|UNITED STATES                                                                                                                                                                                                                                                                                                                                                                                            
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|SECURITIES AND EXCHANGE COMMISSION                                                                                                                                                                                                                                                                                                                                                                       
|Washington, D.C. 20549                                                                                                                                                                                                                                                                                                                                                                                   
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|Form 10-K/A                                                                                                                                                                                                                                                                                                                                                                                              
|Amendment No. 1                                                                                                                                                                                                                                                                                                                                                                                          
|                                                                                                                                                                                                                                                                                                                                                                                                         
|x ANNUAL REPORT PURSUANT TO SECTION 13                                                                                                                                                                                                                                                                                                                                                                   
|OR 15(d) OF THE SECURITIES Exchange Act of 1934                                                                                                                                                                                                                                                                                                                                                          
|                                                                                                                                                                                                                                                                                                                                                                                                         
|For the fiscal year ended:  December 31, 2005                                                                                                                                                                                                                                                                                                                                                            
|Or                                                                                                                                                                                                                                                                                                                                                                                                       
|oTRANSITION REPORT PURSUANT TO SECTION 13 OR                                                                                                                                                                                                                                                                                                                                                             
|15(d) OF THE SECURITIES EXCHANGE ACT OF 1934                                                                                                                                                                                                                                                                                                                                                             
|For the transition period from ________ to _________                                                                                                                                                                                                                                                                                                                                                     
|                                                                                                                                                                                                                                                                                                                                                                                                         
|Commission file number  0-12248                                                                                                                                                                                                                                                                                                                                                                          
|Daxor Corporation                                                                                                                                                                                                                                                                                                                                                                                        
|(Exact name of registrant as specified in its charter)                                                                                                                                                                                                                                                                                                                                                   
|                                                                                                                                                                                                                                                                                                                                                                                                         
|New York                                                                                                                                                                                                                                                                                                                                                                                                 
|                                                                                                                                                                                                                                                                                                                                                                                                         
|( State or Other Jurisdiction of                                                                                                                                                                                                                                                                                                                                                                         
|Incorporation or Organization)                                                                                                                                                                                                                                                                                                                                                                           
|                                                                                                                                                                                                                                                                                                                                                                                                         
|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.                                                                                                                                                                                                                                                                                  
|oYes   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.                                                                                                                                                                                                                                                                             
|oYes   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 theSecurities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was requiredto file such reports), and (2) has been subject to such filing requirements for the past 90 days                                                    
|x YesoNo                                                                                                                                                                                                                                                                                                                                                                                                 
|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.                                         
|oYes   x  No                                                                                                                                                                                                                                                                                                                                                                                             
|Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act)                                                                                                                                                                                                                                                                                              
|oYes   x  No                                                                                                                                                                                                                                                                                                                                                                                             
|Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act                                                                                                                                                                                                                                                                                                    
|oYes   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 as of March 31, 2006, the last day of the registrants most recently completed first fiscal quarter was $26,368,724. As of March 31, 2006, there were 4,630,426 shares of the Registrants common stock, par value $.01 per share, outstanding.

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|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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|EXPLANATORY NOTE
The Company is filing this amended 10-K (Form 10-K/A) for the year ended December 31, 2005 to provide
detailed disclosure of the restatements and reclassifications that were only broadly presented in
the original Form 10-K filed for December 31, 2005. These restatements and reclassifications pertained
to the years ended December 31, 2005, 2004 and 2003, and were the result of changes in accounting
principles, as well as segment reporting. For further details on these transactions, please refer
to Item #7  Managements Discussion and Analysis of Financial Condition and Results of
Operations  Impact of Restatements and Reclassifications for 2005, 2004 and 2003, and Notes 1 and 2 of the Financial Statements.
Please be advised that this newly included detail has been incorporated into all sections of this amended
10-K (Form 10-K/A) that refer to the years ended December 31, 2005, 2004 and 2003.
It is important to note that while the presentation of this information has been amended to include
detail of the changes, the net loss and loss per share information for any year presented in this
filing has not changed from the original Form 10-K filed for the year ended December 31, 2005.
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|TABLE OF CONTENTS |  |                                                                                                                    | 
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|                  |  |                                                                                                                    | 
|Item              |  | Description                                                                                                        | 
|                  |  |                                                                                                                    | 
|PART I           
|                  |  |                                                                                                                    | 
|Item 1.           |  | Business                                                                                                           | 
|Item 1A.          |  | Risk Factors                                                                                                       | 
|Item 1B           |  | Unresolved Staff Comments                                                                                          | 
|Item 2.           |  | Properties                                                                                                         | 
|Item 3.           |  | Legal Proceedings                                                                                                  | 
|Item 4.           |  | Submission of Matters to a Vote of Security Holders                                                                | 
|                  |  |                                                                                                                    | 
|PART II          
|                  |  |                                                                                                                    | 
|Item 5.           |  | Market for Registrants Common Equity, Related Shareholder Matters
      and Issuer Purchases of Equity Securities | 
|Item 6.           |  | Selected Financial Data                                                                                            | 
|Item 7.           |  | Managements Discussion and Analysis of Financial Condition and
      Results of Operations                        | 
|Item 7A.          |  | Quantitative and Qualitative Disclosures about Market Risk                                                         | 
|Item 8.           |  | Consolidated Financial Statements and Supplementary Data
      Index to Financial Statements                       | 
|Item 9.           |  | Changes and Disagreements with Accountants on Accounting
      and Financial Disclosure                            | 
|Item 9A.          |  | Controls and Procedures                                                                                            | 
|                  |  |                                                                                                                    | 
|PART III         
|                  |  |                                                                                                                    | 
|Item 10.          |  | Directors and Executive Officers of the Registrant                                                                 | 
|Item 11.          |  | Executive Compensation                                                                                             | 
|Item 12.          |  | Security Ownership of Certain Beneficial Owners and Management
      and Related Shareholder Matters               | 
|Item 13.          |  | Certain Relationships and Related Transactions                                                                     | 
|Item 14.          |  | Principal Accountant Fees and Services                                                                             | 
|                  |  |                                                                                                                    | 
|PART IV          
|                  |  |                                                                                                                    | 
|Item 15.          |  | Exhibits and Financial Statement Schedules                                                                         | 

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|Introductory Note: Forward Looking Statements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|This Form 10-K/A 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, 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 11 years, the Companys major focus has been on the development of the BVA-100® Blood Volume Analyzer, an instrument                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

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|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, syncope and to aid in fluid 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 prepare 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, blood
volume measurements were performed in only a small minority of hospitals in the United States.
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 off, 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. 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 was the difficulty of calculating an accurate normal blood volume for a specific
individual. Daxors Chief Scientific Officer published his findings in Circulation in April 1977 which showed that normal blood volume has varied in relation to the degree of deviation
from ideal weight. A leaner individual has a higher blood volume percentage of body weight as compared
to an obese individual. The computations for an 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 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 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 established a small scale manufacturing facility in
Oak Ridge, Tennessee, primarily for research and development purposes, with limited manufacturing
capabilities. The Company has received United States, European Common Market, and Japanese patents
for its Blood Volume Analyzer.
After successful beta testing for the Blood Volume Analyzer at hospitals in the New York metropolitan
region, the Company
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|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 several 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).
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. Other studies are ongoing, and Vanderbilt University is preparing a symposium
on blood volume that will feature a number of articles from institutions that utilize the BVA-100.
These completed and published studies represent the areas in which blood volume measurement has 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 5 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
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|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 guidelines for the treatment of
chronic heart failure.
This landmark study highlights the importance of correcting a heart failure patients blood volume
to normal. The most recent revision 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.
The American College of Cardiology in its most recent update of Guidelines for Treating Congestive
Heart Failure (2005), for the first time specifically referenced studies partially supported by Daxor
on the treatment of congestive heart failure. These studies from Columbia Presbyterian Medical Center
demonstrated that the goal of achieving normal blood volume resulted in a much higher survival rate
as compared to patients who remained in a hypervolemic state (expanded blood volume). The studies
further demonstrated that physicians using the standard clinical and laboratory techniques to evaluate
blood volume were only correct 51% of the time, and incorrect 49% of the time. These studies, which
are further described elsewhere in this report, were very important to the Company in its goal of
achieving blood volume measurement as a standard of care in treating heart failure. At the present
time, the Company considers itself to still be in the earliest stages of achieving this goal. The
Companys operations in semen banking and blood banking (laboratories) have received limited
promotion; however, the Company has taken steps to increase awareness of these services. The potential
market for the Blood Volume Analyzer is significantly larger than the Companys current operations.
The Company anticipates that proceeds from Daxors Blood Volume Analyzer will be the primary
source of revenue in the immediate future. The Company believes that the potential market for blood
volume measurement and analysis is between 15-20 million tests per year. Successful penetration of
even a small fraction of the market would significantly change the Companys structure.
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
promises not only to prolong patients lives but to be 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 Queens 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 colleagues,
with Dr. Elizabeth Biuk as the senior author, have presented their findings at the Society of Critical
Care 2006 annual meeting and their studies were featured in the November 2005 issue of Anesthesiology News. These studies are preliminary studies that should be followed up by additional evaluation of how
incorporating blood volume measurement intro critical care treatment affects outcomes.
Syncope
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.
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.
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) have been prepared for publication
by Dr. Fetnat Fouad-Tarazi, Head of the Hemodynamic and Neuroregulation Lab.
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.
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
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|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 presented at the 2005 annual meeting
of the Society of Nuclear Medicine.
Other Uses for 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. Howard University, a 482-bed award
winning university and teaching hospital, has contracted to receive the Blood Volume Analyzer on
a trial basis. For more than 141 years, Howard University Hospital has pioneered treatment techniques
and is the only African American academic and comprehensive health care center in the country.
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 hypertensinon.
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.
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.
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|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 eventually discontinued almost all its operations. At the
present time, only Northfield Laboratories appears to be actively engaged in testing a blood substitute.
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 concerned
with sperm banking.
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 4 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, and
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|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.
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) 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, presurgical treatment of
blood volume deficits, and frozen autologous blood transfusion. The Company has applied for and received
trademark protection for the BOP name and is reviewing whether or not to apply for a methods patent
for the 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.
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
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|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 the first semen
bank in the state of New York, out of more than 50 licensed banks, to be accredited by the American
Association of Tissue Banks.
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.
Idant utilizes the most reliable, 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.
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
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) and preferred to use another method
(Chromium 51) that measured red cell volume. That method required several 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.
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|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.
In 2003, the company sold only 5 instruments. 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
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| |  | 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 was changed from Plexiglas to metal.                                                                              
| |   |                                                                                                                                
| |  | A sample guide for the carousel (hub cap) was added.                                                                           
| |   |                                                                                                                                
| |  | A rear Plexiglas plate was added.                                                                                              
| |   |                                                                                                                                
| |  | 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.                                                                                         
| |   |                                                                                                                                
| |  | 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.

