
sanctions that may be imposed.

A resolution was passed at
the Board of Directors meeting of March 23, 2007 whereby the Company agreed to
indemnify the Chief Executive Officer for any expenses he may incur if the
Securities and Exchange Commission brings an enforcement action against him as
specified in their letter of February 8, 2007.

|        |           
|------- | ----------
|Item 2. | Properties

In December 2002, the
Company signed a ten-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.

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.

Regarding the second
building at 109 Meco Lane, the current plan is to use that space for
radiopharmaceutical manufacturing and distribution. To achieve this end, we
have obtained our license from the Nuclear Regulatory Commission for State of
Tennessee for nuclear capability and, subsequently, obtained a license from the
FDA to become a re-shipper. This license will enable Daxor to receive bulk
quantities of Volumex from our third party manufacturer and distribute the
doses individually.

The Company subleases a
small portion of its New York City office space to the President of the Company
for 5 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, 2007,
2006 and 2005 was $11,022, $10,646 and $9,750. For the years ended December 31,
2007, 2006 and 2005 the Company had sublease income from non-affiliated third
parties of $0, $3,000 and $4,936. The sublease income is shown on the Income
Statement as part of other revenues.

|        |                    
|------- | -------------------
|Item 3. | Legal
  Proceedings

There
are currently no outstanding legal proceedings.

|        |                                                     
|------- | ----------------------------------------------------
|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, 2007.

23

---



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.

|               |  |      |       |     |   |       | 
|-------------- |  | ---- | ----- | --- | - | ----- | 
|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 | 

|               |  |      |       |     |   |       | 
|-------------- |  | ---- | ----- | --- | - | ----- | 
|2006           |  | High |       | Low |  
|               |  |      |       |     |  
|              
|First Quarter  |  | $    | 20.50 |     | $ | 18.25 | 
|Second Quarter |  | $    | 17.90 |     | $ | 16.00 | 
|Third Quarter  |  | $    | 17.00 |     | $ | 16.16 | 
|Fourth Quarter |  | $    | 15.00 |     | $ | 14.00 | 

On March 19,
2008, the Company had approximately 144 holders of record of the Common Stock.
The Company believes there are approximately 1,050 beneficial holders of their
Common Stock.

The Company
paid a single cash dividend of $.50 per share on the Common Stock in 1997. No
dividends have been declared or paid since 1997. Any future dividends will be
dependent upon the Companys earnings, financial condition and other relevant
factors.

24

---



|        |                         
|------- | ------------------------
|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, 2007, 2006, 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 years ended December 31, 2004 and 2003 have been
derived from audited consolidated financial statements that are not included in
this report.

Operations Data:

|                                                                           |  |                         |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|-------------------------------------------------------------------------- |  | ----------------------- | ---------- | ---- | - | ---------- | - | ---- | ---------- | ---- | - | ---------- | - | - | ---------- | -
|                                                                           |  | Year Ended December 31, |           
|                                                                           |  | 2007                    |            | 2006 |   | 2005       |   | 2004 |            | 2003 |  
|                                                                           |  |                         |            |      |   |            |   |      |            |      |  
|                                                                          
|Operating revenues                                                         |  | $                       | 1,869,779  |      | $ | 1,486,449  |   | $    | 1,343,538  |      | $ | 1,066,314  |   | $ | 1,013,647  |  
|                                                                           |  |                         |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|Total revenues                                                             |  | $                       | 1,869,779  |      | $ | 1,486,449  |   | $    | 1,343,538  |      | $ | 1,066,314  |   | $ | 1,013,647  |  
|                                                                           |  |                         |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|                                                                           |  |                         |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|Costs and expenses:                                                        |  |                         |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|                                                                           |  |                         |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|Operations of laboratories  & costs of production                          |  |                         | 682,786    |      |   | 631,567    |   |      | 565,742    |      |   | 251,622    |   |   | 246,206    |  
|Research and development                                                   |  |                         | 2,576,708  |      |   | 2,332,399  |   |      | 2,152,261  |      |   | 1,566,115  |   |   | 1,246,526  |  
|Selling, general and  administrative                                       |  |                         | 4,041,155  |      |   | 3,947,404  |   |      | 3,528,560  |      |   | 2,790,444  |   |   | 2,600,310  |  
|                                                                           |  |                         |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|Total costs and expenses                                                   |  |                         | 7,300,649  |      |   | 6,911,370  |   |      | 6,246,563  |      |   | 4,608,181  |   |   | 4,093,042  |  
|                                                                           |  |                         |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|                                                                           |  |                         |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|                                                                           |  |                         |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|Loss from operations                                                       |  |                         | (5,430,870 | )    |   | (5,424,921 | ) |      | (4,903,025 | )    |   | (3,541,867 | ) |   | (3,079,395 | )
|                                                                           |  |                         |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|                                                                           |  |                         |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|Other income and expenses:                                                 |  |                         |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|Dividend income                                                            |  |                         | 2,419,476  |      |   | 2,273,737  |   |      | 2,511,054  |      |   | 1,990,669  |   |   | 1,897,669  |  
|Gains on sale of investments                                               |  |                         | 14,853,934 |      |   | 3,316,710  |   |      | 1,515,653  |      |   | 989,599    |   |   | 238,550    |  
|Mark to market of short positions                                          |  |                         | 357,337    |      |   | (544,629   | ) |      | (204,225   | )    |   | 266,807    |   |   | 115,871    |  
|Other revenues                                                             |  |                         | 11,112     |      |   | 13,838     |   |      | 14,686     |      |   | 15,245     |   |   | 15,571     |  
|Investment recovery                                                        |  |                         |           |      |   |           |   |      | 75,000     |      |   |           |   |   |           |  
|Admin expense relating to portfolio
  investments                          |  |                         | (55,538    | )    |   | (44,564    | ) |      | (36,842    | )    |   | (1,126     | ) |   |           |  
|Interest expense, net of interest Income                                   |  |                         | (197,211   | )    |   | (363,952   | ) |      | (296,114   | )    |   | (108,949   | ) |   | (83,133    | )
|                                                                           |  |                         |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|Total other income and expenses                                            |  |                         | 17,389,110 |      |   | 4,651,140  |   |      | 3,579,212  |      |   | 3,152,245  |   |   | 2,184,528  |  
|                                                                           |  |                         |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|                                                                           |  |                         |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|                                                                           |  |                         |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|Income (loss) before income taxes                                          |  |                         | 11,958,240 |      |   | (773,781   | ) |      | (1,323,813 | )    |   | (389,622   | ) |   | (894,867   | )
|                                                                           |  |                         |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|                                                                          
|Provision for income taxes                                                 |  |                         | 1,311,024  |      |   | 11,750     |   |      | 12,168     |      |   |           |   |   |           |  
|                                                                          
|                                                                           |  |                         |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|Net Income (loss)                                                          |  | $                       | 10,647,216 |      | $ | (785,531   | ) | $    | (1,335,981 | )    | $ | (389,622   | ) | $ | (894,867   | )
|                                                                           |  |                         |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|                                                                           |  |                         |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|                                                                           |  |                         |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|Weighted average number of  common shares outstanding  - basic and diluted |  |                         | 4,572,119  |      |   | 4,625,168  |   |      | 4,638,384  |      |   | 4,615,993  |   |   | 4,645,700  |  
|                                                                           |  |                         |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|                                                                           |  |                         |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|Income (loss) per common  equivalent share - basic  and diluted            |  | $                       | 2.33       |      | $ | (0.17      | ) | $    | (0.29      | )    | $ | (0.08      | ) | $ | (0.19      | )
|                                                                           |  |                         |            |      |   |            |   |      |            |      |   |            |   |   |            |  

25

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Selected
Balance Sheet Data:

|                       |  |                         |             |      |   |            |   |      |            |      |   |            |   |   |            |  
|---------------------- |  | ----------------------- | ----------- | ---- | - | ---------- | - | ---- | ---------- | ---- | - | ---------- | - | - | ---------- | -
|                       |  | Year Ended December 31, |            
|                       |  | 2007                    |             | 2006 |   | 2005       |   | 2004 |            | 2003 |  
|                       |  |                         |             |      |   |            |   |      |            |      |  
|                      
|Total assets           |  | $                       | 102,560,500 |      | $ | 78,166,312 |   | $    | 59,565,053 |      | $ | 55,746,607 |   | $ | 48,752,533 |  
|Total
  liabilities*   |  | $                       | 47,644,615  |      | $ | 32,528,520 |   | $    | 20,820,252 |      | $ | 15,493,319 |   | $ | 12,154,041 |  
|Stockholders
  equity |  | $                       | 54,915,885  |      | $ | 45,637,792 |   | $    | 38,744,801 |      | $ | 40,253,288 |   | $ | 36,598,492 |  
|Return
  on equity**   |  |                         | 21.18       | %    |   | 0.00       | % |      | 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.

26

---



|        |                                                                                        
|------- | ---------------------------------------------------------------------------------------
|Item 7. | Managements Discussion and Analysis of
  Financial Condition and Results of Operation.

RECENT DEVELOPMENTS

As disclosed
in our Form 10-Q for the period ended September 30, 2007, 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 separate 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.

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

RESULTS OF OPERATIONS

Operating Revenues

In 2007 revenue from operations was
$1,869,779.vs. 2006 revenue from operations of $1,486,449 for an increase of
26%.  In 2005, operating revenues were
$1,343,538.

Equipment
sales and kit sales increased from $1,055,706 in 2006 to $1,453,201 in
2007.  In 2007 the Company sold six
blood volume analyzers for a total of $390,500 versus two in 2006 for $130,000.
Kit sales increased by 15% in 2007 over 2006 and by 35% in 2006 over 2005.  Kit sales increased by 53% in 2005 over 2004
and by 35% in 2004 over 2003.  3,015
patients, utilizing the BVA-100, had blood volume measurements in 2007 vs.
2,876 in 2006, 2,132 in 2005 and 1,474 in 2004.  For the year ended December 31, 2007 the Company provided 328
Volumex doses free of charge to facilities utilizing the BVA-100 for research
versus 194 in 2006, 95 in 2005,83 in 2004 and 101 in 2003.

The major
reason for the current year increase in kit sales is that there are 58 Blood
Volume Analyzers placed at December 31, 2007 versus 48 placed at December 31,
2006. Effective February 1, 2007, the Company raised prices by approximately 5%
on Blood Volume Kits. This was the first price increase in two years and helped
to increase revenue from kit sales by 15% even though the number of kits sold
increased by 5%.

The main
reason for the increase in Gross Profit Percentage for Equipment Sales and
Related Services from 44.5% for the year ended December 31, 2006 to 56.3% for
the year ended December 31, 2007 is that six blood volume analyzers were sold
in 2007 versus two in 2006. The gross margin on the blood volume analyzer is
substantially higher than the gross margin on Volumex Kits.

The following
table provides gross margin information on Equipment Sales & Related
Services for the years ended December 31, 2007 and December 31, 2006:

|                                           |  |                                                    |         |                                                             |   |                                             |   |                                         |           |   |   |           |  
|------------------------------------------ |  | -------------------------------------------------- | ------- | ----------------------------------------------------------- | - | ------------------------------------------- | - | --------------------------------------- | --------- | - | - | --------- | -
|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 |   | Total
  Year
  Ended
  December31, 2006 |          
|                                           |  |                                                    |         |                                                             |   |                                             |   |                                         |          
|Revenue                                    |  | $                                                  | 963,318 |                                                             | $ | 489,883                                     |   | $                                       | 1,453,201 |   | $ | 1,055,706 |  
|Cost of
  Goods Sold                       |  |                                                    | 475,811 |                                                             |   | 159,127                                     |   |                                         | 634,938   |   |   | 585,742   |  
|Gross Profit                               |  |                                                    | 487,507 |                                                             |   | 330,756                                     |   |                                         | 818,263   |   |   | 469,964   |  
|Gross
  Profit  Percentage                 |  |                                                    | 50.6    | %                                                           |   | 67.5                                        | % |                                         | 56.3      | % |   | 44.5      | %

27

---



There were
twelve trial agreements signed for the BVA-100 Blood Volume Analyzer during the
year ended December 31, 2007 versus twenty in the year ended December 31, 2006.
The reduction in the amount of trial agreements is a result of the sales force
focusing more on securing sale and clinical research agreements instead of
trial agreements.

Operating
revenues from Cryobanking and related services decreased in 2007 by $14,165 or
3.3% from 2006. This was due mainly to revenue from semen storage decreasing by
$23,153 or 7.6% to $282,067 versus $305,220 in the year ended December 31,
2006. There was also a decrease of $4,302 in semen analysis and other lab
services.  The Companys Idant
Laboratories subsidiary contributed 22.3%, 29.0%, and 44.0% of operating
revenues in 2007, 2006 and 2005 respectively.

Operating Expenses

The increase
in operating expenses for 2007, 2006 and 2005 was due to additional hiring in
each year of sales and marketing personnel for the Blood Volume Analyzer and
costs of expanded research and development efforts.

For 2007,
consolidated expenses from operations including cost of sales totaled
$7,300,649 and 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 was $5,424,921. In
2005, expenses from operations including cost of sales totaled $6,246,563; the
loss from operations totaled $4,903,025.