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| |  | 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).
| |   |                                                                                                                                                                                                                                                            

| |  | 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.

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|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.
In addition to improving the BVA-100 itself, 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 full
time 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 2006 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. Howard University in Washington, D.C.
is expected to be a prime location for such studies. (Refer to previous sections on clinical conditions
utilizing blood volume measurement.)
Blood Banking
The Scientific Medical Systems blood bank devoted a significant amount of its resources in the past
year to improvements and upgrades. The Company installed a new 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 has tested this system throughout 2005.

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|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).
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).
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. The sales staff was expanded to twelve sales personnel
plus additional research support personnel.
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
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|15
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|expected to be hospitals, surgery centers, and imaging centers (radiology). The Company also has been
demonstrating its equipment at major trade shows such as nuclear medicine, surgical anesthesiology,
and trauma conferences. The Company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.
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.
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 full time 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
the to interact with both physicians and administrators to explain cost benefit factors.
In 2004 the Company sold four instruments. In 2005 the Company sold only a single Blood Volume Analyzer.
This was primarily due to the fact that in 2005 Medicare, which reimburses hospitals separately for
the cost of a kit, made an erroneous assessment of kit costs. Medicare had developed a policy that
any kits under $50 would have their cost bundled into the reimbursement for the entire test, and
it included the Volumex® kits in this policy. However, each kit costs hospitals $280-$300. The
Company obtained legal experts on Medicare regulations and met with Medicare officials to correct
this problem. It took almost ten months before this incorrect designation was corrected. In the last
quarter of 2005, the Company signed seven trial agreements, as compared to seven trial agreements
for the first nine months of 2005.
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 believes that some agreements with hospitals will be implemented in 2006.
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
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|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).
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 and is reviewing whether or not to apply for a methods patent for the
concept (see Blood Banking).
Future Projects and Potential Patents
The Company expects to file additional patents for tests associated with the BVA-100® in the near
future.
Glomerular Filtration Rate
The Company is working on an instrument 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 Company believes
that it can automate this process, 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 needle
less system.
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 33 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, 2005 there were two customers (hospitals) that
accounted for 10% or more 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. These two 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.
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
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|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 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 other short-term donor blood banks to expand frozen
personal blood storage services. The Company views personal blood storage as a supplement to and
not as competition to other existing blood donor services.
Semen Banking
There are at least 300 sperm banks in the United States operated either by commercial entities or by
academic institutions. The Idant semen bank was the first semen bank in the State of New York that
was accredited by the American Association of Tissue Banks. There are fewer than 9 semen banking
organizations in the United States that have achieved this accreditation.
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 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.
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|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 March 24, 2006, the Company had a labor force of 46, all of which were leased through ADP TotalSource.
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.
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 its 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.
At
December 31, 2005, approximately 90% of the Companys investment portfolio consists of utility
stocks whose market value 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.
Item 1B. Unresolved Staff Comments
The
Company received an inquiry from the SEC regarding its accounting reporting, as well as questioning
whether the companys activities with respect to its cash management constituted a reason to
designate it as an investment company. The accounting changes did not result in any material changes
with respect to the companys total income, assets or revenues, but did result in a shift in
income. The company has an investment portfolio and a policy of cash management which has been in
place for over 20 years. The company is heavily dependent on income from its investment activities.
This investment company issue was raised in 1984/5, when the company had a secondary offering which
raised approximately $7 million. The issue was again raised in 1992 with no action taken. In 2005,
the issue was raised again.
There are a number of criteria, including assets and income which could qualify a company as an investment
company or what is also termed an inadvertent investment company. Many companies in their research
and development phase become an inadvertent investment company because they have little or no operating
revenue and most of their income is derived from invested capital. The Investment Company Act, however,
recognizes this and provides a number of Safe Harbor exemptions to avoid this designation. These
exemptions include (1) whether the company uses its securities and cash to finance its research
and development activities; (2) whether the company has substantial research and development expenses
and insignificant investment-related expenses; (3) whether the company invests in securities in a
manner that is consistent with the preservation of its assets until needed to finance operations.
If a company satisfies these factors, the remaining major factors of the traditional primary business
test -- the companys historical development, its public representations of policy, and the
activities of its officers and directors  are examined: (taken from Section B  Research
and Development Companies from Release No. IC-26077; File No. S7-47-02). Under rule 3a-8 as proposed,
a company could rely on the rules nonexclusive safe harbor if it (a) had research and development
expenses that were a substantial percentage of its total expenses for its last four fiscal quarters
combined and that equaled at least half of its investment revenues for that period; (b) had investment-related
expenses that did not exceed five percent of its total expenses for its last four fiscal quarters
combined; (c) made its investments to conserve capital and liquidity until it used the funds in its
primary business; and (d) was primarily engaged, directly or through a company or companies that
it controls primarily, in a non-investment business, as evidenced by the activities of its officers,
directors and employees, its public representation of policies, and its historical development. The
company believes it meets these last criteria.
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|One of the Safe Harbor designations is to have 45% of liquid assets in government short term paper
such as T-bills. In the case of Daxor, the company has not used the T-bill Safe Harbor designations.
In Part II, Section 7A, we have provided a perspective of what would have occurred had we, in 1993,
decided to avail ourselves of Safe Harbor provisions and invest the companys assets in T-bills.
The company is highly dependent on income from its investment portfolio. For the past 13 years the
company has experienced an operating deficit as it expanded its research and development and marketing
efforts. The company has had a firm policy of operating so that it will not find itself in the sudden
position of imminent bankruptcy. From time to time the company has received offers of additional
financing. Such financing which has been offered has been at very deleterious terms to existing shareholders.
The company believes that as blood volume technology gains increasing acceptance, that it will be
able to raise additional capital on more reasonable terms. The company also believes that the market
for a safer alternative frozen blood banking system is very large but in the initial phases such
a system the company would operate at a significant deficit for an indeterminate time. At the present
time the company is focusing its efforts primarily on the blood volume analyzer but will explore
opportunities for raising additional capital. The company is currently expanding its expenditure on blood banking
To provide additional understanding of what the Companys financial status would be had we elected
to utilize a Safe Harbor investment policy of T-bills, we have prepared a series of graphs derived
from information from previous 10K filings. Examination of the graphs makes it apparent that the
company would have been on the verge of bankruptcy in 2006 had it instituted a T-bill policy. The
Companys current investment policy does entail higher risks which were understood and approved
by the members of the Board of Directors. The results of this investment policy have proven, over
time, to be prudent. For 84 consecutive quarters the Companys investment portfolio has always
been above historical cost. If the Company had not followed this course, there is a high likelihood
that it would have been bankrupt. We did not provide an analysis of what would have occurred had
we done that in prior years from 1985 on, but it is clear from this analysis that the company would
have already been bankrupt.
The most important issue with respect to whether a company is an investment company is what the company
does with its earnings. In the case of Daxor, we utilize all our investment income, plus retained
earnings, for research and development and for operation of the company. The companys investments
are managed by the CEO, Dr. Feldschuh, who spends approximately 15% of his time, 5  7 hours
a week, on investment activities. He is assisted by a single half-time employee. No other member
of the company has any role in these decisions. The portfolio has certain parameters which are described
elsewhere. The company has, in response to the SEC inquiry, has made a number of changes and increased
its disclosures. The company has also provided a formal response in December 2005 to the SEC on the
question why it is an operating company and not an investment company.
Item 2. Properties
In December 2002, the Company signed a new 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 7,500 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.
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 in each of the years ended December 31, 2005,
2004 and 2003 was $9,750, $8,571 and $8,571. For the years ended December 31, 2005, 2004 and 2003
the Company had sublease income from non-affiliated third parties of $4,936, $6,674 and $7,000.
Item 3. Legal Proceedings
The Company had a suit which was filed in 2004 and dismissed in 2005. There are no other legal proceedings
outstanding.
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, 2005.
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|PART II
Item 5.  Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases
of Equity Securities.
The common stock is traded on the American Stock Exchange under the symbol DXR.
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|                                                                                                                                                                                                              

| |                |  
| | -------------- | -
| |                |  
|
| | First Quarter  | $
| | Second Quarter | $
| | Third Quarter  | $
| | Fourth Quarter | $

|         |                |         |       |  |   |       | 
|-------- | -------------- | ------- | ----- |  | - | ----- | 
|**2004** | **High**       | **Low**
|         |                |         |       |  |  
|        
|         | First Quarter  | $       | 14.80 |  | $ | 13.95 | 
|         | Second Quarter | $       | 21.85 |  | $ | 14.37 | 
|         | Third Quarter  | $       | 24.00 |  | $ | 19.00 | 
|         | Fourth Quarter | $       | 24.60 |  | $ | 20.25 | 

|                                                                                                                                                                                                                                                                                                                                                                                                                                 
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|On March 31, 2006, the Company had approximately 192 holders of record of the Common Stock. The Company
believes there are approximately 1,400 beneficial holders.
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.

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|Item 6. Selected Financial Data.
The
following table sets forth certain selected financial data with respect to the Company.
Operations Data:
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|                                                                                                                                             

|**Year Ended December 31,**                                                    
|-------------------------------------------------------------------------------
|**Restated
      2005**                                                        
|                                                                               
|Operating revenues                                                             
|                                                                               
|Total revenues                                                                 
|                                                                               
|Costs and expenses:                                                            
|Operations of laboratories & costs of 
    production                          
|Selling, general and administrative                                            
|                                                                               
|Total costs and expenses                                                       
|                                                                               
|                                                                               
|                                                                               
|Loss from operations                                                           
|                                                                               
|Other Income and Expenses:                                                     
|Dividend income                                                                
|Gains on sale of investments                                                   
|Mark to Market of Short Positions                                              
|Other revenues                                                                 
|Investment Recovery                                                            
|Admin Expense relating to portfolio 
      investments                         
|Interest expense, net of Interest Income                                       
|                                                                               
|Total Other Income and Expenses                                                
|                                                                               
|                                                                               
|                                                                               
|Income (Loss) before income taxes                                              
|                                                                               
|Provision for income taxes                                                     
|                                                                               
|Net income/(loss)                                                              
|                                                                               
|                                                                               
|                                                                               
|Weighted average number of common 
      shares outstanding - basic and diluted
|                                                                               
|Income (loss) per common equivalent 
      share - basic and diluted           
|                                                                               
|                                                                               
|                                                                               

|                                                                                                                                                                                                                                                                                                                                                                           
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Please note that three accounting principle changes were put into effect on January 1, 2003. The years ended December 31, 2002 and 2001 have not been restated to reflect these changes. Please refer to Item #7  Impact of Restatements and Reclassifications for 2004 and 2003 and Notes 1 and 2 of the Financial Statements for further information on these changes.
|                                                                                                                                                                                                                                                                                                                                                                           
|**Selected Balance Sheet Data:**                                                                                                                                                                                                                                                                                                                                           
|                                                                                                                                                                                                                                                                                                                                                                           

|                        |                        
|----------------------- | -----------------------
|**Restated
      2005** | **Restated
      2004**
|
|
|Total assets            | $                      
|Total liabilities*      | $                      
|Stockholders equity    | $                      
|Return on equity**      |                        

|   |  |                                                                                                                                                      
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------
|*  |  | 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 stockholders equity at the beginning of the period

|22
|--



|Item 7.  Managements Discussion and Analysis of Financial Condition and Results of Operation.
RECENT DEVELOPMENTS
During fiscal years 2005 and 2004, Daxor made major changes in the blood volume analyzer. It expanded
its research and development staff (see R&D section). In January, 2005, it hired, on a permanent
basis, the employees of Tennessee Valley Software, and leased a second site in Oak Ridge,Tennessee.
Because of the ongoing changes the Company will be first ready to obtain an Underwriters Laboratories
and a CE mark which is required for marketing in Europe in the second quarter of 2006. The Company
has also recognized that it needs to expand research projects that will provide validation on a cost
benefit basis for the blood volume analyzer.
In the Year 2005, the Company obtained new equipment approved by the FDA which enables frozen blood
to be used for up to 14 days after thawing. The Company has purchased this equipment and has been
testing it for the past year using purchased blood. The Company is in the process of negotiating
with several hospitals for a Blood Optimization Program which will enable individuals to freeze their
own blood months in advance of surgery. This program is coupled with the use of the blood volume
analyzer so as to prevent patients from donating excessive amounts of blood and entering surgery
in a blood depleted state. Because of the Companys limited resources, the Company will devote
a larger portion of its efforts towards the blood volume analyzer. Daxor has continued to expand
its research and marketing staff. The Company intends to increase its marketing efforts to add to
its operational income. Some of the steps the Company had undertaken, such as consolidating certain
manufacturing facilities at Oak Ridge, Tennessee and simultaneously contracting with an Original
Equipment Manufacturer (OEM) will permit greater economies of scale. The Companys primary focus
will be to increase operating revenues even if this initially results in increasing losses.
RESULTS OF OPERATIONS
Operating Revenues
In 2005 revenue from operations was $1,343,538.vs. 2004 revenue from operations was $ 1,066,314
for an increase of 26%. In 2003, operating revenues were $1,013,647. The figures for 2004 and 2003
have been restated.
Idant Laboratories subsidiary contributed 44.0%, 48.5%, and 45.0% of operating revenues in 2005, 2004
and 2003 respectively. Equipment sales and kit sales increased from $643,592 to $751,071. In 2005
the Company sold only a single blood volume analyzer because hospitals which had equipment on trial
delayed making a commitment because Medicare had made an error on reimbursement. This error was not
corrected for 10 months. Despite this, kit sales increased 45% over 2004. Kit sales in 2004 increased
35% over 2003, and kit sales in 2003 increased 6% over 2002. 2,132 patients, utilizing the BVA-100,
had blood volume measurements in 2005 vs. 1,474 in 2005, and 1,094 in 2003. Revenue from Cryobanking
and related services increased in 2005 by $169,745 or 40.2% from 2004.
This was due mainly to a onetime receipt of royalty income of $97,729. This royalty income stemmed
from the sale of a one-time use of the cryobanking technology of Idant Laboratories.
Dividend Income
Dividend income earned on the Companys securities portfolio was $2,511,054 vs. $1,990,669 reported
in 2004, for an increase of $520,385, or 26.1%. $402,896 of the increase was due to a one-time special
stock dividend related to a utility company merger. In 2003, dividend income was $1,897,669.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|23
|--



|Investment Gains
Gains on the sale of investments were $1,515,653 in 2005 vs. $989,599 in 2004, and $238,550 in 2003.
The sum of dividend income plus investment gain from sale of securities was $4,026,707 in 2005, $2,980,268
in 2004, and $2,136,219 in 2003. .
Operating Expenses
Daxors expenses from operations totaled $6,258,731 in 2005; the loss from operations was $4,915,193
for 2005. In 2004 expenses from operations totaled $4,608,181; the loss from operations was $ 3,541,867 In
2003, expenses from operations totaled $4,093,042; the loss from operations totaled $3,079,395. The
increase in operating expenses for 2005, 2004 and 2003 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.
The Company had a major change in its blood volume analyzer (see Research and Development). The Company
intends to continue to expand its Research and Development efforts as well as its marketing efforts.
The Company anticipated these increased operating expenses and intends to continue expanding its
research and marketing staff. The Company experienced the largest operating loss in its history.
These losses were only partially offset by investment company income. The Company has expanded its
research staff in Oak Ridge, Tennessee and currently has a pilot manufacturing facility. In 2005
the Company reviewed plans for building a full scale manufacturing facility in Oak Ridge, Tennessee,
which would enable it to manufacture both its own Volumex kits as well as build other advanced medical
instruments such as an instrument to automate the glomerular filtration test. It was decided that
the timing of the implementation of this plan would depend on the rate of acceptance of the blood
volume analyzer by the medical community.
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, 2005, the Company had $20,820,252 in short-term debt vs. $15,493,319 in 2004. At year-end
2005, stockholders equity was $38,744,801 at year-end 2005 vs. total shareholder equity was
$40,253,288; at year-end 2004. At December 31, 2005 the Companys security portfolio had a market
value of $57,246,006 vs. $54,806,400 in 2004. In 2005, the Companys total liabilities and stockholders
equity were $59,565,053 vs. $55,746,607 in 2004.
Income from the Companys security portfolio is a major asset for the Company as it expands its
research and marketing staff.Year-end 2005 finds the Company 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.
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.
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.
| | -------------------------------------------------------------------------------------------------------------------------------

|24
|--



|
|
|

| | 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 5% of the value of its portfolio. 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 5%.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | 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 5% 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 5% of its accounts,
in actual practice the short stock positions account for less than
5% of the assets of the company.

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|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. Individual investment decisions
are made solely by Dr. Joseph Feldschuh, CEO, who devotes approximately 10 to 15% of his time, or
7 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.
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, which is usually offered in one-year,
three year or

|25
|--



|five year increments. Prior to Q3 2005, these service contracts were recorded by the Company as deferred
revenue and were amortized into income in the period in which they apply. Currently, all service
contracts, regardless of length of term, are billed quarterly in the period in which the revenue
is earned.
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
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.
Impact of Restatements and Reclassifications for 2005, 2004 and 2003
As a result of our 2005 annual audit, two changes in accounting principles were adopted retroactively
to January 1, 2003 and three were adopted retroactive to January 1, 2004. These changes impacted
the Balance Sheet, Statement of Operations and Cash Flow Statement for the years ended December 31,
2004 and 2003.
For the year ended December 31, 2005, $468,188 of salary expense which had originally been incorrectly
classified as Costs of equipment sales and related services was reclassified to Selling, general
and administrative; equipment sales and related services. Also, for the year ended December 31, 2005,
$287,634 of salary expense which had originally been incorrectly classified as Costs of cryobanking
and related services was reclassified to Selling, general and administrative; cryobanking and related
services.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

| | 1) | Restatement - Change in revenue recognition for cryobanking from cash to accrual method. This change was made
| | -- | -------------------------------------------------------------------------------------------------------------

|26
|--



| | retroactive to January 1, 2004. As of January 1, 2004, the method of invoicing customers was changed
to allow for payment in one quarter of future quarters. Prior to January 1, 2004 cryobanking revenue
was recognized as it was paid without any need for recording deferred revenue. The billing methodology
was changed as of January 1, 2004 without any corresponding change in the accounting for storage
revenue.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                                                                                                                                           

| | 2) | Restatement - Change in valuation of certain investments (options and shorts) from cost to fair market value with
the market adjustment reflected in the Statement of Operations. This change was made retroactive
to January 1, 2003.                                               
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                      
| | 3) | Restatement - Change in the method of accounting for the blood volume analyzer equipment that is out on loan/rental
from immediate expensing to capitalization and depreciation of the equipment over its estimated useful
life. This change was made retroactive to January 1, 2003.
| |    |                                                                                                                                                                                                                                                                                      
| | 4) | Reclassification - Changes in account classifications to consistently present investment activity and segment reporting.                                                                                                                                                             

|                                                                                                                                                                    
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------
|The following table presents the detailed impact of these changes to the Balance Sheets and Statements
of Operations for the years ended December 31, 2004 and 2003:
|                                                                                                                                                                    