Total
Operating costs including cost of sales for Daxor and the BVA segment were
$6,351,501 for the year ended December 31, 2007 versus $6,426,768 for the year
ended December 31, 2006 for a decrease of $75,267 or 1.2%.  The main reason for this decrease is that
$390,973 of rent and salary expense paid by Daxor was allocated to the
Cryobanking segment in 2007. This allocation was not done in 2006.

Research and
Development expenses for Daxor and the BVA segment increased in 2007 by
$194,981 or 8.9% to $2,390,352 from $2,195,371 in 2006. Daxor is 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
$949,148 for the year ended December 31, 2007 versus $485,002 for the year
ended December 31, 2006 for an increase of $464,146 or 95.7%.The major reason
for this increase is that $390,973 of rent and salary expense paid by Daxor was
allocated to the Cryobanking segment in 2007. This allocation was not done in
2006. Payroll and Benefits expense increased in 2007 to $368,332 from $310,706
in 2006 for an increase of $57,626 or 18.6%. This increase was due mostly to
the hiring of additional personnel for the Cryobanking laboratory.

In January of 2007 the Company completed the
purchase of a 20,000 square foot facility, including 3.5 acres of land. This
provides an opportunity for expansion.
The Company selected the town of Oak Ridge, Tennessee because of its
long history and association with radio isotopic facilities and its local pool
of talent in this area.  There are only
a few sites in the United States which could provide this combination of expertise
and community acceptance of nuclear medicine.

Dividend
Income

Dividend
income earned on the Companys securities portfolio was $2,419,476 in 2007 vs.
$2,273,737 in 2006, for an increase of $145,739, or 6.4%. This is mainly due to
a one-time special dividend of $156,200 received in 2007 on a stock that was
not in the portfolio at December 31, 2007. Including this distribution, the
Company received dividends of $381,578 on stocks that were no longer in the
portfolio at the end of the year.  In
2005, dividend income was $2,511,054 which included a one-time special dividend
of $402,896 received as the result of a utility company merger.

Investment
Gains

Gains on the
sale of investments were $14,853,934 in 2007 vs. $3,316,710 in 2006, and
$1,515,653 in 2005.  A major reason for
the increase in Gains on the sale of investments in 2007 is that the Company
realized $3,954,428 in gains on securities that were sold as the result of
mergers and stock buybacks. These stocks would not have otherwise been sold but
would have been held by the Company as of December 31, 2007.

28

---



The sum of dividend income plus investment
gain from sale of securities was $17,273,410 in 2007, $5,590,447 in 2006, and
$4,026,707 in 2005.

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, 2007, the Company had $47,214,047 in short-term debt vs. $32,528,520 at
December 31, 2006. The following amounts are included in short-term debt at
December 31, 2007 and December 31, 2006: Income Taxes Payable of $1,295,668 and
$13,826 respectively, Deferred Tax Liability of $15,726,213 and $15,281,370
respectively, and Securities borrowed at fair market value of $20,362,259 and
$10,665,722. 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, 2007, stockholders equity was $54,915,885 vs.  $45,637,792 at December 31, 2006. At December 31, 2007 the
Companys security portfolio had a market value of $74,919,193 vs. $66,968,446
at December 31, 2006. At December 31, 2007, the Companys total liabilities and
stockholders equity were $102,560,500 vs. $78,166,312 at December 31, 2006.

Starting
February 2, 2007, the Company made the first monthly mortgage payment of $5,932
(which includes principal and interest) for the properties purchased at 107 and
109 Meco Lane, Oak Ridge, Tennessee. This monthly amount is due to paid through
December 31, 2011. There is a balloon payment of $301,972 due on January 2,
2012 for the remaining principal and interest. 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.

Income from
the Companys security portfolio is a major asset for the Company as it expands
its research and marketing staff. At December
31, 2007, 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 additional
expenses associated with an expanding sales and marketing program.

The following
table shows the Cost, Market Value, Net Unrealized Gain, Unrealized Gain and
Loss at December 31st from 2003 through 2007.

|                    |  |      |            |                      |   |                        |  |                  |            |                   |   |            |  |   |            |  
|------------------- |  | ---- | ---------- | -------------------- | - | ---------------------- |  | ---------------- | ---------- | ----------------- | - | ---------- |  | - | ---------- | -
|Valuation Date:     |  | Cost |            | Fair Market 
  Value |   | Net Unrealized 
  Gain |  | Unrealized Gains |            | Unrealized Losses |  
|                    |  |      |            |                      |   |                        |  |                  |            |                   |   |            |  |   |            |  
|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   | )
|December 31,
  2003 |  |      | 22,307,744 |                      |   | 47,399,159             |  |                  | 25,091,415 |                   |   | 25,409,592 |  |   | (318,177   | )

The Companys
invested capital has varied over the past 5 years, varying from $22,307,744 in
2003 to $29,987,157 in 2007.  The value
of the Companys investments increased from $47,399,159 in 2003 to $74,919,193
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

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.

29

---



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

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 a minimum 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

The income
derived from these investments has been essential to offset the research,
operating and marketing expenses of developing the Blood Volume Analyzer. The
Company has followed a conservative policy of assuring adequate liquidity so
that it can expand its marketing and research development without the sudden
necessity of raising additional capital. The securities in the Companys
portfolio are selected to provide stability of both income and capital. The
Company has been able to achieve financial stability because of these returns,
which covered a significant portion of the Companys continuing losses from
operations. The Companys investment policy is reviewed at least once yearly by
the Board of Directors and the Audit Committee, who vote upon the policy.  Individual investment decisions are made
solely by Dr. Joseph Feldschuh, CEO, who devotes approximately 10 to 15% of his
time, or 5 to 7.5 hours per week to this activity.  He is assisted by a single part-time employee.  No other member of the Company is involved
in individual investment decisions.

30

---



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.

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 two
hospitals that the Company billed during the year ended December 31, 2007 for
the entire amount of their annual service contract. At December 31, 2007,
deferred revenue pertaining to the historical service contracts was $7,417 and
$0 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 3rd 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

31

---



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.

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                                                        |  | $     | 586,372   |                    | $                      | 71,190        |  | $           | 142,380 |                     | $ | 372,802   |  |   | 0         | 
|                                                                                    
|(Capital Lease Obligations)                                                          |  |       | 0         |                    |                        | 0             |  |             | 0       |                     |   | 0         |  |   | 0         | 
|                                                                                    
|(Operating Lease Obligations)2                                                       |  | $     | 2,690,112 |                    | $                      | 336,264       |  | $           | 672,528 |                     | $ | 672,528   |  | $ | 1,008,792 | 
|                                                                                    
|(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                                                                                |  | $     | 3,276,484 |                    | $                      | 407,454       |  | $           | 814,908 |                     | $ | 1,045,330 |  | $ | 1,008,792 | 
|                                                                                     |  |       |           |                    |                        |               |  |             |         |                     |   |           |  |   |           | 

1   This 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.

2   This amount
represents a total monthly rental payment of $28,022 which consists of base
rent of $27,317 and $705 for two separate spaces at 350 5thAvenue.

32

---



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, 2007 and 2006, the company held 63 and
62 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.

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 | 
|                          |  |                           |        |      |   |              |  |                  |            |                   |   |                        |  |   |            |   |   |           | 

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 | )
|                     |  |                   |           |              |   |                  |  |                   |           |  |   |            |  

33

---



December 31, 2006

The following is summary
information on the actual Securities Portfolio held by Daxor Corporation during
the year ended and as at December 31, 2006:

|                           |  |                             |        |      |   |                |  |                    |            |                     |   |                          |  |   |          |   |   |           | 
|-------------------------- |  | --------------------------- | ------ | ---- | - | -------------- |  | ------------------ | ---------- | ------------------- | - | ------------------------ |  | - | -------- | - | - | --------- | 
|Description                |  | Percent
  of Portfolio Cost |        | Cost |   | Market
  Value |  | Unrealized
  Gains |            | Unrealized
  Losses |   | Dividends
  and Interest | 
|                           |  |                             |        |      |   |                |  |                    |            |                     |   |                          | 
|Utilities-Common Stock     |  |                             | 87.88  | %    | $ | 20,481,218     |  | $                  | 63,888,800 |                     | $ | 43,414,597               |  |   | (7,015   | ) | $ | 2,005,856 | 
|Non-Utilities Common Stock |  |                             | 7.76   | %    |   | 1,809,107      |  |                    | 1,648,402  |                     |   | 98,313                   |  |   | (259,018 | ) |   | 10,360    | 
|Total Common Stock         |  |                             | 95.64  | %    |   | 22,290,325     |  |                    | 65,537,202 |                     |   | 43,512,910               |  |   | (266,033 | ) |   | 2,016,216 | 
|Utilities-Preferred Stock  |  |                             | 3.40   | %    |   | 792,419        |  |                    | 1,114,925  |                     |   | 322,506                  |  |   | 0        |   |   | 52,009    | 
|Non-Utilities-Preferred    |  |                             | .17    | %    |   | 40,000         |  |                    | 40,429     |                     |   | 1,110                    |  |   | (681     | ) |   | 2,450     | 
|Total Preferred Stock      |  |                             | 3.57   | %    |   | 832,419        |  |                    | 1,155,354  |                     |   | 323,616                  |  |   | (681     | ) |   | 54,459    | 
|Total Equities             |  |                             | 99.21  | %    |   | 23,122,744     |  |                    | 66,692,556 |                     |   | 43,836,526               |  |   | (266,714 | ) |   | 2,070,675 | 
|Utilities-Bonds            |  |                             | .65    | %    |   | 151,881        |  |                    | 237,650    |                     |   | 85,769                   |  |   | 0        |   |   | 0         | 
|Non-Utilities Bonds        |  |                             | .14    | %    |   | 32,765         |  |                    | 38,240     |                     |   | 5,475                    |  |   | 0        |   |   | 1,844     | 
|Total Bonds                |  |                             | .79    | %    |   | 184,646        |  |                    | 275,890    |                     |   | 91,244                   |  |   | 0        |   |   | 1,844     | 
|                           |  |                             |        |      |   |                |  |                    |            |                     |   |                          |  |   |          |   |   |           | 
|Total Portfolio            |  |                             | 100.00 | %    | $ | 23,307,390     |  | $                  | 66,968,446 |                     | $ | 43,927,770               |  | $ | (266,714 | ) | $ | 2,072,519 | 
|                           |  |                             |        |      |   |                |  |                    |            |                     |   |                          |  |   |          |   |   |           | 

During the year ended
December 31, 2006, the Company received $213,045 of dividends on stocks that
were not in the Securities Portfolio at December 31, 2006 and was charged
$19,518 for dividends on short positions. The Company also received $5,209 in
money market dividends and recorded an additional $4,326 in dividend income as
the value of shares received.

Summary of Put and Call
Options at December 31, 2006

|                     |  |                   |           |              |   |                  |  |                   |           |  |   |            |  
|-------------------- |  | ----------------- | --------- | ------------ | - | ---------------- |  | ----------------- | --------- |  | - | ---------- | -
|Description          |  | Proceeds Received |           | Market Value |   | Unrealized Gains |  | Unrealized Losses |          
|                     |  |                   |           |              |   |                  |  |                   |          
|Puts                 |  | $                 | 655,053   |              | $ | 640,182          |  | $                 | 329,018   |  | $ | (314,147   | )
|Calls                |  | $                 | 2,193,614 |              | $ | 2,042,363        |  | $                 | 919,025   |  | $ | (767,774   | )
|                     |  |                   |           |              |   |                  |  |                   |           |  |   |            |  
|Total Puts and Calls |  | $                 | 2,848,667 |              | $ | 2,682,545        |  | $                 | 1,248,043 |  | $ | (1,081,921 | )
|                     |  |                   |           |              |   |                  |  |                   |           |  |   |            |  

|         |                                                            
|-------- | -----------------------------------------------------------
|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
  15% 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. All individual investment decisions are
  made by Dr. Joseph Feldschuh. Dr. Feldschuh spends approximately 10  15% of
  his time (approximately 5  7.5 hours per week) on reviewing information
  relative to investment decisions, as well as transmitting instructions
  concerning these decisions. A single part-time administrative employee
  provides assistance to Dr. Feldschuh. No other employee is involved in
  investment making decisions. The Company subscribes to two independent
  investment/economic newsletters and three financial newspapers. The Company
  also receives free investment analysis from the two primary brokerage houses
  where it has corporate accounts.

34

---



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 15
year period of 1993-2007 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, 2007.

Graph 1: Comparison of Net Earnings with Hypothetical
Earnings That Would Have Resulted Had the Company Invested in Treasury Bills
from 1993 to 2007 and Received a 2% Interest Rate

(LINE GRAPH 1)

Graph 1 illustrates three
sets of data from 1993 to 2007: 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%.

35

---



For the year ended December 31, 2007, the Company had net income
of $10,647,216. However, for the years ended December 31, 2006, 2005 and 2004,
the company recorded total 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 in 2007, 2006
and 2005 would have exceeded $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.

36

---



Graph 2: Comparison of Net Earnings with Hypothetical
Earnings That Would Have Resulted Had the Company Invested in Treasury Bills
from 1993 to 2007 and Received a 3% Interest Rate

(LINE GRAPH 2)

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 2, but the loss is slightly lower because of the 1% higher
interest rate.