|                                                          |                 |           
|--------------------------------------------------------- | --------------- | ----------
|
|**As
      Originally
      Reported**                    | **Adjustments** | **Code**  
|
|BALANCE SHEETS                                            |                 |           
|                                                          |                 |           
|                                                          |                 |           
|                                                          |                 |           
|                                                          |                 |           
|                                                          |                 |           
|Total Current Assets                                      | $               | 55,606,750
|                                                          |                 |           
|                                                          |                 |           
|                                                          |                 |           
|                                                          |                 |           
|Property and equipment, net                               | $               | 290,572   
|                                                          |                 |           
|                                                          |                 |           
|                                                          |                 |           
|Total Assets                                              | $               | 55,929,480
|                                                          |                 |           
|                                                          |                 |           
|                                                          |                 |           
|                                                          |                 |           
|                                                          |                 |           
|                                                          |                 |           
|Total Current Liabilities                                 | $               | 16,048,161
|                                                          |                 |           
|                                                          |                 |           
|                                                          |                 |           
|Total Liabilitites                                        | $               | 16,048,161
|                                                          |                 |           
|                                                          |                 |           
|                                                          |                 |           
|                                                          |                 |           
|                                                          |                 |           
|                                                          |                 |           
|Retained Earnings                                         | $               | 14,589,698
|                                                          |                 |           
|                                                          |                 |           
|                                                          |                 |           
|Total Stockholders Equity                                | $               | 39,881,319
|                                                          |                 |           
|                                                          |                 |           
|                                                          |                 |           
|Total Liabilitites and Stockholders Equity               | $               | 55,929,480
|                                                          |                 |           
|                                                          |                 |           
|STATEMENTS OF OPERATIONS                                  |                 |           
|                                                          |                 |           
|                                                          |                 |           
|                                                          |                 |           
|Total Revenues                                            | $               | 1,218,406 
|                                                          |                 |           
|                                                          |                 |           
|                                                          |                 |           
|                                                          |                 |           
|                                                          |                 |           
|Total Costs of Sales                                      | $               | 1,241,589 
|                                                          |                 |           
|                                                          |                 |           
|                                                          |                 |           
|                                                          |                 |           
|                                                          |                 |           
|Total Selling, General & Administrative                   | $               | 3,460,370 
|                                                          |                 |           
|                                                          |                 |           
|                                                          |                 |           
|Loss from Operations                                      | $               | (3,483,553
|                                                          |                 |           
|                                                          |                 |           
|                                                          |                 |           
|                                                          |                 |           
|Total Other Income (Expenses)                             | $               | 2,903,285 
|                                                          |                 |           
|                                                          |                 |           
|                                                          |                 |           
|Income (Loss) Before Income Taxes                         | $               | (580,268  
|                                                          |                 |           
|                                                          |                 |           
|                                                          |                 |           
|Net Income (Loss)                                         | $               | (580,268  
|                                                          |                 |           
|                                                          |                 |           
|                                                          |                 |           
|Net Income (Loss) Per Common
   Share - Basic and Diluted | $               | (0.13     
|                                                          |                 |           

|27
|--



|CONTRACTUAL OBLIGATIONS
In December 2002, the Company signed a new ten-year lease 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 7,500 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.. The Company also signed a contract
with an Original Equipment Manufacturer (OEM) for manufacturing the BVA-100. The Companys Volumex
syringes are filled by an FDA licensed radiopharmaceutical manufacturer under contract with Daxor.
TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

|                                                                                                           
|-----------------------------------------------------------------------------------------------------------
|
|**Contractual
      Obligations**                                                                          
|
|(Long-Term Debt
    Obligations)                                                                           
|                                                                                                           
|(Capital Lease Obligations)1                                                                               
|                                                                                                           
|(Operating Lease Obligations)                                                                              
|                                                                                                           
|(Purchase Obligations)                                                                                     
|                                                                                                           
|(Other Long-Term
      Liabilities Reflected on the
      Registrants Balance Sheet 
      under
    GAAP)
|                                                                                                           
|Total                                                                                                      

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|**1****This amount represents a total monthly rental fee of $26,310; Base rent of $22,167, additional space
at 350 5th Avenue at $671; Rent for 2 separate locations in Oak Ridge, Tennessee is on a month-to-month basis,
for a total of $3,472 per month. Each space can be cancelled at any time with no penalty with common
courtesy notice.**
RECENT ACCOUNTING PRONOUNCEMENTS
Although we have not yet determined whether the adoption of SFAS 123R will result in amounts that are
similar to the current pro forma disclosures under SFAS 123, we are evaluating the requirements under
SFAS 123R and do not expect the adoption to have a significant impact on our statements of operations.
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 policy
is: 1) the primary investments are in electric utilities; no more than 5% 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
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|28
|--



| | 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 half-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.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|The Company has always had on its Board of Directors, for at past the last twenty years, at least one person who could be considered an expert on investing accounting policy with Wall Street experience.
        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 approximately3%. The 2% and 3% scenarios are reasonable approximations of which the Company might have encountered during this time. During this time period T-bill interest rates fluctuated between approximately 1% and 5%.
        Graph 1: Comparison of Net Earnings with Hypothetical Earnings That Would Have Resulted Had the Company Invested in Treasury Bills from 1993 to 2005 and Received a 2% Interest Rate
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|**Net Income, Operations Income, and Adjusted Net
      Income, Assuming 2% Treasury Bill Interest**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

|
|

|**Year**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | 
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|Graph 1 illustrates three sets of data from 1993 to 2005: 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%.
        From 1993 to 1995, the company reported a net profit despite increasing losses from operations. As can be seen, from 1993 through 1995, operating revenues did not cover expenses. From 1996-2002, despite heavy operating losses, the company was close to breaking even. In the years ended December 31, 2005, 2004 and 2003, the company lost $1,335,981, $389, 622 and $894,867 despite supplemental revenue from investments.
        Had the company invested in Treasury Bills and received a 2% interest rate, all years would have shown a loss. From 1996-2002, the company would have lost approximately $2 million each year. In 2003, the company would have lost nearly $3 million, in 2004 over $3 million, and in 2005 over $5 million.
        Graph 2: Comparison of Net Earnings with Hypothetical Earnings That Would Have Resulted Had the Company Invested in Treasury Bills from 1993 to 2005 and Received a 3% Interest Rate

|29
|--



|**Net Income, Operations Income, and Adjusted Net
Income, Assuming 3% Treasury Bill Interest**                                                                                                                                                                                                                                                                                                                                                                                                                             | 
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|**Year**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|Graph 2 shows the same basic scenario as Graph 1, except that the hypothetical net income was calculated assuming a 3% interest rate from Treasury Bills. The results are similar to those from Graph 1, but the loss is slightly lower because of the 1% higher interest rate.
    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
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|**Marketable Securities at Cost and 
      Revised Value of Sceurities
      Assuming 2% Treasury Bill Interest**                                                                                                                                                                                                                                                                                                                                                                                                          | 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|**Year**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

|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 value of our marketable securities at cost has slowly decreased over the last 12 years but has begun to slowly increase since 2001.
        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. The company would be facing potential bankruptcy in 2006.
        Graph 4: Hypothetical Change in Company Assets that Would Have Occurred Had Persistent Losses from Investment in Treasury Bills with a 3% Rate of Interest Forced the Company to Cover Losses by Liquidating Sections of its Portfolio
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|30
|--



|**Marketable Securities at Cost 
      and
Revised Value of Sceurities
Assuming 3% Treasury Bill Interest**                                                                                                                                                                                                                     | 
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|                                                                                                                                                                                                                                                                                                                               
|**Year**                                                                                                                                                                                                                                                                                                                        | 
|                                                                                                                                                                                                                                                                                                                               
|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.
|                                                                                                                                                                                                                                                                                                                               
|Graph 5: Loans Payable per Year                                                                                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                                                                                                               

|****                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | **Loans Payable per Year**
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|****                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | **Year**                  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|Graph 5 illustrates the Companys loans payable at December 31 from 1993 to 2005. 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. Had the company invested in Treasury Bills, this would have led by year end 2005 to a combination of depleted capital, increased debt, and looming bankruptcy.

|31
|--



|Graph 6: Operating Revenues and Total Expenses from 1993 to 2005                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|******Operating Revenues and Total Expenses 1993-2005**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|******Year**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|Graph 6 illustrates operational revenues and total expenses from 1993 to 2005. Operational revenues dropped sharply between 1995 and 1996. Between 1998 and 1999, operational revenues began to recover, but they have not yet reached pre-1995 levels. 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 twelve years, operating expenses have consistently exceeded operating revenues.
    Graph 7: Marketable Securities at Cost Compared to the Rate of Return
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

|**Marketable Securities at Cost and Rate of Return** | 
|---------------------------------------------------- | 
|                                                    

|**Year**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | 
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|Graph 7 shows the cost of securities compared with rate of return (investment income/cost of securities) from 1993 to 2005. The rate of return includes dividends and net profits from security sales, but it does not include unrealized profits. Had these 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 12 years.
        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, 2005 and 2004, the company held 70 and 61 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.

|32
|--



|December 31, 2005The following is summary information on the actual Securities Portfolio held by Daxor Corporation during the year ended and as at December 31, 2005:
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                     

|                                |  |        |   |   |           
|------------------------------- |  | ------ | - | - | ----------
|
|Utililites-Common
      Stock   |  | 86.54  | % | $ | 22,197,422
|Non-Utilities Commn             |  | 9.04   | % |   | 2,318,219 
|Total Common Stock              |  | 95.58  | % | $ | 24,515,641
|Utilities-Preferred
      Stock |  | 3.59   | % |   | 919,690   
|Non-Utilities-Preferred         |  | .24    | % |   | 62,255    
|Total Prefered Stock            |  | 3.83   | % | $ | 981,945   
|Total Equities                  |  | 99.41  | % | $ | 25,497,586
|Total Bonds                     |  | .59    | % | $ | 151,881   
|Total Portfolio                 |  | 100.00 | % | $ | 25,649,467

|                                                                                                                                                                                                                                                                                                                  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|During the year ended December 31, 2005, the Company received $4,154 of dividends on stocks that were not in the Securities Portfolio at December 31, 2005. During the year the Company also received an additional $1,558 in money market dividends.
        Summary of Put and Call Options at December 31, 2005
|                                                                                                                                                                                                                                                                                                                  

|                     |  |   |         | 
|-------------------- |  | - | ------- | 
|
|Puts                 |  | $ | 657,116 | 
|Calls                |  | $ | 326,796 | 
|Total Puts and Calls |  | $ | 983,912 | 

|                                                                                                                                                                              
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|December 31, 2004
        The following is summary information on the actual Securities Portfolio held by Daxor Corporation during the year ended and as at December 31, 2004:
|                                                                                                                                                                              

|                                |  |        |   |   |           
|------------------------------- |  | ------ | - | - | ----------
|
|Utililites-Common
      Stock   |  | 94.58  | % | $ | 21,667,027
|Non-Utilities Commn             |  | 2.54   | % |   | 581,416   
|Total Common Stock              |  | 97.12  | % | $ | 22,248,443
|Utilities-Preferred
      Stock |  | 2.26   | % |   | 516,871   
|Non-Utilities-Preferred         |  | .16    | % |   | 37,254    
|Total Prefered Stock            |  | 2.42   | % | $ | 554,125   
|Total Equities                  |  | 99.54  | % | $ | 22,802,568
|Total Bonds                     |  | .46    | % | $ | 105,212   
|                                |  |        |   |   |           
|Total Portfolio                 |  | 100.00 | % | $ | 22,907,780

|                                                                                                                                                                                                                                                   
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|During the year ended December 31, 2004, the Company received $9,048 of dividends on stocks that were not in the Securities Portfolio at December 31, 2004. During the year the Company also received an additional $197 in money market dividends.

|33
|--



Summary of Put and Call Options at December 31, 2004

|                         |  |   |         | 
|------------------------ |  | - | ------- | 
|                         | 
|**Puts**                 |  | $ | 874,096 | 
|**Calls**                |  | $ | 95,134  | 
|**Total Puts and Calls** |  | $ | 969,230 | 

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Item 8.  Financial Statements and Supplementary Data.
        Index to Consolidated Financial Statements
        Report of Independent Auditors  December 31, 2005, 2004 and 2003
        Consolidated Balance Sheets - December 31, 2005, 2004 and 2003
        Consolidated Statements of Operations for the years ended December 31, 2005, 2004 and 2003
        Consolidated Statements of Stockholders Equity and Comprehensive Income for the years ended December 31, 2005, 2004 and 2003
        Consolidated Statements of Cash Flows for the years ended December 31, 2005, 2004 and 2003.
        Notes to Consolidated Financial Statements

|34
|--



|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, 2005, 2004 and 2003, and the related consolidated statements of operations, stockholders equity and comprehensive income (loss), and cash flows for the three years then ended. 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 the Company as of December 31, 2005, 2004 and 2003, and the consolidated results of its operations and its cash flows for the three years then ended, in conformity with accounting principles generally accepted in the United States of America.
        As discussed in Note 1, the Company has amended these consolidated financial statements and related footnotes for the year ended December 31, 2005.
        As discussed in Note 2, the Company has restated its 2004 and 2003 consolidated financial statements.
        /s/ Rotenberg Meril Solomon Bertiger & Guttilla, P.C.
        Saddle Brook, NJ
        April 3, 2006, except for Notes 1 and 2, which are dated October 31, 2006.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|35
|--



|DAXOR CORPORATIONCONSOLIDATED FINANCIAL STATEMENTS
        DAXOR CORPORATIONCONSOLIDATED BALANCE SHEETS
|-------------------------------------------------------------------------------------------------------
|                                                                                                       

|                                                                                     | RESTATED |            | RESTATED |   | RESTATED   |  
|------------------------------------------------------------------------------------ | -------- | ---------- | -------- | - | ---------- | -
|
|
|
|                                                                                     |         
|ASSETS                                                                               |          |            |          |   |            |  
|                                                                                     |         
|                                                                                     |          |            |          |   |            |  
|CURRENT ASSETS                                                                       |          |            |          |   |            |  
|                                                                                     |          |            |          |   |            |  
|Cash and cash equivalents                                                            | $        | 93,003     |          | $ | 5,079      |  
|Available-for-sale securities                                                        |          | 57,246,006 |          |   | 54,806,400 |  
|Other Receivables                                                                    |          | 1,018,936  |          |   | 0          |  
|Accounts receivable, net of reserve of
      $41,300 in 2005, and 0 in 2004 and 2003 |          | 131,592    |          |   | 156,387    |  
|                                                                                     |          |            |          |   |            |  
|Inventory                                                                            |          | 191,861    |          |   | 139,338    |  
|Prepaid expenses and other current assets                                            |          | 230,632    |          |   | 158,569    |  
|                                                                                     |          |            |          |   |            |  
|                                                                                     |          |            |          |   |            |  
|Total Current Assets                                                                 |          | 58,912,030 |          |   | 55,265,773 |  
|                                                                                     |          |            |          |   |            |  
|Property and equipment, net                                                          |          | 620,865    |          |   | 448,676    |  
|Other Assets                                                                         |          | 32,158     |          |   | 32,158     |  
|                                                                                     |          |            |          |   |            |  
|                                                                                     |          |            |          |   |            |  
|Total Assets                                                                         | $        | 59,565,053 |          | $ | 55,746,607 |  
|                                                                                     |          |            |          |   |            |  
|                                                                                     |          |            |          |   |            |  
|                                                                                     |         
|LIABILITIES AND STOCKHOLDERS EQUITY                                                 |          |            |          |   |            |  
|                                                                                     |         
|                                                                                     |          |            |          |   |            |  
|CURRENT LIABILITIES                                                                  |          |            |          |   |            |  
|                                                                                     |          |            |          |   |            |  
|Accounts payable and accrued liabilities                                             | $        | 512,024    |          | $ | 89,162     |  
|Loans payable                                                                        |          | 7,083,372  |          |   | 3,818,570  |  
|Puts and calls, at fair market value                                                 |          | 772,803    |          |   | 585,142    |  
|Other liabilities                                                                    |          | 1,302,797  |          |   | 14,898     |  
|Deferred revenue                                                                     |          | 90,468     |          |   | 140,016    |  
|Deferred taxes                                                                       |          | 11,058,788 |          |   | 10,845,531 |  
|                                                                                     |          |            |          |   |            |  
|Total Current Liabilities and
      Total Liabilities                                |          | 20,820,252 |          |   | 15,493,319 |  
|                                                                                     |          |            |          |   |            |  
|STOCKHOLDERS EQUITY                                                                 |          |            |          |   |            |  
|Common stock, $.01 par value                                                         |          |            |          |   |            |  
|Authorized - 10,000,000 shares                                                       |          |            |          |   |            |  
|Issued - 5,316,550 shares                                                            |          |            |          |   |            |  
|Outstanding  4,630,426, 4,610,826 and 4,639,026
  shares, respectively              |          | 53,165     |          |   | 53,097     |  
|Additional paid in capital                                                           |          | 10,303,902 |          |   | 9,821,564  |  
|Accumulated other comprehensive income                                               |          | 20,537,750 |          |   | 21,053,089 |  
|Retained earnings                                                                    |          | 13,625,686 |          |   | 14,961,667 |  
|Treasury stock, at cost                                                              |          | (5,775,702 | )        |   | (5,636,129 | )
|                                                                                     |          |            |          |   |            |  
|Total Stockholders Equity                                                           |          | 38,744,801 |          |   | 40,253,288 |  
|                                                                                     |          |            |          |   |            |  
|Total Liabilities and Stockholders Equity                                           | $        | 59,565,053 |          | $ | 55,746,607 |  
|                                                                                     |          |            |          |   |            |  
|                                                                                     |          |            |          |   |            |  
|See accompanying notes to consolidated financial statements.                        

|36
|--



|DAXOR CORPORATION AND SUBSIDIARY
        CONSOLIDATED STATEMENTS OF OPERATIONSFOR THE YEARS ENDED DECEMBER 31
|-------------------------------------------------------------------------------------------------------------
|                                                                                                             

|                                                                                  | RESTATED
    2005 |            | RESTATED
    2004 |   | RESTATED
    2003 |  
|--------------------------------------------------------------------------------- | ----------------- | ---------- | ----------------- | - | ----------------- | -
|
|Revenues:                                                                         |                   |            |                   |   |                   |  
|                                                                                  |                   |            |                   |   |                   |  
|Operating Revenues - Equipment sales and 
  related services                      |                   | 751,071    |                   |   | 643,592           |  
|Operating Revenues - Cryobanking and 
      related services                      |                   | 592,467    |                   |   | 422,722           |  
|                                                                                  |                   |           
|Total Revenues                                                                    |                   | 1,343,538  |                   |   | 1,066,314         |  
|                                                                                  |                   |           
|                                                                                  |                   |            |                   |   |                   |  
|Costs of Sales:                                                                   |                   |            |                   |   |                   |  
|                                                                                  |                   |            |                   |   |                   |  
|Costs of equipment sales and related 
      services                              |                   | 530,652    |                   |   | 224,724           |  
|                                                                                  |                   |            |                   |   |                   |  
|Costs of cryobanking and related services                                         |                   | 35,090     |                   |   | 26,898            |  
|                                                                                  |                   |           
|Total Costs of Sales                                                              |                   | 565,742    |                   |   | 251,622           |  
|                                                                                  |                   |           
|                                                                                  |                   |            |                   |   |                   |  
|Selling, General & Administrative Expenses:                                       |                   |            |                   |   |                   |  
|                                                                                  |                   |            |                   |   |                   |  
|Selling, general, and administrative; 
      equipment sales and related services |                   | 5,199,555  |                   |   | 3,882,490         |  
|                                                                                  |                   |            |                   |   |                   |  
|Selling, general & administrative; 
      cryobanking and related services        |                   | 493,434    |                   |   | 474,069           |  
|                                                                                  |                   |           
|Total Selling, General & Adminstrative 
      Expenses                            |                   | 5,692,989  |                   |   | 4,356,559         |  
|                                                                                  |                   |           
|                                                                                  |                   |           
|Loss from Operations                                                              |                   | (4,915,193 | )                 |   | (3,541,867        | )
|                                                                                  |                   |           
|                                                                                  |                   |            |                   |   |                   |  
|Other income (expenses):                                                          |                   |            |                   |   |                   |  
|                                                                                  |                   |            |                   |   |                   |  
|Dividend income  investment portfolio                                            |                   | 2,511,054  |                   |   | 1,990,669         |  
|                                                                                  |                   |            |                   |   |                   |  
|Gains on sale of securities, net                                                  |                   | 1,515,653  |                   |   | 989,599           |  
|                                                                                  |                   |            |                   |   |                   |  
|Mark to market of short positions                                                 |                   | (204,225   | )                 |   | 266,807           |  
|                                                                                  |                   |            |                   |   |                   |  
|Other revenues                                                                    |                   | 14,686     |                   |   | 15,245            |  
|                                                                                  |                   |            |                   |   |                   |  
|Investment Recovery                                                               |                   | 75,000     |                   |   |                   |  
|                                                                                  |                   |            |                   |   |                   |  
|Interest expense, net of interest income                                          |                   | (296,114   | )                 |   | (108,949          | )
|                                                                                  |                   |            |                   |   |                   |  
|Administrative expenses relating to 
      portfolio investments *                |                   | (36,842    | )                 |   | (1,126            | )
|                                                                                  |                   |           
|Total Other Income, net                                                           |                   | 3,579,212  |                   |   | 3,152,245         |  
|                                                                                  |                   |           
|                                                                                  |                   |            |                   |   |                   |  
|Loss Before Income Taxes                                                          | $                 | (1,335,981 | )                 | $ | (389,622          | )
|                                                                                  |                   |            |                   |   |                   |  
|Provision for income taxes                                                        |                   | 0          |                   |   | 0                 |  
|                                                                                  |                   |           
|                                                                                  |                   |            |                   |   |                   |  
|Net Loss                                                                          | $                 | (1,335,981 | )                 | $ | (389,622          | )
|                                                                                  |                   |            |                   |   |                   |  
|                                                                                  |                   |            |                   |   |                   |  
|Weighted average number of shares 
      outstanding  basic and diluted          |                   | 4,638,384  |                   |   | 4,615,993         |  
|                                                                                  |                   |            |                   |   |                   |  
|Net loss per common equivalent share 
      basic and diluted                    | $                 | (0.29      | )                 | $ | (0.08             | )

|                                                                                                                                                                                   
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|* Due to a change in computer systems and accounting software, the administrative expenses relating to portfolio investments is not available for the year ended December 31, 2003.