37

---



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

(LINE GRAPH 3)

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 $30 million at December 31, 2007.

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.

38

---



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 4)

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. Under this
scenario, the Company would have been facing bankruptcy by the end of 2007.

39

---



Graph 5: Loans Payable per Year

(LINE GRAPH 5)

Graph 5 illustrates the
Companys loans payable at December 31 from 1993 to 2007. 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 but was still significant.
Had the company invested in Treasury Bills, this would have led by year end
2007 to a combination of reduced capital, increased debt, and likely
bankruptcy.

40

---



Graph 6: Operating Revenues and Total Expenses from 1993 to
2007

(LINE GRAPH 6)

Graph 6 illustrates
operational revenues and total expenses from 1993 to 2007. 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 fifteen year period of 1993-2007, operating expenses have exceeded
operating revenues each year.

41

---



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

(LINE GRAPH 7)

Graph 7 shows the cost of
securities compared with rate of return (investment income/cost of securities)
from 1993 to 2007. 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 15 years.

42

---



Graph 8: Portfolio of Treasury Securities at One Year
constant maturity from 1993 -2007 from Federal Reserve Bank Data.

(LINE GRAPH 8)

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 fifteen years is 4.25%,
and the average interest rate for the past five years is 3.24%.

43

---



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 1993-2007.

(LINE GRAPH 9)

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
15 year period.

44

---



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 10)

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.

45

---



|                                                                                                                                         |                                              | 
|---------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------- | 
|Item 8.                                                                                                                                  | Financial Statements and Supplementary Data. | 
|                                                                                                                                         |                                              | 
|Index to Consolidated Financial Statements                                                                                               |                                             
|                                                                                                                                         |                                              | 
|Report of Independent Registered Public
  Accounting Firm                                                                                | 47                                          
|                                                                                                                                         |                                              | 
|Consolidated Balance Sheets - December 31,
  2007 and 2006.                                                                              | 48                                          
|                                                                                                                                         |                                              | 
|Consolidated Statements of Operations for
  the years ended December 31, 2007, 2006 and 2005                                             | 49                                          
|                                                                                                                                         |                                              | 
|Consolidated Statements of Stockholders
  Equity and Comprehensive Income (Loss) for the years ended December 31, 2007,
  2006 and 2005 | 51                                          
|                                                                                                                                         |                                              | 
|Consolidated Statements of Cash Flows for
  the years ended December 31, 2007, 2006 and 2005.                                            | 52                                          
|                                                                                                                                         |                                              | 
|Notes to Consolidated Financial
Statements                                                                                               | 54                                          

46

---



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, 2007 and 2006, 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, 2007. 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, 2007 and 2006, and the
consolidated results of its operations and its cash flows for each of the three
years in the period ended December 31, 2007, in conformity with U.S. generally
accepted accounting principles.

|                                                        | 
|------------------------------------------------------- | 
|                                                        | 
|/s/
  Rotenberg Meril Solomon Bertiger & Guttilla, P.C. | 
|                                                        | 
|Saddle
  Brook, NJ                                      | 
|                                                        | 
|March 28,
  2008                                        | 

47

---



DAXOR
CORPORATION AND SUBSIDIARY
CONSOLIDATED FINANCIAL STATEMENTS

DAXOR CORPORATION AND SUBSIDIARYCONSOLIDATED BALANCE SHEETS

|                                                                                                     |  |                     |             |                     |   |            |  
|---------------------------------------------------------------------------------------------------- |  | ------------------- | ----------- | ------------------- | - | ---------- | -
|                                                                                                     |  | December 31,
  2007 |             | December 31,
  2006 |  
|                                                                                                     |  |                     |             |                     |  
|                                                                                                     |  |                     |             |                     |   |           
|ASSETS                                                                                               |  |                     |             |                     |   |            |  
|                                                                                                     |  |                     |             |                     |   |            |  
|                                                                                                     |  |                     |             |                     |   |            |  
|CURRENT ASSETS                                                                                       |  |                     |             |                     |   |            |  
|                                                                                                     |  |                     |             |                     |   |            |  
|Cash and cash
  equivalents                                                                          |  | $                   | 2,029,834   |                     | $ | 2,838,927  |  
|Receivable from
  broker (held in money market accounts)                                             |  |                     | 10,495,417  |                     |   |           |  
|Available-for-sale
  securities, at fair value                                                       |  |                     | 74,919,193  |                     |   | 66,968,446 |  
|Securities
  sold, not received, at fair value                                                       |  |                     | 12,404,409  |                     |   | 7,102,763  |  
|Accounts
  receivable, net of reserve of $57,655 in 2007 and $34,163 in 2006                         |  |                     | 214,334     |                     |   | 174,109    |  
|Inventory                                                                                            |  |                     | 255,834     |                     |   | 170,996    |  
|Prepaid
  expenses and other current assets                                                          |  |                     | 145,827     |                     |   | 115,111    |  
|                                                                                                     |  |                     |             |                     |   |            |  
|Total Current
  Assets                                                                               |  |                     | 100,464,848 |                     |   | 77,370,352 |  
|                                                                                                     |  |                     |             |                     |   |            |  
|Property and
  equipment, net                                                                        |  |                     | 2,058,494   |                     |   | 763,802    |  
|Other assets                                                                                         |  |                     | 37,158      |                     |   | 32,158     |  
|                                                                                                     |  |                     |             |                     |   |            |  
|                                                                                                     |  |                     |             |                     |   |            |  
|Total Assets                                                                                         |  | $                   | 102,560,500 |                     | $ | 78,166,312 |  
|                                                                                                     |  |                     |             |                     |   |            |  
|                                                                                                     |  |                     |             |                     |   |            |  
|                                                                                                     |  |                     |             |                     |   |            |  
|LIABILITIES AND
  STOCKHOLDERS EQUITY                                                               |  |                     |             |                     |   |            |  
|                                                                                                     |  |                     |             |                     |   |            |  
|                                                                                                     |  |                     |             |                     |   |            |  
|CURRENT
  LIABILITIES                                                                                |  |                     |             |                     |   |            |  
|                                                                                                     |  |                     |             |                     |   |            |  
|Accounts
  payable and accrued liabilities                                                           |  | $                   | 498,212     |                     | $ | 399,141    |  
|Loans payable                                                                                        |  |                     | 3,314,303   |                     |   | 3,483,161  |  
|Income taxes
  payable                                                                               |  |                     | 1,295,668   |                     |   | 13,826     |  
|Mortgage
  payable, current portion                                                                  |  |                     | 37,313      |                     |   |           |  
|Puts and calls,
  at fair value                                                                      |  |                     | 5,972,632   |                     |   | 2,682,545  |  
|Securities
  borrowed, at fair value                                                                 |  |                     | 20,362,259  |                     |   | 10,665,722 |  
|Deferred
  revenue                                                                                   |  |                     | 7,417       |                     |   | 2,755      |  
|Deferred income
  taxes                                                                              |  |                     | 15,726,213  |                     |   | 15,281,370 |  
|                                                                                                     |  |                     |             |                     |   |            |  
|Total Current
  Liabilities                                                                          |  |                     | 47,214,017  |                     |   | 32,528,520 |  
|                                                                                                     |  |                     |             |                     |   |            |  
|LONG TERM
  LIABILITIES                                                                              |  |                     |             |                     |   |            |  
|                                                                                                     |  |                     |             |                     |   |            |  
|Mortgage
  payable, less current portion                                                             |  |                     | 430,598     |                     |   |           |  
|                                                                                                     |  |                     |             |                     |   |            |  
|Total
  Liabilities                                                                                  |  |                     | 47,644,615  |                     |   | 32,528,250 |  
|                                                                                                     |  |                     |             |                     |   |            |  
|COMMITMENTS AND
  CONTINGENCIES                                                                      |  |                     |             |                     |   |            |  
|                                                                                                     |  |                     |             |                     |   |            |  
|STOCKHOLDERS
  EQUITY                                                                               |  |                     |             |                     |   |            |  
|Common stock,
  $.01 par value                                                                       |  |                     |             |                     |   |            |  
|Authorized -
  10,000,000 shares                                                                     |  |                     |             |                     |   |            |  
|Issued -
  5,316,550 shares                                                                          |  |                     |             |                     |   |            |  
|Outstanding 
  4,468,618 and 4,615,326 shares, respectively                                         |  |                     | 53,165      |                     |   | 53,165     |  
|Additional paid
  in capital                                                                         |  |                     | 10,594,161  |                     |   | 10,381,882 |  
|Accumulated
  other comprehensive income                                                             |  |                     | 29,205,823  |                     |   | 28,379,687 |  
|Retained
  earnings                                                                                  |  |                     | 23,487,371  |                     |   | 12,840,155 |  
|Less: cost of
  common stock held in treasury, at cost, 847,932 shares in 2007 and 701,224 in
  2006 |  |                     | (8,424,635  | )                   |   | (6,017,097 | )
|                                                                                                     |  |                     |             |                     |   |            |  
|Total
  Stockholders Equity                                                                         |  |                     | 54,915,885  |                     |   | 45,637,792 |  
|                                                                                                     |  |                     |             |                     |   |            |  
|Total
  Liabilities and Stockholders Equity                                                         |  | $                   | 102,560,500 |                     | $ | 78,166,312 |  
|                                                                                                     |  |                     |             |                     |   |            |  

See accompanying notes to consolidated
financial statements.

48

---



DAXOR CORPORATION AND SUBSIDIARY



CONSOLIDATED STATEMENTS OF OPERATIONSFOR THE YEARS ENDED DECEMBER 31

|                                                                             |  |      |           |      |   |           |  |   |           | 
|---------------------------------------------------------------------------- |  | ---- | --------- | ---- | - | --------- |  | - | --------- | 
|                                                                             |  | 2007 |           | 2006 |   | 2005      | 
|                                                                             |  |      |           |      |   |           | 
|REVENUES:                                                                    |  |      |           |      |   |           |  |   |           | 
|                                                                             |  |      |           |      |   |           |  |   |           | 
|Operating revenues - equipment sales
and
  related services                  |  | $    | 1,453,201 |      | $ | 1,055,706 |  | $ | 751,071   | 
|                                                                             |  |      |           |      |   |           |  |   |           | 
|Operating revenues - cryobanking and
  related services                      |  |      | 416,578   |      |   | 430,743   |  |   | 592,467   | 
|                                                                             |  |      |           |      |   |           |  |   |           | 
|                                                                             |  |      |           |      |   |           |  |   |           | 
|Total Revenues                                                               |  |      | 1,869,779 |      |   | 1,486,449 |  |   | 1,343,538 | 
|                                                                             |  |      |           |      |   |           |  |   |           | 
|                                                                             |  |      |           |      |   |           |  |   |           | 
|Costs of Sales:                                                              |  |      |           |      |   |           |  |   |           | 
|                                                                             |  |      |           |      |   |           |  |   |           | 
|Costs of equipment sales and related
  services                              |  |      | 634,938   |      |   | 585,742   |  |   | 530,652   | 
|                                                                             |  |      |           |      |   |           |  |   |           | 
|Costs of cryobanking and related
services                                    |  |      | 47,848    |      |   | 45,825    |  |   | 35,090    | 
|                                                                             |  |      |           |      |   |           |  |   |           | 
|                                                                             |  |      |           |      |   |           |  |   |           | 
|Total Costs of Sales                                                         |  |      | 682,786   |      |   | 631,567   |  |   | 565,742   | 
|                                                                             |  |      |           |      |   |           |  |   |           | 
|                                                                             |  |      |           |      |   |           |  |   |           | 
|Gross Profit                                                                 |  |      | 1,186,993 |      |   | 854,882   |  |   | 777,796   | 
|                                                                             |  |      |           |      |   |           |  |   |           | 
|                                                                             |  |      |           |      |   |           |  |   |           | 
|OPERATING EXPENSES:                                                          |  |      |           |      |   |           |  |   |           | 
|                                                                             |  |      |           |      |   |           |  |   |           | 
|Research and development
expenses:                                           |  |      |           |      |   |           |  |   |           | 
|                                                                             |  |      |           |      |   |           |  |   |           | 
|Research and development-equipment
sales
  and related services              |  |      | 2,390,352 |      |   | 2,195,371 |  |   | 2,082,835 | 
|                                                                             |  |      |           |      |   |           |  |   |           | 
|Research and development-cryobanking
and
  related services                  |  |      | 186,356   |      |   | 137,028   |  |   | 69,426    | 
|                                                                             |  |      |           |      |   |           |  |   |           | 
|Total Research and Development
Expenses                                      |  |      | 2,576,708 |      |   | 2,332,399 |  |   | 2,152,261 | 
|                                                                             |  |      |           |      |   |           |  |   |           | 
|                                                                             |  |      |           |      |   |           |  |   |           | 
|Selling, General & Administrative
  Expenses:                                |  |      |           |      |   |           |  |   |           | 
|                                                                             |  |      |           |      |   |           |  |   |           | 
|Selling, general, and administrative;
  equipment sales and related services |  |      | 3,326,211 |      |   | 3,645,655 |  |   | 3,105,119 | 
|                                                                             |  |      |           |      |   |           |  |   |           | 
|Selling, general & administrative;
  cryobanking and related services        |  |      | 714,944   |      |   | 301,749   |  |   | 423,441   | 
|                                                                             |  |      |           |      |   |           |  |   |           | 
|                                                                             |  |      |           |      |   |           |  |   |           | 
|Total Selling, General &
  Administrative Expenses                           |  |      | 4,041,155 |      |   | 3,947,404 |  |   | 3,528,560 | 
|                                                                             |  |      |           |      |   |           |  |   |           | 

|                         |  |  |            |   |  |            |   |  |            |  
|------------------------ |  |  | ---------- | - |  | ---------- | - |  | ---------- | -
|Total Operating Expenses |  |  | 6,617,863  |   |  | 6,279,803  |   |  | 5,680,821  |  
|                         |  |  |            |   |  |            |   |  |            |  
|                         |  |  |            |   |  |            |   |  |            |  
|Loss from Operations     |  |  | (5,430,870 | ) |  | (5,424,921 | ) |  | (4,903,025 | )
|                         |  |  |            |   |  |            |   |  |            |  
|                         |  |  |            |   |  |            |   |  |            |  

49

---



|                                                                          |  |   |            |   |    |           |   |    |           |  
|------------------------------------------------------------------------- |  | - | ---------- | - | -- | --------- | - | -- | --------- | -
|Other income (expenses):                                                  |  |   |            |   |    |           |   |    |           |  
|                                                                          |  |   |            |   |    |           |   |    |           |  
|Dividend income-investment portfolio                                      |  |   | 2,419,476  |   |    | 2,273,737 |   |    | 2,511,054 |  
|                                                                          |  |   |            |   |    |           |   |    |           |  
|Realized gains on sale of securities, net                                 |  |   | 14,853,934 |   |    | 3,316,710 |   |    | 1,515,653 |  
|                                                                          |  |   |            |   |    |           |   |    |           |  
|Mark to market of short positions                                         |  |   | 357,337    |   |    | (544,629  | ) |    | (204,225  | )
|                                                                          |  |   |            |   |    |           |   |    |           |  
|Other revenues                                                            |  |   | 11,112     |   |    | 13,838    |   |    | 14,686    |  
|                                                                          |  |   |            |   |    |           |   |    |           |  
|Investment recovery                                                       |  |   |           |   |    |          |   |    | 75,000    |  
|                                                                          |  |   |            |   |    |           |   |    |           |  
|Interest expense, net of interest income of $12,838, $3,699 and
  $23,031 |  |   | (197,211   | ) |    | (363,952  | ) |    | (296,114  | )
|                                                                          |  |   |            |   |    |           |   |    |           |  
|Administrative expenses relating to portfolio investments                 |  |   | (55,538    | ) |    | (44,564   | ) |    | (36,842   | )
|                                                                          |  |   |            |   |    |           |   |    |           |  
|                                                                          |  |   |            |   |    |           |   |    |           |  
|Total Other income, net                                                   |  |   | 17,389,110 |   |    | 4,651,140 |   |    | 3,579,212 |  
|                                                                          |  |   |            |   |    |           |   |    |           |  
|Income (Loss) before income taxes                                         |  | $ | 11,958,240 |   | ($ | 773,781   | ) | ($ | 1,323,813 | )
|                                                                          |  |   |            |   |    |           |   |    |           |  
|Provision for income taxes                                                |  |   | 1,311,024  |   |    | 11,750    |   |    | 12,168    |  
|                                                                          |  |   |            |   |    |           |   |    |           |  
|                                                                          |  |   |            |   |    |           |   |    |           |  
|Net Income (Loss)                                                         |  | $ | 10,647,216 |   | ($ | 785,531   | ) | ($ | 1,335,981 | )
|                                                                          |  |   |            |   |    |           |   |    |           |  
|                                                                          |  |   |            |   |    |           |   |    |           |  
|Weighted average number of shares outstanding - basic and
  diluted       |  |   | 4,572,119  |   |    | 4,625,168 |   |    | 4,638,384 |  
|                                                                          |  |   |            |   |    |           |   |    |           |  
|Net income (loss) per common equivalent share - basic and
  diluted       |  | $ | 2.33       |   | ($ | 0.17      | ) | ($ | 0.29      | )

50

---



DAXOR CORPORATION AND SUBSIDIARYSTATEMENTS 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, 2004                                                 |  |                                | 4,610,826 |        | $ | 53,097                       |  | $                                        | 9,821,564  |                   | $ | 21,053,089     |   | $     | 14,961,667 |                               | $ | (5,636,129 | ) | $ | 40,253,288 |   |   |            |  
|                                                                            |  |                                |           |        |   |                              |  |                                          |            |                   |   |                |   |       |            |                               |   |            |   |   |            |   |   |            |  
|Change in unrealized gain on securities net of
  $213,257 deferred taxes    |  |                                |           |        |   |                              |  |                                          |            |                   |   | (515,339       | ) |       |            |                               |   |            |   |   | (515,339   | ) | $ | (515,339   | )
|                                                                            |  |                                |           |        |   |                              |  |                                          |            |                   |   |                |   |       |            |                               |   |            |   |   |            |   |   |            |  
|Share adjustment                                                            |  |                                |           |        |   | 68                           |  |                                          | (68        | )                 |   |                |   |       |            |                               |   |            |   |   |            |   |   |            |  
|                                                                            |  |                                |           |        |   |                              |  |                                          |            |                   |   |                |   |       |            |                               |   |            |   |   |            |   |   |            |  
|Net loss                                                                    |  |                                |           |        |   |                              |  |                                          |            |                   |   |                |   |       | (1,335,981 | )                             |   |            |   |   | (1,335,981 | ) |   | (1,335,981 | )
|                                                                           
|Sale of treasury stock                                                      |  |                                | 27,500    |        |   |                              |  |                                          | 482,406    |                   |   |                |   |       |            |                               |   | 79,447     |   |   | 561,853    |   |   |            |  
|                                                                            |  |                                |           |        |   |                              |  |                                          |            |                   |   |                |   |       |            |                               |   |            |   |   |            |   |   |            |  
|Purchase of treasury stock                                                  |  |                                | (7,900    | )      |   |                              |  |                                          |            |                   |   |                |   |       |            |                               |   | (219,020   | ) |   | (219,020   | ) |   |            |  
|                                                                            |  |                                |           |        |   |                              |  |                                          |            |                   |   |                |   |       |            |                               |   |            |   |   |            |   |   |            |  
|Comprehensive Income (Loss)                                                 |  |                                |           |        |   |                              |  |                                          |            |                   |   |                |   |       |            |                               |   |            |   |   |            |   | $ | (1,851,320 | )
|                                                                            |  |                                |           |        |   |                              |  |                                          |            |                   |   |                |   |       |            |                               |   |            |   |   |            |   |   |            |  
|                                                                            |  |                                |           |        |   |                              |  |                                          |            |                   |   |                |   |       |            |                               |   |            |   |   |            |   |   |            |  
|                                                                            |  |                                |           |        |   |                              |  |                                          |            |                   |   |                |   |       |            |                               |   |            |   |   |            |   |   |            |  
|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 $4,222,581
  deferred 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 |   |   |            |  
|                                                                            |  |                                |           |        |   |                              |  |                                          |            |                   |   |                |   |       |            |                               |   |            |   |   |            |   |   |            |  

51

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

|                                                                                     |  |      |             |      |   |             |   |   |             |  
|------------------------------------------------------------------------------------ |  | ---- | ----------- | ---- | - | ----------- | - | - | ----------- | -
|                                                                                     |  | 2007 |             | 2006 |   | 2005        |  
|                                                                                     |  |      |             |      |   |             |  
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                |  |      |             |      |   |             |   |   |             |  
|Net income (loss)                                                                    |  | $    | 10,647,216  |      | $ | (785,531    | ) | $ | (1,335,981  | )
|Adjustments to reconcile net income (loss) to net cash used in operating activities: |  |      |             |      |   |             |   |   |             |  
|Depreciation & amortization                                                          |  |      | 229,929     |      |   | 166,399     |   |   | 112,813     |  
|Provision for bad debts                                                              |  |      | 23,492      |      |   | (7,137      | ) |   | 41,300      |  
|Gain on sale of fixed assets                                                         |  |      | (151,016    | )    |   | (29,802     | ) |   |            |  
|Loss on disposal of fixed assets                                                     |  |      | 73,384      |      |   |            |   |   |            |  
|Non-cash consideration received on instrument sale
(1)                               |  |      | (65,000     | )    |   |            |   |   |            |  
|Stock dividend income received on
investments                                        |  |      |            |      |   | (4,326      | ) |   | (402,896    | )
|Stock based compensation associated with employee
stock option
  plans               |  |      | 43,937      |      |   | 77,980      |   |   |            |  
|Non-cash research and development  Expense
(1)                                       |  |      | 65,000      |      |   |            |   |   |            |  
|Gains on sale of investments, net                                                    |  |      | (14,853,934 | )    |   | (3,316,710  | ) |   | (1,515,653  | )
|Marked to market adjustments on options and
shorts                                   |  |      | (357,337    | )    |   | 544,629     |   |   | 204,225     |  
|Investment recovery                                                                  |  |      |            |      |   |            |   |   | (75,000     | )
|Change in operating assets and operating
  liabilities:                              |  |      |             |      |   |             |   |   |             |  
|(Increase)/decrease in accounts receivable
(2)                                       |  |      | (63,717     | )    |   | (35,380     | ) |   | 24,795      |  
|(Increase) decrease in prepaid expenses &
other current
  assets                     |  |      | (30,716     | )    |   | 115,521     |   |   | (72,063     | )
|(Increase) decrease in inventory                                                     |  |      | (84,838     | )    |   | 20,865      |   |   | (52,523     | )
|Increase in other assets                                                             |  |      | (5,000      | )    |   |            |   |   |            |  
|Increase (decrease) in accounts payable and
accrued liabilities                      |  |      | 99,071      |      |   | (99,057     | ) |   | 422,862     |  
|Increase in Income Taxes Payable                                                     |  |      | 1,281,842   |      |   |            |   |   |            |  
|Increase(decrease) in deferred income                                                |  |      | 4,662       |      |   | (87,713     | ) |   | (49,548     | )
|                                                                                     |  |      |             |      |   |             |   |   |             |  
|Net cash used in operating activities                                                |  |      | (3,143,025  | )    |   | (3,440,262  | ) |   | (2,697,669  | )
|                                                                                     |  |      |             |      |   |             |   |   |             |  
|                                                                                     |  |      |             |      |   |             |   |   |             |  
|CASH FLOWS FROM INVESTING ACTIVITIES                                                 |  |      |             |      |   |             |   |   |             |  
|                                                                                    
|Purchase of property and equipment                                                   |  |      | (1,642,489  | )    |   | (344,534    | ) |   | (285,002    | )
|Proceeds from sale of fixed assets                                                   |  |      | 195,500     |      |   | 65,000      |   |   |            |  
|Increase in securities sold, not
received                                            |  |      | (5,301,646  | )    |   | (6,083,827  | ) |   | (1,018,936  | )
|Increase in securities borrowed                                                      |  |      | 9,696,537   |      |   | 9,362,925   |   |   | 1,287,900   |  
|Purchases of put and call options                                                    |  |      | (772,799    | )    |   | (224,165    | ) |   | (368,159    | )
|Sale of put and call options                                                         |  |      | 18,662,703  |      |   | 6,710,808   |   |   | 3,059,531   |  
|Purchase of investments                                                              |  |      | (31,263,920 | )    |   | (13,697,234 | ) |   | (24,092,647 | )
|Sales of investments                                                                 |  |      | 25,195,606  |      |   | 14,238,819  |   |   | 21,279,360  |  
|                                                                                     |  |      |             |      |   |             |   |   |             |  
|Net
  cash provided by (used  in) investing
  activities                             |  |      | 14,769,492  |      |   | 10,027,792  |   |   | (137,953    | )
|                                                                                     |  |      |             |      |   |             |   |   |             |  

52

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|                                                       |  |   |             |   |   |             |   |   |            |  
|------------------------------------------------------ |  | - | ----------- | - | - | ----------- | - | - | ---------- | -
|CASH FLOWS FROM FINANCING ACTIVITIES:                  |  |   |             |   |   |             |   |   |            |  
|Proceeds from bank loan                                |  |   | 1,400,000   |   |   |            |   |   |           |  
|Repayment of bank loan                                 |  |   | (1,400,000  | ) |   |            |   |   |           |  
|Proceeds from margin loans                             |  |   | 40,045,820  |   |   | 23,902,822  |   |   | 5,530,857  |  
|Repayment of margin loans                              |  |   | (50,710,095 | ) |   | (27,503,033 | ) |   | (2,950,144 | )
|Proceeds from mortgage                                 |  |   | 500,000     |   |   |            |   |   |           |  
|Repayment of mortgage                                  |  |   | (32,089     | ) |   |            |   |   |           |  
|Purchase of treasury stock                             |  |   | (2,499,116  | ) |   | (241,395    | ) |   | (219,020   | )
|Proceeds from sale of treasury stock                   |  |   | 259,920     |   |   |            |   |   | 561,853    |  
|                                                       |  |   |             |   |   |             |   |   |            |  
|Net cash (used in) provided by financing
  activities  |  |   | (12,435,560 | ) |   | (3,841,606  | ) |   | 2,923,546  |  
|                                                       |  |   |             |   |   |             |   |   |            |  
|                                                       |  |   |             |   |   |             |   |   |            |  
|Net increase (decrease) in cash and cash
  equivalents |  |   | (809,093    | ) |   | 2,745,924   |   |   | 87,924     |  
|Cash and cash equivalents at beginning of
  period     |  |   | 2,838,927   |   |   | 93,003      |   |   | 5,079      |  
|                                                       |  |   |             |   |   |             |   |   |            |  
|Cash and cash equivalents at end of period             |  | $ | 2,029,834   |   | $ | 2,838,927   |   | $ | 93,003     |  
|                                                       |  |   |             |   |   |             |   |   |            |  

| |    |                                                                                                                                  |                                                                 
| | -- | -------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------
| | 1. | The Company
  owed a hospital $65,000 of credits for Volumex Kits that were paid for and
  used in a research study.            
|
| | 2. | Changes in
  account classifications were made to consistently present investment activity
  and accrued liabilities as follows:
|
| |    | a.                                                                                                                               | Accounts
  Receivable for the year ended December 31, 2005 only.