|37
|--



|DAXOR CORPORATION AND SUBSIDIARYCONSOLIDATED STATEMENTS OF CASH FLOWSFOR THE YEARS ENDED DECEMBER 31
|----------------------------------------------------------------------------------------------------
|                                                                                                    

|                                                                                        | Restated |             | Restated |   | Restated   |  
|--------------------------------------------------------------------------------------- | -------- | ----------- | -------- | - | ---------- | -
|
|
|
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                   |          |             |          |   |            |  
|Net loss                                                                                | $        | (1,335,981  | )        | $ | (389,622   | )
|Adjustments to reconcile net
      loss to net cash used in
      operating activities: |          |             |          |   |            |  
|Depreciation & amortization                                                             |          | 112,813     |          |   | 98,889     |  
|Provision for Bad Debt                                                                  |          | 41,300      |          |   | 0          |  
|Value of Shares Received as a 
     Dividend                                            |          | (402,896    | )        |   | 0          |  
|Gains on sale of investments                                                            |          | (1,515,653  | )        |   | (989,599   | )
|Marked to Market adjustments on 
     options & shorts                                  |          | 204,225     |          |   | (266,807   | )
|Investment Recovery                                                                     |          | (75,000     | )        |   | 0          |  
|Change in operating assets and 
      operating liabilities:                            |          |             |          |   |            |  
|(Increase)/decrease in accounts 
     receivable (1)                                    |          | 24,795      |          |   | 54,513     |  
|(Increase) decrease in prepaid 
     expenses & other current assets (1)                |          | (72,063     | )        |   | 71,824     |  
|(Increase) decrease in inventory                                                        |          | (52,523     | )        |   | 6,847      |  
|Decrease in other assets                                                                |          | 0           |          |   | 37,110     |  
|Increase (decrease) in accounts 
     payable and accrued liabilities (1)               |          | 422,862     |          |   | (97,547    | )
|Increase (decrease) in other 
     liabilities (1)                                      |          | 1,287,900   |          |   | (388,522   | )
|Increase in deferred income                                                             |          | (49,548     | )        |   | 66,124     |  
|                                                                                        |          |            
|                                                                                        |          |             |          |   |            |  
|Net cash used in operating activities                                                   |          | (1,409,769  | )        |   | (1,796,790 | )
|                                                                                        |          |            
|                                                                                        |          |             |          |   |            |  
|CASH FLOWS FROM INVESTING ACTIVITIES                                                    |          |             |          |   |            |  
|Purchase of property and equipment                                                      |          | (285,002    | )        |   | (178,741   | )
|Unsettled trades receivable                                                             |          | (1,018,936  | )        |   | 324,480    |  
|Purchase of investments (2)                                                             |          | (24,092,647 | )        |   | (3,411,302 | )
|Purchases of put and call options (2)                                                   |          | (368,159    | )        |   |            |  
|                                                                                        |          |             |          |   |            |  
|Sales of investments (2)                                                                |          | 21,279,360  |          |   | 3,832,384  |  
|Sales of put and call options (2)                                                       |          | 3,059,531   |          |   | 676,254    |  
|                                                                                        |          |            
|Net cash provided by (used 
      in) investing activities                              |          | (1,425,853  | )        |   | 1,243,075  |  
|                                                                                        |          |            
|                                                                                        |          |             |          |   |            |  
|                                                                                        |          |             |          |   |            |  
|CASH FLOWS FROM FINANCING ACTIVITIES:                                                   |          |             |          |   |            |  
|Proceeds from bank loan                                                                 |          | 0           |          |   | 600,000    |  
|Proceeds from margin loans (2),(3)                                                      |          | 5,530,857   |          |   | 6,864,404  |  
|Repayment of margin loans (2),(3)                                                       |          | (2,950,144  | )        |   | (6,460,597 | )
|Purchase of treasury stock                                                              |          | (219,020    | )        |   | (474,334   | )
|Proceeds from sale of treasury stock                                                    |          | 561,853     |          |   | 25,997     |  
|                                                                                        |          |            
|Net cash provided by financing 
      activities                                        |          | 2,923,546   |          |   | 555,470    |  
|                                                                                        |          |            
|Net increase (decrease) in cash and 
      cash equivalents                             |          | 87,924      |          |   | 1,755      |  
|Cash and cash equivalents at beginning 
      of period                                 |          | 5,079       |          |   | 3,324      |  
|                                                                                        |          |            
|Cash and cash equivalents at end of 
      period                                       | $        | 93,003      |          | $ | 5,079      |  
|                                                                                        |          |            

| |     |                                                                                                                             
| | --- | ----------------------------------------------------------------------------------------------------------------------------
| | (1) | 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.                           
| | --- | -----------------------------------------------------------------------------------------
| |     |                                                                                          
| | (b) | Prepaid expenses and other current assets for the years ended December 31, 2004 and 2003.
| |     |                                                                                          
| | (c) | Accounts Payable and Accrued Expenses for the years ended December 31, 2004 and 2003.    
| |     |                                                                                          
| | (d) | Other Liabilities for the year ended December 31, 2003.                                  
| |     |                                                                                          

| | (2) | Due to a change in computer systems and accounting software, the information needed to disaggregate the cash flow activity for purchases and sales of investments, and proceeds from and repayments of margin loans, was not readily available for the year ended December 31, 2003, and is therefore shown net. For the years ended December 31, 2005 and 2004 these amounts have been disaggregated. The information needed to disaggregate the cash flow activity for purchases and sales of put and call options was available only for the year ended December 31, 2005.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | (3) | As required byFAS 95  Statement of Cash Flows, proceeds and repayment of margin loans which had originally been classified as Cash Flows from Investing Activities are now shown as Cash Flows from Financing Activities. For the year ended December 31, 2003, net loan proceeds of $868,060 were reclassified. For the year ended December 31, 2004, proceeds of $ 6,864,404 and repayments of $6,460,597 are now shown as Cash Flows from Financing activities. For the year ended December 31, 2005, the amounts reclassified were $5,530,857 and $2,950,144 respectively.

|                                                                     
|---------------------------------------------------------------------
|See accompanying notes to condensed consolidated financial statements

|38
|--



|DAXOR CORPORATIONSTATEMENTS OF STOCKHOLDERS EQUITY AND COMPREHENSIVE INCOME (LOSS)
|-----------------------------------------------------------------------------------
|                                                                                   

|                                                                                       | Common Stock |           |   |  
|-------------------------------------------------------------------------------------- | ------------ | --------- | - | -
|
|
|                                                                                       |             
|Balances, December 31, 2002                                                            |              | 4,656,784 |   | $
|                                                                                       |             
|Changes in unrealized gain on
      securities, net of $2,157,380
      deferred taxes |              |           |   |  
|                                                                                       |             
|Net loss                                                                               |              |           |   |  
|                                                                                       |             
|Sale of Treasury Stock                                                                 |              | 2,142     |   |  
|                                                                                       |             
|Purchase of Treasury Stock                                                             |              | (19,900   | ) |  
|                                                                                       |              |          
|                                                                                       |             
|Balances, December 31, 2003,
      as restated                                         |              | 4,639,026 |   |  
|                                                                                       |             
|Change in unrealized gain on
      securities net of $2,314,450
      deferred taxes   |              |           |   |  
|                                                                                       |             
|Net loss                                                                               |              |           |   |  
|                                                                                       |             
|Sale of Treasury Stock                                                                 |              | 2,000     |   |  
|                                                                                       |             
|Purchase of Treasury Stock                                                             |              | (30,200   | ) |  
|                                                                                       |              |          
|Balances, December 31, 2004
      as restated                                          |              | 4,610,826 |   |  
|                                                                                       |              |           |   |  
|                                                                                       |             
|Change in unrealized gain on
      securities, net of $213,257
      deferred taxes    |              |           |   |  
|Share Adjustment                                                                       |              |           |   |  
|                                                                                       |             
|Net loss                                                                               |              |           |   |  
|                                                                                       |             
|Sale of Treasury Stock                                                                 |              | 27,500    |   |  
|                                                                                       |             
|Purchase of Treasury Stock                                                             |              | (7,900    | ) |  
|                                                                                       |              |          
|Balances, December 31, 2005                                                            |              | 4,630,426 |   | $
|                                                                                       |              |           |   |  

|39
|--



|DAXOR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
        (1) EXPLANATORY NOTE  AMENDED FORM 10-K/A
        The original Form 10-K filed by Daxor Corporation for the year ended December 31, 2005 included restatements and reclassifications for the comparative years ended December 31, 2004 and 2003. It fully disclosed the changes in accounting principles, as well as segment reporting, which necessitated these restatements and reclassifications. However, the original filing only disclosed the net effect of these changes to the financial statements and failed to provide the reader with the level of detailed disclosure that is required by U.S. generally accepted accounting
principles. This Form 10-K for the year ended December 31, 2005 (Form 10-K/A, Amendment No. 1) has been amended to include this required disclosure, both in the financial statement presentation and the accompanying footnotes. Please note that while the Company has expanded its disclosure of the changes presented in the original Form 10-K filing for the year ended December, 31, 2005, the net loss and loss per share amounts have not changed for any of the years presented.
        (2) 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 of an instrument that rapidly and accurately measures human blood volume. This instrument is used in conjunction with a single use diagnostic injection and collection kit.
        Significant Accounting Policies
        Principles of Consolidation
        The consolidated financial statements include the accounts of Daxor Corporation and Scientific Medical Systems Corp, a wholly-owned subsidiary. All significant inter-company 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.
        Segment Information
        The Company has two operating segments, one of which is comprised of the sale of blood volume analysis equipment and related services; the other segment is the cryobanking business conducted under a wholly-owned subsidiary, Scientific Medical Systems. This segment encompasses semen banking services, related testing, and long-term storage of frozen blood, primarily autologous blood for individual use. (See Note 16)
        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.
        Fair Value of Financial Instruments
        Carrying amounts of certain financial instruments of the Company, 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.
        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 of the Balance Sheet as Accumulated Other Comprehensive Income (Loss). Conversely, all realized
gains, losses and earnings are recorded in the Statement of Operations under Other Income (Expense). Historical cost is used by the Company to determine all gains and losses, and fair market value is obtained by readily available market
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|40
|--



|quotes on all securities.
        Puts and Calls at Fair Market Value
        Put and call options are sold short on various stocks the company is willing to buy or sell. The premiums received are shown on the balance sheet as current liabilities under Puts and Calls, at fair market value until they are exercised or expire. This amount is reduced or increased at the end of each quarter by the mark to market adjustment which is recorded in accordance with SFAS No. 133-Accounting for Derivatives 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 without being exercised are recorded as income in the period which they expire.
        Other Liabilities
        When a call option that has been sold short is exercised, this creates a short position in the related common stock. The recorded cost of these short positions is the amount received on the sale of the stock plus the proceeds received from the underlying call option. These positions are shown on the Balance Sheet as Other Liabilities 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.
        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 5% of the value of its portfolio. 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 5%.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | 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 5% 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 5% of its accounts, in actual
practice the short stock positions account for less than 5% of the assets of the company.

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

|41
|--



|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. Individual investment decisions are made solely by Dr. Joseph Feldschuh, CEO, who devotes approximately 10 to 15% of his time, or 7 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.
        Accounts Receivable
        Accounts receivable are reviewed by the Company at the end of each reporting period to determine the collectibility based upon the aging of the balances and the history of the customer. As of December 31, 2005, the Company determined that a reserve of $41,300 should be placed against the outstanding receivable balance of $172,892. For the years ended December 31, 2004 and 2003, there was no reserve against the outstanding receivable balance.
        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, 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, there is no impairment of any long-lived assets.
        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 of single use tracer doses supplied as Volumex kits that are injected into the patient and measured by the Blood Volume Analyzer. The third source of revenue is service contracts on the Blood Volume Analyzer, after it has been sold to a customer. The fourth source of revenue is the storage fees associated with cryobanked blood and semen specimens, and associated laboratory tests.
        The Company currently offers three different methods of purchasing the Blood Volume Analyzer equipment. A customer may purchase the equipment directly, lease the equipment, or rent the equipment on a month-to-month basis. The revenues generated by a direct sale or a monthly rental are recognized as revenue in the period in which the sale or rental occurred. If a customer is to select the lease option, the Company refers its customer to a third party finance company with which it has established a relationship, and if the lease is approved, the Company receives 100% of the sales proceeds from the finance company and recognizes 100% of the revenue. The finance company then deals directly with the customer with regard to lease payments and related collections.
        The sales of the single-use radioisotope doses (Volumex) that are used in conjunction with the Blood Volume Analyzer are recognized as revenue in the period in which the sale occurred.
        When Blood Volume Analyzer equipment has been sold to a customer, the Company offers a one year warranty on the product, which covers all mechanical failures. This one year warranty is effective on the date of sale of the equipment. After the one year period expires, customers may purchase a service contract through the Company, which is usually offered in one-year 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, 2005 and 2004, deferred revenue pertaining to these service contracts was $ 6,583 and $17,465, respectively.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|42
|--



|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 3 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
        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.
        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, 2005, 2004 and 2003 were $2,152,261, $1,566,115 and $1,246,526. 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.
        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 2005, 2004, and 2003, stock options were not included in the computation of diluted loss per common share due to their anti-dilutive effect given the net loss for each of those years. The number of anti-dilutive stock options excluded from the computation of diluted loss per common share was 78,100, 87,500, and 62,800, respectively.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|43
|--



|Leased Employees
The Company has entered into an agreement with ADP TotalSource, 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 Options
        The Company applies the intrinsic-value-based method of accounting prescribed by Accounting Principles Board, or APB, Opinion No. 25, Accounting for Stock Issued to Employees, and related interpretations including Financial Accounting Standards Board, or FASB, Interpretation No. 44, Accounting for Certain Transactions involving Stock Compensation, an Interpretation of APB Opinion No. 25, issued in March 2000, to account for its stock options. Under this method, compensation expense is recorded on the date of the grant only if the current market price of the underlying stock exceeded the exercise price. SFAS No. 123, Accounting for Stock Based Compensation, established accounting and disclosure requirements using a fair-value-based method of accounting for stock-based employee compensation plans. As allowed by SFAS No. 123, the Company has elected to
continue to apply the intrinsic-value-based method of accounting described above, and has adopted only the disclosure requirements of SFAS No. 123. The following table illustrates the effect on the net loss if the fair-value-based method has been applied to all outstanding and unvested awards in each period.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|44
|--



|                                                                                                                              | 2005 |            | 2004
      Restated |   | 2003
      Restated |  
|----------------------------------------------------------------------------------------------------------------------------- | ---- | ---------- | ------------------- | - | ------------------- | -
|                                                                                                                              |      |            |                     |   |                     |  
|Net loss, as reported                                                                                                         | $    | (1,335,981 | )                   |   | (389,622            | )
|Deduct total stock-based employee
      compensation expense determined
      under fair-value-based method, net
      of tax |      | (82,790    | )                   |   | (26,229             | )
|                                                                                                                              |      |            |                     |   |                     |  
|Proforma net income (loss)                                                                                                    | $    | (1,418,771 | )                   | $ | (415,851            | )
|                                                                                                                              |      |            |                     |   |                     |  
|                                                                                                                              |     
|Pro forma net income (loss) per
      common share: basic and diluted                                                         | $    | (.31       | )                   | $ | (.09                | )
|                                                                                                                              |      |            |                     |   |                     |  

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|In 2005 and 2004 a total of 25,000 and 25,700, respectively, of stock options were issued to various
employees under the 2004 Stock Option Plan. No stock options were granted to employees in 2003. The
weighted-average fair value per stock option granted in 2005 and 2004 was $3.40 and $2.96, 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 2005 and 2004: no dividend
yield, expected volatility of 28.65% and 22.74%, respectively, risk-free interest rates of 3.32%
and 1.91%, respectively and an expected life of 2 and 1⁄4 years for 2005 and 3 years for 2004.
Recent Accounting Pronouncements
In December 2004, the FASB revised SFAS No. 123 (FAS 123R), Share-Based Payment, which requires companies
to expense the estimated fair value of employee stock options and similar awards. The accounting
provisions of FAS 123R will be effective for the third quarter of fiscal 2005.
The Company will adopt the provisions of FAS 123R using a modified prospective application. Under modified
prospective application, FAS 123R, which provides certain changes to the method for valuing stock-based
compensation among other changes, will apply to new awards and to awards that are outstanding on
the effective date and are subsequently modified or cancelled. Further compensation expense for outstanding
awards for which the requisite service had not been rendered as of the effective date will be recognized
over the remaining service period using the compensation cost calculated for pro forma disclosure
purposes under FAS 123. The Company is in the process of determining how the new method of valuing
stock-based compensation as prescribed in FAS 123R will be applied to valuing stock-based awards
granted after the effective date and the impact the recognition of compensation expense related to
such awards will have on its consolidated financial statements.
Reclassifications and Restatements
For purposes of financial statement presentation in this Form 10-K/A, the Company has retroactively
corrected three reporting errors. These errors occurred as a result of misapplication of generally
accepted accounting principles and have required restatement of the financial statement information
for the years ended December 31, 2004 and 2003. In addition, reclassification of account groupings
have been made to the data for the years ended December 31, 2004 and 2003 in order to present comparable
financial statement information to the year ended December 31, 2005.
For the year ended December 31, 2005, $468,188 of salary expense which had originally been incorrectly
classified as Costs of equipment sales and related services was reclassified to Selling, general
and administrative; equipment sales and related services. Also, for the year ended December 31, 2005,
$287,634 of salary expense which had originally been incorrectly classified as Costs of cryobanking
and related services was reclassified to Selling, general and administrative; cryobanking and related
services.
(1) Restatement -The first change in accounting principle is Revenue Recognition. Previously, the Company reported its
cryobanking revenue under the cash method. As restated, these revenues are now appropriately reported
under the accrual method, giving rise to a deferred income account, and proper matching of income
and expense. As of January 1, 2004, the method of invoicing customers was changed to allow for payment
in one quarter of future quarters. Prior to January 1, 2004 cryobanking revenue was recognized as
it was paid without any need for recording deferred revenue. The billing methodology was changed
as of January 1, 2004 without any

|45
|--



|corresponding change in the accounting for storage revenue.
(2) Restatement - The second change in accounting principle is the appropriate capitalization and valuation of equipment
that has been placed with customers as either a loan or rental. The Company
has properly capitalized these equipment costs and correspondingly, depreciated them over the estimated
useful life of the equipment. Under previous reporting, the Company expensed the cost of the equipment
as the equipment was manufactured.
(3) Restatement -The third and final accounting principle change related to the appropriate valuation and classification
of options and short sale activities. Per SFAS No. 133  Accounting for Derivate Instruments and Hedging Activites, the cost of these transactions have been marked-to-market and the adjustment has been reflected in
the Statement of Operations. Under previous reporting, these option and short sale positions were
not marked up/down to the fair market value at the time of financial reporting, but rather were carried
at cost until the positions were closed.
(4) Reclassification Certain accounts balances have been reclassified (regrouped) in order to present comparable
financial statement information for all years presented.
The following table presents the detailed impact of these changes to the Balance Sheets and Statements
of Operations for the years ended December 31, 2004 and 2003:
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