See
accompanying notes to consolidated financial statements

53

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DAXOR CORPORATION AND SUBSIDIARYNOTES 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, 2007 and 2006 there were $1,970,872 and
$2,491,571 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 short
term debt (loans payable and short positions on securities) approximate fair
value because of their short maturities. The carrying amount of the mortgage
payable is estimated to approximate fair value as the mortgage was closed in
2007 at a current interest rate.

54

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Available-for-Sale
Securities

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

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

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

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 dividend bearing money
market accounts.

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
yet received at fair value

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

Investment Goals,
Strategies & Policies

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 position 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 a minimum 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.

55

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

Accounts Receivable

Accounts
receivable are reviewed by the Company at the end of each reporting period to
determine the collectability based upon the aging of the balances and the
history of the customer. As of December 31, 2007, the Company determined that a
reserve of $57,655 should be placed against the outstanding receivable balance
of $271,989. As of December 31, 2006, the Company determined that a reserve of
$34,163 should be placed against the outstanding receivable balance of
$208,272.

Inventory

Inventory is
stated at the lower of cost or market, using the first-in, first-out method
(FIFO), and consists primarily of finished goods.

Prepaid Expenses and
Other Current Assets

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

Property and
Equipment

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

Amounts spent
to repair or maintain these assets arising out of the normal course of business
are expensed in the period incurred. The cost of betterments and additions are
capitalized and depreciated over the life of the asset. The cost of assets
disposed of or determined to be non-revenue producing, together with the
related accumulated depreciation applicable thereto, are eliminated from the
accounts, and any gain or loss is recognized.

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

Revenue Recognition

The Company
recognizes operational revenues from several sources. The first source is the
sale of equipment, the Blood Volume Analyzer, to customers. The second source
is the sale 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.

56

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

The sales of
the single-use 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, 2007 and
2006, deferred revenue pertaining to these service contracts was $ 7,417and $0,
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.

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 Warranties
and Related Liabilities

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

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 offers service contracts priced on annual basis which
are billed quarterly and revenue is earned in the same calendar quarter that it
is billed. There were three hospitals that the Company billed during the year
ended December 31, 2007 for the entire amount of their annual service contract.
As at December 31, 2007 and December 31, 2006, deferred revenue pertaining to
the historical service contracts was $7,417 and $0 respectively.

57

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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, 2007, 2006 and 2005 were
$2,576,708, $2,332,399 and $2,152,261. 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, 2007, 2006 and 2005 amounted to $ 18,050,
$17,943 and $20,262.

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 2007, 2006
and 2005, stock options were not included in the computation of diluted loss
per common share due to their anti-dilutive effect. The number of anti-dilutive
stock options excluded from the computation of diluted loss per common share
was 90,000, 96,500, and 78,100, 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).

Stock Based
Compensation

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

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, 2007, reflect the impact
of SFAS No. 123R. In accordance with the modified prospective transition
method, the Companys consolidated financial statements for periods prior to
January 1, 2006 have not been restated to reflect, and do not include, the
impact of SFAS 123R.

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

At December 31, 2007, 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, 2007, there is a total unvested stock-based
compensation expense of $41,090 and a total weighted average remaining service
term of 0.70 years. Total share-based compensation expense recognized in the
Statement of Operations aggregated $43,937 for the year ended December 31, 2007
and $77,980 for the year ended December 31, 2006.

58

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

The
following table represents stock option activity for the year ended December
31, 2007:

|                                             |  |                    |         |                  |   |                           |  |         |  | 
|-------------------------------------------- |  | ------------------ | ------- | ---------------- | - | ------------------------- |  | ------- |  | 
|                                             |  | Number of
  Shares |         | Exercise
  Price |   | Remaining
  Contract Life | 
|                                             |  |                    |         |                  |   |                           | 
|Outstanding
  options at beginning of period |  |                    | 96,500  |                  | $ | 19.36                     |  | 2.19Yrs |  | 
|Granted                                      |  |                    | 30,200  |                  | $ | 16.84                     |  |         |  | 
|Exercised                                    |  |                    | (17,100 | )                |   | 15.20                     |  |         |  | 
|Canceled/Expired                             |  |                    | (19,600 | )                | $ | 21.06                     |  |         |  | 
|                                             |  |                    |         |                  |   |                           |  |         |  | 
|Outstanding
  options at end of period       |  |                    | 90,000  |                  | $ | 18.93                     |  | 2.60Yrs |  | 
|                                             |  |                    |         |                  |   |                           |  |         |  | 
|Outstanding
  exercisable at end of period   |  |                    | 59,800  |                  | $ | 19.99                     |  | 2.93Yrs |  | 
|                                             |  |                    |         |                  |   |                           |  |         |  | 

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.

As part of
this exercise of options, the Company sold 17,100 shares of Treasury stock for
$15.20 during the year ended December 31, 2007 resulting in total proceeds due
of $259,920.

59

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Prior to the
adoption of SFAS 123R, the Company accounted for stock options issued under its
plans under APB Opinion No. 25, Accounting for Stock Issued to Employees, and
related interpretations. If compensation cost had been determined based on fair
values at the date of grant under SFAS 123, Accounting for Stock-Based
Compensation, pro-forma net loss and loss per share would have been as
follows:

|                                                                                                                |  |      |            |  
|--------------------------------------------------------------------------------------------------------------- |  | ---- | ---------- | -
|                                                                                                                |  | 2005 |           
|                                                                                                                |  |      |           
|Net loss, as reported                                                                                           |  | $    | (1,335,981 | )
|Deduct total
  stock-based employee compensation expense determined under fair-value-based
  method, net of tax |  |      | (82,790    | )
|                                                                                                                |  |      |            |  
|Proforma net income
  (loss)                                                                                    |  | $    | (1,418,771 | )
|                                                                                                                |  |      |            |  
|                                                                                                               
|Pro forma net income (loss) per common share: basic
  and diluted                                               |  | $    | (.31       | )
|                                                                                                                |  |      |            |  

In 2007, 2006
and 2005 a total of 30,200, 36,900 and 25,000, 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 2007, 2006 and 2005 was
$2.65, $2.95 and $3.40 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 2007, 2006
and 2005: no dividend yield, expected volatility of 24.14%, 24.62% and 28.65%,
respectively, risk-free interest rates of 4.14%, 4.34% and 3.32%, respectively
and an expected life of 3.00 years for 2007, 2.67 years for 2006 and 2.25 years
for 2005.

Recent Accounting
Pronouncements

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

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

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

60

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

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

In December
2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated
Financial Statements -- an amendment of ARB No. 51 (SFAS 160). SFAS 160
requires that ownership interests in subsidiaries held by parties other than
the parent, and the amount of consolidated net income, be clearly identified,
labeled, and presented in the consolidated financial statements within equity,
but separate from the parents equity. It also requires once a subsidiary is
deconsolidated, any retained noncontrolling equity investment in the former
subsidiary be initially measured at fair value. Sufficient disclosures are
required to clearly identify and distinguish between the interests of the
parent and the interests of the noncontrolling owners. SFAS 160 will be
effective for the Company beginning January 1, 2009. The Company is currently
evaluating the impact of the provisions of SFAS 160 on its financial position,
results of operations and cash flows and does not believe the impact of the
adoption will be material.

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

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

(2)
AVAILABLE-FOR-SALE SECURITIES

Upon adoption
of SFAS No. 115, Accounting for Certain Investments in Debt and Equity
Securities, management has determined that the companys portfolio is best
characterized as Available-For-Sale. SFAS No. 115 requires these securities
to be recorded at their fair market values, with the offsetting unrealized
holding gains or losses being recorded as Comprehensive Income (Loss) in the
Equity section of the Balance Sheet. The adoption of this pronouncement has
resulted in an increase in the carrying value of the companys
available-for-sale securities, as at December 31, 2007 and December 31, 2006,
of approximately 149.84% and 187.33%, respectively, over its historical cost.

In accordance
with the provisions of SFAS No. 115, the adjustment in stockholders equity has
been recorded net of the tax effect had these gains been realized.

61

---



The Company uses
the historical cost method in the determination of its realized and unrealized
gains and losses. The following tables summarize the Companys investments as
of:

|                   |  |                   |            |            |   |                         |  |                          |            |  |   |            |  
|------------------ |  | ----------------- | ---------- | ---------- | - | ----------------------- |  | ------------------------ | ---------- |  | - | ---------- | -
|                   |  | December 31, 2007 |           
|Type
  of security |  | Cost              |            | Fair Value |   | Unrealizedholding gains |  | Unrealizedholding losses |           
|                   |  |                   |            |            |   |                         |  |                          |           
|Equity             |  | $                 | 29,802,511 |            | $ | 74,572,643              |  | $                        | 47,224,495 |  | $ | (2,454,363 | )
|Debt               |  |                   | 184,646    |            |   | 346,550                 |  |                          | 161,904    |  |   | (0         | )
|                   |  |                   |            |            |   |                         |  |                          |            |  |   |            |  
|                  
|Total              |  | $                 | 29,987,157 |            | $ | 74,919,193              |  | $                        | 47,386,399 |  | $ | (2,454,363 | )
|                   |  |                   |            |            |   |                         |  |                          |            |  |   |            |  

|                   |  |                   |            |            |   |                         |  |                          |            |  |   |          |  
|------------------ |  | ----------------- | ---------- | ---------- | - | ----------------------- |  | ------------------------ | ---------- |  | - | -------- | -
|                   |  | December 31, 2006 |           
|Type
  of security |  | Cost              |            | Fair Value |   | Unrealizedholding gains |  | Unrealizedholding losses |           
|                   |  |                   |            |            |   |                         |  |                          |           
|Equity             |  | $                 | 23,122,744 |            | $ | 66,692,556              |  | $                        | 43,836,526 |  | $ | (266,714 | )
|Debt               |  |                   | 184,646    |            |   | 275,890                 |  |                          | 91,244     |  |   | (0       | )
|                   |  |                   |            |            |   |                         |  |                          |            |  |   |          |  
|                  
|Total              |  | $                 | 23,307,390 |            | $ | 66,968,446              |  | $                        | 43,927,770 |  | $ | (266,714 | )
|                   |  |                   |            |            |   |                         |  |                          |            |  |   |          |  

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, 2006, the securities held by the Company had a market value of $66,968,446
and a cost basis of $23,307,390 resulting in a net unrealized gain of
$43,661,056 or 187.33% of cost.

At December
31, 2007 and December 31, 2006, marketable securities, primarily consisting of
preferred and common stocks of utility companies, are valued at fair value.
Debt securities consist of Corporate Bonds. As at December 31, 2006, the
Company held $346,550 in bonds at various rates and maturities.

(3) Valuation
and Qualifying allowance

The allowance
for doubtful accounts for the years ended December 31, 2007, 2006, and 2005
were as follows:

|                                |  |                                |        |                                 |   |                            |  |                          |       |  |   |        | 
|------------------------------- |  | ------------------------------ | ------ | ------------------------------- | - | -------------------------- |  | ------------------------ | ----- |  | - | ------ | 
|Classifications                 |  | Balance at
  Beginning of Year |        | Charged to
  Costs and Expenses |   | Deductions
  From Reserves |  | Balance at
  End of Year |      
|                                |  |                                |        |                                 |   |                            |  |                          |      
|Year ended December 31, 2005    |  |                                |        |                                 |   |                            |  |                          |       |  |   |        | 
|Allowance for Doubtful Accounts |  | $                              |       |                                 | $ | 41,300                     |  | $                        |      |  | $ | 41,300 | 
|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 | 

There was no inventory reserve
recorded for the years ended December 31, 2007, 2006 and 2005. The inventory
reflects proper valuation for slow moving and
obsolete items.

62

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(4) PROPERTY
AND EQUIPMENT

Property and
equipment as at December 31, 2007 and 2006, respectively, consist of:

|                            |  |      |            |      |   |            |  
|--------------------------- |  | ---- | ---------- | ---- | - | ---------- | -
|                            |  | 2007 |            | 2006 |  
|                            |  |      |            |      |  
|Machinery and equipment     |  | $    | 1,161,413  |      | $ | 975,656    |  
|BVA Equipment on trial      |  |      | 782,000    |      |   | 578,000    |  
|Land and Land Improvements  |  |      | 196,991    |      |   |           |  
|Buildings                   |  |      | 598,422    |      |   |           |  
|Furniture and fixtures      |  |      | 352,972    |      |   | 338,473    |  
|Leasehold improvements      |  |      | 591,866    |      |   | 295,530    |  
|                            |  |      |            |      |  
|                            |  |      | 3,683,664  |      |   | 2,187,659  |  
|                            |  |      |            |      |  
|Accumulated depreciation    |  |      | (1,625,170 | )    |   | (1,423,857 | )
|                            |  |      |            |      |  
|Property and equipment, net |  | $    | 2,058,494  |      | $ | 763,802    |  
|                            |  |      |            |      |  

For the years
ended December 31, 2007 and 2006, depreciation expense for the above listed
assets was $ 229,929 and $166,399.

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

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

(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, 2007 and 2006, the Company had no intangible assets.

(6) LOANS AND
MORTGAGE PAYABLE

LOANS
PAYABLE

As
at December 31, 2007 and 2006 the Company has a note payable of $1,500,000 and
$1,500,000 respectively, with a bank. The note matures each year, with an
option to renew, and is classified as short term. The note balance is an
aggregate of borrowings (loans) that renews as one note each year. 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.

Interest
expense on the note payable was $82,669 for the year ended December 31, 2007
and $88,377 for the year ended December 31, 2006.

The loans bear
interest at approximately 5.75% at December 31, 2007 and 5.95% at December 31,
2006. 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 $1,814,303 at December 31, 2007 and $1,983,161 at December 31,
2006.

Interest
expense on short term margin debt was $94,211 for the year ended December 31,
2007 and $278,937 for the year ended December 31, 2006.

63

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SHORT-TERM
BORROWINGS
Years Ended December 31, 2007 and 2006.

|                                              |  |                              |           |                                                       |      |                                                 |  |                                                |           |                                                     |   |           |  |      |   |  | 
|--------------------------------------------- |  | ---------------------------- | --------- | ----------------------------------------------------- | ---- | ----------------------------------------------- |  | ---------------------------------------------- | --------- | --------------------------------------------------- | - | --------- |  | ---- | - |  | 
|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
|                                              |  |                              |           |                                                       |      |                                                 |  |                                                |           |                                                    
|2007                                          |  |                              |           |                                                       |      |                                                 |  |                                                |           |                                                     |   |           |  |      |  
|                                              |  |                              |           |                                                       |      |                                                 |  |                                                |           |                                                     |   |           |  |      |  
|Banks                                         |  | $                            | 1,500,000 |                                                       | 5.75 | %                                               |  | $                                              | 1,500,000 |                                                     | $ | 1,200,000 |  | 6.89 | %
|                                              |  |                              |           |                                                       |      |                                                 |  |                                                |           |                                                     |   |           |  |      |  
|Brokers                                       |  | $                            | 1,814,303 |                                                       | 5.89 | %                                               |  | $                                              | 2,914,807 |                                                     | $ | 1,481,789 |  | 6.36 | %
|                                              |  |                              |           |                                                       |      |                                                 |  |                                                |           |                                                     |   |           |  |      |  
|All
  Categories                              |  | $                            | 3,314,303 |                                                       | 5.83 | %                                               |  | $                                              | 4,414,807 |                                                     | $ | 2,681,789 |  | 5.93 | %
|                                              |  |                              |           |                                                       |      |                                                 |  |                                                |           |                                                     |   |           |  |      |  
|2006                                          |  |                              |           |                                                       |      |                                                 |  |                                                |           |                                                     |   |           |  |      |  
|                                              |  |                              |           |                                                       |      |                                                 |  |                                                |           |                                                     |   |           |  |      |  
|Banks                                         |  | $                            | 1,500,000 |                                                       | 5.95 | %                                               |  | $                                              | 1,500,000 |                                                     | $ | 1,500,000 |  | 5.95 | %
|                                              |  |                              |           |                                                       |      |                                                 |  |                                                |           |                                                     |   |           |  |      |  
|Brokers                                       |  | $                            | 1,983,161 |                                                       | 6.42 | %                                               |  |                                                | 6,752,666 |                                                     |   | 3,620,616 |  | 7.70 | %
|                                              |  |                              |           |                                                       |      |                                                 |  |                                                |           |                                                     |   |           |  |      |  
|All
  Categories                              |  | $                            | 3,483,161 |                                                       | 6.22 | %                                               |  | $                                              | 8,252,666 |                                                     | $ | 5,120,616 |  | 7.17 | %
|                                              |  |                              |           |                                                       |      |                                                 |  |                                                |           |                                                     |   |           |  |      |  

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.

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

|             |  |          |  |          |        |          |  |          |  |   |         | 
|------------ |  | -------- |  | -------- | ------ | -------- |  | -------- |  | - | ------- | 
|12/31/08     |  | 12/31/09 |  | 12/31/10 |        | 12/31/11 |  | 12/31/12 | 
|             |  |          |  |          |        |          |  |          | 
|            
|$     37,313 |  | 40,306   |  |          | 43,431 |          |  | 46,798   |  | $ | 300,063 | 

At December 31, 2007, the
remaining principal due on the mortgage for the land and buildings in Oak
Ridge, Tennessee is $467,911.  Of this
amount, $37,313 is due before December 31, 2008 and the remaining $430,598 is
due after that date.

(7) SECURITIES BORROWED AT
FAIR VALUE

At December 31, 2007 and
2006 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 $18,712,876 and $10,166,081 at December 31, 2007 and 2006,
respectively, and had respective market values of $20,362,259 and $10,665,722,
resulting in mark to market adjustments of $(1,649,383) and $(499,641) at
December 31, 2007 and 2006.

64

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(8) PUTS AND CALLS, AT FAIR
VALUE

At December 31, 2007 and
2006 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, 2007 and December 31, 2006.

|                     |  |                 |           |               |  |                             |  |           |  | 
|-------------------- |  | --------------- | --------- | ------------- |  | --------------------------- |  | --------- |  | 
|Put and Call Options |  | Selling
  price |           | Fair 
  value |  | Mark to
  Market Adjustment | 
|                     |  |                 |           |               |  |                             | 
|December 31, 2007    |  |                 | 7,645,833 |               |  | 5,972,632                   |  | 1,673,201 |  | 
|December 31, 2006    |  |                 | 2,848,667 |               |  | 2,682,545                   |  | 166,122   |  | 

(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, 2007, 2006 and
2005, 59,800, 62,800 and 67,100 of the outstanding options were exercisable,
respectively.

65

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Details of employee option
activity are as follows:

|                                                |  |                    |         |                                     |   |       | 
|----------------------------------------------- |  | ------------------ | ------- | ----------------------------------- | - | ----- | 
|                                                |  | Number of
  Shares |         | Weighted
  Average
  Exercise Price |  
|                                                |  |                    |         |                                     |  
|Outstanding,
  December 31, 2004                |  |                    | 62,500  |                                     | $ | 17.64 | 
|Granted                                         |  |                    | 25,000  |                                     |   | 23.96 | 
|Exercised                                       |  |                    | (3,200  | )                                   |   | 15.73 | 
|Cancelled/Expired                               |  |                    | (6,200  | )                                   |   | 21.36 | 
|                                                |  |                    |         |                                     |   |       | 
|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 | 
|                                                |  |                    |         |                                     |   |       | 
|Outstanding
  - excercisable, December 31, 2007 |  |                    | 59,800  |                                     | $ | 19.99 | 
|                                                |  |                    |         |                                     |   |       | 

The
following table summarizes information concerning currently outstanding and
exercisable options at December 31, 2007:

|                         |  |                                         |        |                                              |            |                                  |  |                                      |       |                                  |  |        |  |   |       | 
|------------------------ |  | --------------------------------------- | ------ | -------------------------------------------- | ---------- | -------------------------------- |  | ------------------------------------ | ----- | -------------------------------- |  | ------ |  | - | ----- | 
|Options Outstanding      |  | Options Exercisable                     |       
|                         |  |                                         |       
|Range of
Exercise Prices |  | Number
Outstanding
at
December 31,
2007 |        | Weighted-
Average
Remaining
Contractual
Life |            | Weighted-
Average
Exercise
Price |  | Number
Exercisable
December 31,
2007 |       | Weighted-
Average
Exercise
Price | 
|                         |  |                                         |        |                                              |            |                                  |  |                                      |       |                                  | 
|Below - $16.00           |  |                                         | 16,700 |                                              | 2.05 years |                                  |  | $                                    | 15.64 |                                  |  | 12,500 |  | $ | 15.77 | 
|$16.01
- $18.00          |  |                                         | 35,000 |                                              | 3.57 years |                                  |  | $                                    | 16.99 |                                  |  | 9,000  |  | $ | 16.70 | 
|$18.01
- $20.00          |  |                                         | 1,000  |                                              | 1.51 years |                                  |  | $                                    | 19.44 |                                  |  | 1,000  |  | $ | 19.44 | 
|$20.01
- $22.00          |  |                                         | 22,300 |                                              | 1.94 years |                                  |  | $                                    | 21.44 |                                  |  | 22,300 |  | $ | 21.44 | 
|$22.01
- $25.00          |  |                                         | 11,000 |                                              | 1.94 years |                                  |  | $                                    | 22.68 |                                  |  | 11,000 |  | $ | 22.68 | 
|$25.01
 above           |  |                                         | 4,000  |                                              | 2.12 years |                                  |  | $                                    | 25.20 |                                  |  | 4,000  |  | $ | 25.20 | 
|                         |  |                                         |        |                                              |            |                                  |  |                                      |       |                                  |  |        |  |   |       | 
|                         |  |                                         | 90,000 |                                              | 2.60 years |                                  |  | $                                    | 18.93 |                                  |  | 59,800 |  | $ | 19.99 | 

In addition to the employee
options described above, the Company issued 25,000 options to a non-employee
consultant on March 1, 2002 at an exercise price of $21.00. These options were
exercised during 2005.

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.

66

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(10) CURRENT INCOME TAXES

The provision for income
taxes, all of which is current, is comprised of the following:

|                              |  |      |           |      |  |        |  |  |        | 
|----------------------------- |  | ---- | --------- | ---- |  | ------ |  |  | ------ | 
|                              |  | 2007 |           | 2006 |  | 2005   | 
|                              |  |      |           |      |  |        | 
|Federal                       |  |      |           |      |  |        |  |  |        | 
|Undistributed PHC tax         |  |      | 1,021,164 |      |  |        |  |  |        | 
|AMT Tax                       |  |      | 219,977   |      |  |        |  |  |        | 
|                              |  |      |           |      |  |        |  |  |        | 
|State Franchise taxes         |  |      | 69,883    |      |  | 11,750 |  |  | 12,168 | 
|                              |  |      |           |      |  |        |  |  |        | 
|                              |  |      |           |      |  |        |  |  |        | 
|Total Current Tax
  Provision |  |      | 1,311,024 |      |  | 11,750 |  |  | 12,168 | 
|                              |  |      |           |      |  |        |  |  |        | 

The current federal income
tax is comprised of the personal holding company (PHC) income tax assessment of
$1,021,164 and the Alternative Minimum Tax (AMT) of $219,977.

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 year ended December 31,
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 year ended December 31,
2007 was $11,096,760.  The calculation
does allow for certain deductions and the most significant of these deductions
is long-term capital gains, which for Daxor in 2007 was $4,063,828.  During
2007 the Company had a large amount of short-term capital gains totaling
$10,258,359.  Short term capital gains
are not a deduction for PHC tax purposes, and therefore the Company had
undistributed PHC income of $6,807,758, that gave rise to the PHC tax liability.
To avoid the PHC tax, the Company could have elected to distribute its
undistributed PHC income as a dividend to its shareholders and the Company
elected not to do so.

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

The federal tax liability
was paid on March 17, 2008.

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.

The following is a
reconciliation for the year ended December 31, 2007 between the federal statutory rate of 35% and the effective
rate:

|                      |  |  |            |   |  |        |  
|--------------------- |  |  | ---------- | - |  | ------ | -
|Book Income           |  |  | 3,726,525  |   |  | 35.00  | %
|                      |  |  |            |   |  |        |  
|Non-deductible items  |  |  | 459,110    |   |  | 4.31   | %
|                      |  |  |            |   |  |        |  
|Franchise Tax         |  |  | 69,883     |   |  | 0.66   | %
|                      |  |  |            |   |  |        |  
|Undistributed PHC tax |  |  | 1,021,164  |   |  | 9.59   | %
|                      |  |  |            |   |  |        |  
|AMT Tax               |  |  | 219,977    |   |  | 2.07   | %
|                      |  |  |            |   |  |        |  
|Dividend deduction    |  |  | (592,771   | ) |  | -5.57  | %
|                      |  |  |            |   |  |        |  
|NOL Utilization       |  |  | (3,592,864 | ) |  | -33.74 | %
|                      |  |  |            |   |  |        |  
|                      |  |  | 1,311,024  |   |  | 12.32  | %
|                      |  |  |            |   |  |        |  

By statute, the tax years ended December 31, 2003
through December 31, 2006 remain open to examination by the major taxing jurisdictions to which we are subject.

67

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(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.

A valuation allowance has
been recorded for the entire deferred tax asset as a result of uncertainties
regarding the realization of the asset balance due to the history of losses and
the variability of operating results. These net operating losses and
corresponding expiration dates are as follows:

|                     |           |  |                                  |      | 
|-------------------- | --------- |  | -------------------------------- | ---- | 
|Net
  Operating Loss |           |  | Expiration
  Date  December 31; |     
|                     |           |  |                                  |     
|$                    | 723,939   |  |                                  | 2022 | 
|$                    | 2,362,191 |  |                                  | 2023 | 
|$                    | 1,964,522 |  |                                  | 2024 | 
|$                    | 2,916,514 |  |                                  | 2025 | 
|$                    | 1,776,823 |  |                                  | 2026 | 

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

The deferred tax
computations, computed at federal statutory rates of 35% in 2007 and 35% in 2006,
are as follows:

|                                                                 |  |      |            |      |   |            |  
|---------------------------------------------------------------- |  | ---- | ---------- | ---- | - | ---------- | -
|                                                                 |  | 2007 |            | 2006 |  
|Deferred tax assets:                                             |  |      |            |      |   |            |  
|Net operating loss carry forwards                                |  | $    | 3,410,396  |      | $ | 5,724,139  |  
|Valuation allowance                                              |  |      | (3,410,396 | )    |   | (5,724,139 | )
|                                                                 |  |      |            |      |   |            |  
|Total deferred tax assets                                        |  |      | 0          |      |   | 0          |  
|                                                                 |  |      |            |      |   |            |  
|Deferred tax liabilities:                                        |  |      |            |      |   |            |  
|Fair market value adjustment for
  available-for-sale securities |  | $    | 15,726,213 |      | $ | 15,281,370 |  
|                                                                 |  |      |            |      |   |            |  

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
$5,724,139 of unrecognized tax benefits, all of which would affect our
effective tax rate if recognized. At December 31, 2007 we have $ 3,410,396 of
unrecognized tax benefits.

A valuation allowance has been established equal to the full amount of the deferred tax
assets as the Company is not assured at December 31, 2007 and December 31, 2006 that it
is more likely than not that these benefits will be realized.
The valuation allowance is evaluated
considering positive and negative evidence about whether the deferred tax
assets will be realized. At that time of evaluation, the allowance is either
increased or reduced; reduction could result in the complete elimination of the
allowance if positive evidence indicates that the value of the deferred tax
assets is no longer impaired and the allowance is no longer required. The
decrease in the valuation allowance of approximately $2,314,000 was due to the
decrease in the net operating loss of Daxor Corporation and subsidiary.

(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,
2007, stocks representing 97.98% of the market value of common stocks held by
the Company were listed on either the New York Stock Exchange (NYSE) or the
American Stock Exchange (AMEX).  The
Company maintains its investments in six different brokerage accounts, four at
UBS, one at Merrill Lynch and one at JP Morgan Chase. The limits of 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, 2007, the fair market value of securities in excess of the insured
limits is $26,820,046 and the cash on deposit in excess of the insured limit is
$9,395,416.

In the Companys fiscal year
ended December 31, 2007 there were three customers (hospitals) that accounted
for 32% of the Companys total consolidated sales.              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.

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.

68

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As disclosed in our Form
10-Q for the period ended September 30, 2007, 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.

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

As discussed in our Form
10-K for the year ended December 31, 2006, by a letter dated February 8, 2007,
the staff of the Northeast Regional Office of the United States Securities and
Exchange Commission advised Dr. Joseph Feldschuh, the President and Chief
Executive Officer of Daxor that it is recommending that the Commission bring
action against Dr. Feldschuh and Daxor Corporation for violation of Section
7(a) of the Investment Company Act. The company responded to the Securities and
Exchange Commission on March 9, 2007.

The company received a
notice from the SEC in November of 2005 about whether or not it should be
designated as an investment company. The company responded to this notice on
January 13, 2006. The Company has provided extensive documentation directly to
the SEC and in the 10-K filing for the year ended December 31, 2006 as to why
it is primarily an operating company and not primarily an investment company.

As disclosed in our Forms
10-Q for the quarters ended June 30, 2007 and September 30, 2007, the Company
received a  verbal request from the
Northeast Regional Office of the United States Securities and Exchange
Commission (SEC) in June of 2007 for information pertaining to discussions that
had taken place at previous meetings with representatives of the SEC in 1984
and 1992. The Company has complied with that request.

The company cannot determine
whether the Commission will decide to bring an enforcement action against
either the Company or its Chief Executive Officer, nor can the Company
determine the nature or amount of any legal or other regulatory penalties or
sanctions that may be imposed.

A resolution was passed at
the Board of Directors meeting of March 23, 2007 whereby the Company agreed to
indemnify the Chief Executive Officer for any expenses he may incur if the
Securities and Exchange Commission brings an enforcement action against him as
specified in their letter of February 8, 2007.

The Company has incurred
claims in the normal course of business.
None of these claims had a material effect on the financial
statements.  At the present time there
are no pending legal claims.

(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, 2007, 2006
and 2005 was $11,022, $10,646 and $9,750.

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

(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, 2007, 2006 and 2005 were $2,576,708, $2,332,339 and
$2,152,261. These amounts have been classified according to the criteria
specified in SFAS No. 2  Accounting for Research and Development Costs.

69

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(15) INTEREST EXPENSE AND INCOME

Interest expense was
$210,049, $367,651, and $319,145 and interest income was $12,838, $3,699, and
$23,031 in 2007, 2006, and 2005 respectively.

(16) COMMITMENTS

(A) Operating Leases

The Company leases office
and laboratory space in both 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 and a third party in 2007, 2006 and
2005. As of December 31, 2007, the Company is only subleasing space to a
related third party. The amount of rental income received for the year ended
December 31, 2007, 2006 and 2005 was $11,022, $13,646 and $14,686 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:

|           |  |   |           | 
|---------- |  | - | --------- | 
|2008       |  | $ | 336,264   | 
|2009       |  | $ | 336,264   | 
|2010       |  | $ | 336,264   | 
|2011       |  | $ | 336,264   | 
|2012       |  | $ | 336,264   | 
|Thereafter |  | $ | 1,008,792 | 

Rent expense for all
non-cancelable operating leases was $371,561, $352,560, and $284,147 for the
years ended December 31, 2007, 2006 and 2005 respectively.

(17) SUBSEQUENT EVENTS

There were no subsequent
events which took place after December 31, 2007 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.

70

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The
following tables summarize the results of each segment described above for the
years ended December 31, 2007, 2006 and 2005.

|                                                            |  |                                    |            |                                |   |                     |   |       |            |   |   |             |  
|----------------------------------------------------------- |  | ---------------------------------- | ---------- | ------------------------------ | - | ------------------- | - | ----- | ---------- | - | - | ----------- | -
|                                                            |  | December 31, 2007                  |           
|                                                            |  |                                    |           
|                                                            |  | Equipment Sales & Related Services |            | Cryobanking & Related Services |   | Investment Activity |   | Total |           
|                                                            |  |                                    |            |                                |   |                     |   |       |           
|                                                            |  |                                    |            |                                |   |                     |   |       |            |   |   |             |  
|Revenues                                                    |  | $                                  | 1,453,201  |                                | $ | 416,578             |   |       |           |   | $ | 1,869,779   |  
|                                                           
|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   |  
|                                                            |  |                                    |            |                                |   |                     |   |       |            |   |   |             |  
|                                                           
|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 |  
|                                                            |  |                                    |            |                                |   |                     |   |       |            |   |   |             |  

|                                                              |  |                                    |            |                                |   |                     |   |       |            |   |   |            |  
|------------------------------------------------------------- |  | ---------------------------------- | ---------- | ------------------------------ | - | ------------------- | - | ----- | ---------- | - | - | ---------- | -
|                                                              |  | December 31, 2006                  |           
|                                                              |  |                                    |           
|                                                              |  | Equipment Sales & Related Services |            | Cryobanking & Related Services |   | Investment Activity |   | Total |           
|                                                              |  |                                    |            |                                |   |                     |   |       |           
|                                                              |  |                                    |            |                                |   |                     |   |       |            |   |   |            |  
|Revenues                                                      |  | $                                  | 1,055,706  |                                | $ | 430,743             |   | $     |           |   | $ | 1,486,449  |  
|                                                             
|Cost of sales                                                 |  |                                    | 585,742    |                                |   | 45,825              |   |       |           |   |   | 631,567    |  
|Research and Development                                      |  |                                    | 2,195,371  |                                |   | 137,028             |   |       |           |   |   | 2,332,399  |  
|Selling, general and administrative
  expenses                |  |                                    | 3,645,655  |                                |   | 301,749             |   |       |           |   |   | 3,947,404  |  
|                                                              |  |                                    |            |                                |   |                     |   |       |            |   |   |            |  
|                                                             
|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 |  
|                                                              |  |                                    |            |                                |   |                     |   |       |            |   |   |            |  

71

---



|                                                             |  |                                    |            |                                |   |                     |  |       |            |   |   |              |  
|------------------------------------------------------------ |  | ---------------------------------- | ---------- | ------------------------------ | - | ------------------- |  | ----- | ---------- | - | - | ------------ | -
|                                                             |  | December 31, 2005                  |           
|                                                             |  |                                    |           
|                                                             |  | Equipment Sales & Related Services |            | Cryobanking & Related Services |   | Investment Activity |  | Total |           
|                                                             |  |                                    |            |                                |   |                     |  |       |            |   |   |              |  
|                                                             |  |                                    |            |                                |   |                     |  |       |            |   |   |              |  
|Revenues                                                     |  | $                                  | 751,071    |                                | $ | 592,467             |  |       |           |   | $ | 1,343,538    |  
|                                                            
|Cost of sales                                                |  |                                    | 530,652    |                                |   | 35,090              |  |       |           |   |   | 565,742      |  
|Research and Development                                     |  |                                    | 2,082,835  |                                |   | 69,426              |  |       |           |   |   | 2,152,261    |  
|Selling, general and administrative
  expenses               |  |                                    | 3,105,119  |                                |   | 423,441             |  |       |           |   |   | 3,528,560    |  
|                                                             |  |                                    |            |                                |   |                     |  |       |            |   |   |              |  
|                                                            
|Operating income (loss)                                      |  |                                    | (4,967,535 | )                              |   | 64,510              |  |       |           |   |   | (4,903,025   | )
|                                                             |  |                                    |            |                                |   |                     |  |       |            |   |   |              |  
|                                                             |  |                                    |            |                                |   |                     |  |       |            |   |   |              |  
|Investment income                                            |  |                                    |            |                                |   |                     |  |       |            |   |   |              |  
|Dividends                                                    |  |                                    |           |                                |   |                    |  |       | 2,511,054  |   |   | 2,511,054    |  
|Gain on sales of securities, net                             |  |                                    |           |                                |   |                    |  |       | 1,515,653  |   |   | 1,515,653    |  
|Mark to market of short positions                            |  |                                    |           |                                |   |                    |  |       | (204,225   | ) |   | (204,225     | )
|Investment Recovery                                          |  |                                    |            |                                |   |                     |  |       | 75,000     |   |   | 75,000       |  
|*Administrative expenses relating
  to portfolio investments |  |                                    |           |                                |   |                    |  |       | (36,842    | ) |   | (36,842      | )
|                                                             |  |                                    |            |                                |   |                     |  |       |            |   |   |              |  
|Total Investment income, net                                 |  |                                    |           |                                |   |                    |  |       | 3,860,640  |   |   | 3,860,640    |  
|                                                             |  |                                    |            |                                |   |                     |  |       |            |   |   |              |  
|                                                             |  |                                    |            |                                |   |                     |  |       |            |   |   |              |  
|Interest expense, net of interest
  income of $23,031        |  |                                    |           |                                |   | 803                 |  |       | (296,917   | ) |   | (296,114     | )
|                                                            
|Other income                                                 |  |                                    | 13,850     |                                |   | 836                 |  |       | 0          |   |   | 14,686       |  
|                                                             |  |                                    |            |                                |   |                     |  |       |            |   |   |              |  
|Income (loss) before income taxes                            |  |                                    | (4,953,685 | )                              |   | 66,149              |  |       | 3,563,723  |   |   | (1,323,813   | )
|                                                             |  |                                    |            |                                |   |                     |  |       |            |   |   |              |  
|Income tax expense                                           |  |                                    | 11,601     |                                |   | 567                 |  |       |           |   |   | 12,168       |  
|                                                             |  |                                    |            |                                |   |                     |  |       |            |   |   |              |  
|                                                             |  |                                    |            |                                |   |                     |  |       |            |   |   |              |  
|Net income (loss)                                            |  | $                                  | (4,965,286 | )                              | $ | 65,582              |  | $     | 3,563,723  |   | $ | $ (1,335,981 | )
|                                                             |  |                                    |            |                                |   |                     |  |       |            |   |   |              |  
|                                                            
|Total assets                                                 |  | $                                  | 2,191,982  |                                | $ | 127,065             |  | $     | 57,246,006 |   | $ | 59,565,053   |  
|                                                             |  |                                    |            |                                |   |                     |  |       |            |   |   |              |  

72

---



(19) SELECTED FINANCIAL
DATA

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                             |  | $                        | 0.66      |                          | $ | 0.51                     |  | $                        | 0.43      |  | $ | 0.73      | 

Summary of Quarterly Financial
Data (Unaudited) for the Year Ended December 31, 2006

|                                           |  |                          |           |                          |   |                          |  |                          |           |   |   |           | 
|------------------------------------------ |  | ------------------------ | --------- | ------------------------ | - | ------------------------ |  | ------------------------ | --------- | - | - | --------- | 
|Description                                |  | Quarter
  ended 03/31/06 |           | Quarter
  ended 06/30/06 |   | Quarter
  ended 09/30/06 |  | Quarter
  ended 12/31/06 |          
|                                           |  |                          |           |                          |   |                          |  |                          |          
|Operating Revenues                         |  | $                        | 342,146   |                          | $ | 389,322                  |  | $                        | 420,140   |   | $ | 334,841   | 
|Operating Expenses including Cost of Sales |  | $                        | 1,614,265 |                          | $ | 1,914,928                |  | $                        | 1,663,524 |   | $ | 1,718,653 | 
|Other Income                               |  | $                        | 1,233,137 |                          | $ | 1,659,926                |  | $                        | 315,592   |   | $ | 1,442,485 | 
|Income Taxes                               |  |                          |          |                          |   |                         |  |                          |          |   | $ | 11,750    | 
|Net  Income (Loss)                         |  | $                        | (38,982   | )                        | $ | 134,320                  |  | $                        | (927,792  | ) | $ | 46,923    | 
|Income (Loss) Per Share                    |  | $                        | (0.01     | )                        | $ | 0.03                     |  | $                        | (0.20     | ) | $ | 0.01      | 

73

---



The
consolidated statements of operations data for the years ended December 31,
2007, 2006, 2005 are derived from our audited consolidated financial statements
that are included herein.  The
consolidated statements of operations data for the years ended December 31,
2004 and 2003 have been derived from audited consolidated financial statements
that are not included in this report.

Operations Data:

|                                                                              |  |                           |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|----------------------------------------------------------------------------- |  | ------------------------- | ---------- | ---- | - | ---------- | - | ---- | ---------- | ---- | - | ---------- | - | - | ---------- | -
|                                                                              |  | Year
  Ended December 31, |           
|                                                                              |  | 2007                      |            | 2006 |   | 2005       |   | 2004 |            | 2003 |  
|                                                                              |  |                           |            |      |   |            |   |      |            |      |  
|                                                                              |  |                           |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|Operating revenues                                                            |  | $                         | 1,869,779  |      | $ | 1,486,449  |   | $    | 1,343,538  |      | $ | 1,066,314  |   | $ | 1,013,647  |  
|                                                                              |  |                           |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|Total revenues                                                                |  |                           | 1,869,779  |      |   | 1,486,449  |   |      | 1,343,538  |      |   | 1,066,314  |   |   | 1,013,647  |  
|                                                                              |  |                           |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|                                                                              |  |                           |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|Costs and expenses:                                                           |  |                           |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|                                                                              |  |                           |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|Operations of laboratories
  & costs of production                            |  |                           | 682,786    |      |   | 631,567    |   |      | 565,742    |      |   | 251,622    |   |   | 246,206    |  
|Research and Development                                                      |  |                           | 2,576,708  |      |   | 2,332,399  |   |      | 2,152,261  |      |   | 1,566,115  |   |   | 1,246,526  |  
|                                                                              |  |                           |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|Selling, general and
  administrative                                         |  |                           | 4,041,155  |      |   | 3,947,404  |   |      | 3,528,560  |      |   | 2,790,444  |   |   | 2,600,310  |  
|                                                                              |  |                           |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|Total costs and expenses                                                      |  |                           | 7,300,649  |      |   | 6,911,370  |   |      | 6,246,563  |      |   | 4,608,181  |   |   | 4,093,042  |  
|                                                                              |  |                           |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|                                                                              |  |                           |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|Loss from operations                                                          |  |                           | (5,430,870 | )    |   | (5,424,921 | ) |      | (4,903,025 | )    |   | (3,541,867 | ) |   | (3,079,395 | )
|                                                                              |  |                           |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|                                                                              |  |                           |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|Other Income and Expenses:                                                    |  |                           |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|Dividend income                                                               |  |                           | 2,419,476  |      |   | 2,273,737  |   |      | 2,511,054  |      |   | 1,990,669  |   |   | 1,897,669  |  
|Gains on sale of investments                                                  |  |                           | 14,853,934 |      |   | 3,316,710  |   |      | 1,515,653  |      |   | 989,599    |   |   | 238,550    |  
|Mark to Market of Short Positions                                             |  |                           | 357,337    |      |   | (544,629   | ) |      | (204,225   | )    |   | 266,807    |   |   | 115,871    |  
|Other revenues                                                                |  |                           | 11,112     |      |   | 13,838     |   |      | 14,686     |      |   | 15,245     |   |   | 15,571     |  
|Investment Recovery                                                           |  |                           |           |      |   |           |   |      | 75,000     |      |   |           |   |   |           |  
|Admin Expense relating to portfolio investments                               |  |                           | (55,538    | )    |   | (44,564    | ) |      | (36,842    | )    |   | (1,126     | ) |   | 0          |  
|                                                                             
|Interest expense, net of Interest Income                                      |  |                           | (197,211   | )    |   | (363,952   | ) |      | (296,114   | )    |   | (108,949   | ) |   | (83,133    | )
|                                                                              |  |                           |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|Total Other Income and Expenses                                               |  |                           | 17,389,110 |      |   | 4,651,140  |   |      | 3,579,212  |      |   | 3,152,245  |   |   | 2,184,528  |  
|                                                                              |  |                           |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|                                                                              |  |                           |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|Income (Loss) before income taxes                                             |  |                           | 11,958,240 |      |   | (773,781   | ) |      | (1,323,813 | )    |   | (389,622   | ) |   | (894,867   | )
|                                                                              |  |                           |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|                                                                              |  |                           |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|Provision for income taxes                                                    |  |                           | 1,311,024  |      |   | 11,750     |   |      | 12,168     |      |   |           |   |   |           |  
|                                                                             
|                                                                              |  |                           |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|Net Income (Loss)                                                             |  | $                         | 10,647,216 |      | $ | (785,531   | ) | $    | (1,335,981 | )    | $ | (389,622   | ) | $ | (894,867   | )
|                                                                              |  |                           |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|                                                                              |  |                           |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|Weighted average number of
  common shares outstanding  -
  basic and diluted |  |                           | 4,572,119  |      |   | 4,625,168  |   |      | 4,638,384  |      |   | 4,615,993  |   |   | 4,645,700  |  
|                                                                              |  |                           |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|                                                                              |  |                           |            |      |   |            |   |      |            |      |   |            |   |   |            |  
|Income (Loss) per common
  equivalent share - basic  and
  diluted            |  | $                         | 2.33       |      | $ | (0.17      | ) | $    | (0.29      | )    | $ | (0.08      | ) | $ | (0.19      | )
|                                                                              |  |                           |            |      |   |            |   |      |            |      |   |            |   |   |            |  

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

None to report.

|         |                        
|-------- | -----------------------
|Item 9A. | Controls and Procedures

74

---



Evaluation
of Disclosure Controls and Procedures

As of December
31, 2005, the Company carried out an evaluation, under the supervision and with
the participation of the Companys management, including the Companys Chief
Executive Officer, Chief Financial Officer and Treasurer, of the effectiveness
of the design and operation of the Companys disclosure controls and procedures
pursuant to Rule 13a-14 under the Securities and Exchange of 1934, as amended.

During the
calendar year ended December 31, 2005, the Company had insufficient numbers of
internal personnel possessing the appropriate knowledge, experience and
training in applying US GAAP and in reporting financial information in
accordance with the requirements of the Commission. The evaluation revealed the
following: insufficient controls over dissemination of information regarding
non-routine and complex transactions by our accounting staff to our management,
as well as incorrect treatment and lack of proper analysis of such transactions
by our accounting staff. This weakness resulted in material adjustments
proposed by our independent registered accountants with respect to our
financial statements for the calendar years ended December 31, 2005, 2004 and
2003. As a result of these weaknesses, the figures for the years ended December
31, 2004 and 2003 were restated on November 9, 2006 from their previous filing.

In late 2005,
the Company hired a Controller, who is a Certified Public Accountant to oversee
the accounting department and coordinate the efforts of analysis and
dissemination. These efforts include design changes and related monitoring of
the internal control system. The Company temporarily hired two Certified Public
Accountants to assist with the work required to bring our prior financial statements
into compliance with all reporting requirements. It is managements intention
to address accounting issues on a timely basis, and prevent misstatement based
on errors and/or lack of understanding. Management now believes the internal
controls and disclosure controls and procedures in place at December 31, 2007
to be effective.

The Companys
management and Board of Directors are fully committed to the review and
evaluation of our procedures and policies designed to assure effective internal
control over financial reporting. It is the opinion of management that the
additions to the internal accounting staff will assist in the establishment of
an effective design and operation of the internal control system and will
improve the quality of future period 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 2008 Annual Meeting of Shareholders, which will be filed with
the Securities and Exchange Commission within 120 days after the close of our
2007 year end.

|         |                        
|-------- | -----------------------
|Item 11. | Executive Compensation.

The
information required by item 11 is incorporated by reference to our proxy
statement for our 2008 Annual Meeting of Shareholders, which will be filed with
the Securities and Exchange Commission within 120 days after the close of our
2007 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 2008 Annual Meeting of Shareholders, which will be filed with
the Securities and Exchange Commission within 120 days after the close of our
2007 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.

75

---



|         |                                        
|-------- | ---------------------------------------
|Item 14. | Principal Accounting Fees and Services.

For the years
ended December 31, 2007 and December 31, 2006, 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         |  | 2007 |         | 2006 |  
|                 |  |      |         |      |  
|                 |  |      |         |      |   |         | 
|Audit Fees
  (1) |  | $    | 104,863 |      | $ | 104,185 | 
|Tax Fees (2)     |  |      | 10,346  |      |   | 5,000   | 
|All Other
  Fees |  |      | 2,565   |      |   |        | 
|                 |  |      |         |      |   |         | 
|                 |  |      |         |      |   |         | 
|Total            |  | $    | 117,774 |      | $ | 109,185 | 
|                 |  |      |         |      |   |         | 

|    |                                                                                                                                                                                          
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(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.

76

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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 Principal  | 
|                        |  | Executive
  Officer        | 
|                        |  | Chairman
  of the Board    | 
|                       
|Dated:
  March 31, 2008 |  |                            | 

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
  Principal Executive Officer |  | March
  31, 2008
|                       |  |                                                      | 
|Joseph Feldschuh, M.D. |  |                                                      | 
|                       |  |                                                      |  |                 
|/s/ Stephen Feldschuh  |  | Chief Operating Officer                              |  | March
  31, 2008
|                       |  |                                                      |  |                 
|Stephen Feldschuh      |  |                                                      |  |                 
|                       |  |                                                      |  |                 
|/s/ David Frankel      |  | Chief Financial Officer                              |  | March
  31, 2008
|                       |  |                                                      |  |                 
|David Frankel          |  |                                                      |  |                 
|                       |  |                                                      |  |                 
|/s/ Diane M. Meegan    |  | Corporate Secretary                                  |  | March
  31, 2008
|                       |  |                                                      |  |                 
|Diane M. Meegan        |  |                                                      |  |                 
|                       |  |                                                      |  |                 
|/s/ Robert Willens     |  | Director                                             |  | March
  31, 2008
|                       |  |                                                      |  |                 
|Robert Willens         |  |                                                      |  |                 
|                       |  |                                                      |  |                 
|/s/ James Lombard      |  | Director                                             |  | March
  31, 2008
|                       |  |                                                      |  |                 
|James Lombard          |  |                                                      |  |                 
|                       |  |                                                      |  |                 
|/s/ Martin Wolpoff     |  | Director                                             |  | March
  31, 2008
|                       |  |                                                      |  |                 
|Martin Wolpoff         |  |                                                      |  |                 
|                       |  |                                                      |  |                 
|/s/ Stephen Valentine  |  | Director                                             |  | March
  31, 2008
|                       |  |                                                      |  |                 
|Stephen Valentine      |  |                                                      |  |                 
|                       |  |                                                      |  |                 
|/s/ Robert Moussa      |  | Director                                             |  | March
  31, 2008
|                       |  |                                                      |  |                 
|Robert Moussa          |  |                                                      |  |                 

77

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Board of Directors:

|                     |  |                           
|-------------------- |  | --------------------------
|Name                 |  | Title                     
|                     |  |                           
|Dr. Joseph Feldschuh |  | Chairman, President, & CEO
|James Lombard        |  | Director                  
|Martin Wolpoff       |  | Director                  
|Robert Willens       |  | Director                  
|Stephen Valentine    |  | Director                  
|Robert
  Moussa      |  | Director                  

78

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