|                                                         | DECEMBER 31, 2004 |            | DECEMBER 31, 2003 |  
|-------------------------------------------------------- | ----------------- | ---------- | ----------------- | -
|                                                         |                   |            |                   |  
|
|                                                         |                   |            |                   |  
|***BALANCE SHEETS***                                     |                   |            |                   |  
|                                                         |                   |            |                   |  
|                                                         |                   |            |                   |  
|                                                         |                   |            |                   |  
|                                                         |                   |            |                   |  
|Total Current Assets                                     | $                 | 55,606,750 |                   | $
|                                                         |                   |            |                   |  
|                                                         |                   |            |                   |  
|                                                         |                   |            |                   |  
|                                                         |                   |            |                   |  
|Property and equipment, net                              | $                 | 290,572    |                   | $
|                                                         |                   |            |                   |  
|                                                         |                   |            |                   |  
|                                                         |                   |            |                   |  
|Total Assets                                             | $                 | 55,929,480 |                   | $
|                                                         |                   |            |                   |  
|                                                         |                   |            |                   |  
|                                                         |                   |            |                   |  
|                                                         |                   |            |                   |  
|                                                         |                   |            |                   |  
|                                                         |                   |            |                   |  
|Total Current Liabilities                                | $                 | 16,048,161 |                   | $
|                                                         |                   |            |                   |  
|                                                         |                   |            |                   |  
|                                                         |                   |            |                   |  
|Total Liabilitites                                       | $                 | 16,048,161 |                   | $
|                                                         |                   |            |                   |  
|                                                         |                   |            |                   |  
|                                                         |                   |            |                   | $
|                                                         |                   |            |                   | $
|                                                         |                   |            |                   | $
|                                                         |                   |            |                   |  
|Retained Earnings                                        | $                 | 14,589,698 |                   | $
|                                                         |                   |            |                   |  
|                                                         |                   |            |                   |  
|                                                         |                   |            |                   |  
|Total Stockholders Equity                               | $                 | 39,881,319 |                   | $
|                                                         |                   |            |                   |  
|                                                         |                   |            |                   |  
|                                                         |                   |            |                   |  
|Total Liabilitites and Stockholders Equity              | $                 | 55,929,480 |                   | $
|                                                         |                   |            |                   |  
|                                                         |                   |            |                   |  
|***STATEMENTS OF OPERATIONS***                           |                   |            |                   |  
|                                                         |                   |            |                   |  
|                                                         |                   |            |                   |  
|                                                         |                   |            |                   |  
|Total Revenues                                           | $                 | 1,218,406  |                   | $
|                                                         |                   |            |                   |  
|                                                         |                   |            |                   |  
|                                                         |                   |            |                   |  
|                                                         |                   |            |                   |  
|                                                         |                   |            |                   |  
|Total Costs of Sales                                     | $                 | 1,241,589  |                   | $
|                                                         |                   |            |                   |  
|                                                         |                   |            |                   |  
|                                                         |                   |            |                   |  
|                                                         |                   |            |                   |  
|                                                         |                   |            |                   |  
|Total Selling, General & Administrative                  | $                 | 3,460,370  |                   | $
|                                                         |                   |            |                   |  
|                                                         |                   |            |                   |  
|                                                         |                   |            |                   |  
|Loss from Operations                                     | $                 | (3,483,553 | )                 | $
|                                                         |                   |            |                   |  
|                                                         |                   |            |                   |  
|                                                         |                   |            |                   |  
|                                                         |                   |            |                   |  
|Total Other Income (Expenses)                            | $                 | 2,903,285  |                   | $
|                                                         |                   |            |                   |  
|                                                         |                   |            |                   |  
|                                                         |                   |            |                   |  
|Income (Loss) Before Income Taxes                        | $                 | (580,268   | )                 | $
|                                                         |                   |            |                   |  
|                                                         |                   |            |                   |  
|                                                         |                   |            |                   |  
|Net Income (Loss)                                        | $                 | (580,268   | )                 | $
|                                                         |                   |            |                   |  
|                                                         |                   |            |                   |  
|                                                         |                   |            |                   |  
|Net Income (Loss) Per Common
  Share - Basic and Diluted | $                 | (0.13      | )                 | $
|                                                         |                   |            |                   |  

|46
|--



|(3) AVAILABLE-FOR-SALE SECURITIES
Upon adoption of SFAS No. 115, Accounting for Certain Investments in Debt and Equity Securities, management
has determined that the companys portfolio is best characterized as Available-For-Sale.
SFAS No. 115 requires these securities to be recorded at their fair market values, with the offsetting
unrealized holding gains or losses being recorded as Comprehensive Income (Loss)in the Equity section of the Balance Sheet. The adoption of this pronouncement has resulted in
an increase in the carrying value of the companys available-for-sale securities, as at December 31, 2005 and December 31, 2004, of approximately 123.19%and 139.25% %, 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.
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, 2005 | 
|----------------- | 
|
|
|
|Equity            | 
|Debt              | 
|                  | 
|                  | 
|Total             | 
|                  | 
|                  | 

|December 31, 2004 | 
|----------------- | 
|
|
|
|
|Equity            | 
|Debt              | 
|                  | 
|                  | 
|Total             | 
|                  | 

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|At December 31, 2005, the securities held by the Company had a market value of $57,246,006 and a cost
basis of $25,649,467 resulting in a net unrealized gain of $31,596,539 or 123.19% of cost.
At December 31, 2004, the securities held by the Company had a market value of $54,806,400 and a cost
basis of $22,907,780 resulting in a net unrealized gain of $31,898,620 or 139.25% of cost.
At December 31, 2005 and December 31, 2004, 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, 2005, the Company held $97,176 in bonds from a major utility at various
rates and maturities.

|47
|--



|(4) PROPERTY AND EQUIPMENT
Property and equipment as at December 31, 2005 and 2004, respectively, consist of:
|-------------------------------------------------------------------------------------------------------------
|                                                                                                             

| |                             | 2005 |            | Restated
    2004 |   | Restated
    2003 |  
| | --------------------------- | ---- | ---------- | ----------------- | - | ----------------- | -
| | Machinery and equipment     | $    | 1,297,120  |                   | $ | 976,237           |  
| | Furniture and fixtures      |      | 330,593    |                   |   | 329,050           |  
| | Leasehold improvements      |      | 295,530    |                   |   | 295,530           |  
| |                             |      |            |                   |   |                  
| |                             |      | 1,923,243  |                   |   | 1,600,817         |  
| |                             |      |            |                   |   |                   |  
| | Accumulated depreciation    |      | (1,302,378 | )                 |   | (1,152,141        | )
| |                             |      |            |                   |   |                  
| | Property and equipment, net |      | 620,865    |                   | $ | 448,676           |  
| |                             |      |            |                   |   |                  

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|For the years ended December 31, 2005, 2004 and 2003, depreciation expense for the above listed assets
was $112,813, $98,889, and $83,738 respectively.
(5) OTHER ASSETS
At December 31, 2003, included in Other Assets was an intangible asset (Customer List) that was being
amortized over its estimated useful life of 15 years. The asset was recorded at its original cost
of $35,000 and had accumulated amortization of $6,222 at December 31, 2003. Amortization expense
was $2,333 for the year ended December 31, 2003.
At December 31, 2004, the Customer List was deemed to have no value and the impairment of the asset
was recognized, in full, in 2004. This impairment totaled $28,778. The net book value of this asset
at December 31, 2003 was $28,778, which was reclassified to amortization expense for the year ended
December 31, 2004, and is included in the Depreciation and Amortization expense account.
At December 31, 2005 and 2004, the Company had no intangible assets.
In accordance with SFAS No. 142, Goodwill and Other Intangible Assets, management periodically reviews
the assets value for potential impairment.
(6) LOANS PAYABLE
As at December 31, 2005, 2004 and 2003 the Company has a note payable of $1,500,000, $1,500,000 and
$900,000 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, but is subject to different interest rates in the initial year of borrowing, depending on the
individual amount of each borrowing and the date each borrowing is made. Upon renewal of the note
at year end, the interest rate is renewed at the banks prime lending rate.
The loans bear interest at approximately 4.28% at December 31, 2005 and 3.0% at December 31, 2004. 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
$5,583,372 at December 31, 2005, $2,313,570 at December 31, 2004 and $1,914,764 at December 31, 2003.

|48
|--



|                                                            
|------------------------------------------------------------
|SHORT-TERM BORROWINGS
Years Ended December 31, 2005 and 2004

|              
|--------------
|
|
|
|
|2005          
|              
|Banks         
|              
|Brokers       
|              
|All Categories
|              
|2004          
|              
|Banks         
|              
|Brokers       
|              
|All Categories
|              
|2003          
|              
|Banks         
|              
|Brokers       
|              
|All Categories
|              

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|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.
(7) SHORT SALES OF SECURITIES
At December 31, 2005, 2004, and 2003 the Company maintained short positions in certain marketable securities.
The liability for short sales o f securities is included in Other Liabilities in the
accompanying balance sheets. These short positions were sold for $1,316,289, $4,930 and $370,489
at December 31, 2005, 2004 and 2003, respectively, and had respective market values of $1,302,798,
$6,341 and $403,420, resulting in mark to market adjustments of $13,491, ($1,411) and $(32,931) at
December 31, 2005, 2004, and 2003 respectively.
(8) 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, 2005, 2004 and 2003,
67,100, 36,800 and 37,800 of the outstanding options were exercisable, respectively.

|49
|--



|Details of employee option activity are as follows:
|---------------------------------------------------
|                                                   

|                               | Number of
      Shares |         | Weighted 
      Average 
      Exercise Price |  
|------------------------------ | ---------------------- | ------- | --------------------------------------------- | -
|
|Outstanding, December 31, 2002 |                        | 58,800  |                                               | $
|Granted                        |                        |        |                                               |  
|Exercised                      |                        | (1,000  | )                                             |  
|Cancelled/Expired              |                        | (20,000 | )                                             |  
|                               |                        |         |                                               |  
|Outstanding, December 31, 2003 |                        | 37,800  |                                               | $
|Granted                        |                        | 25,700  |                                               |  
|Exercised                      |                        | (1,000  | )                                             |  
|Cancelled/Expired              |                        |        |                                               |  
|                               |                        |         |                                               |  
|Outstanding, December 31, 2004 |                        | 62,500  |                                               | $
|Granted                        |                        | 25,000  |                                               |  
|Exercised                      |                        | (3,200  | )                                             |  
|Cancelled/Expired              |                        | (6,200  | )                                             |  
|                               |                        |         |                                               |  
|Outstanding, December 31, 2005 |                        | 78,100  |                                               | $
|                               |                        |         |                                               |  

|                 |  |  |       
|---------------- |  |  | ------
|
|
|
|
|$13.01 - $15.60  |  |  | 20,000
|$15.61 - $18.20  |  |  | 23,300
|$18.21 - $20.80  |  |  | 300   
|$20.81 - $23.40  |  |  | 19,500
|$23.41 and above |  |  | 15,000
|                
|                 |  |  |       
|                 |  |  | 78,100
|                 |  |  |       

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

|50
|--



|(9) CURRENT INCOME TAXES
The following is a reconciliation of the federal statutory tax rate of 35% for 2005, 2004 and 2003,
with the provision for income taxes:
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                 

| |                              | 2005 |     | 2004 |  | 2003 |   
| | ---------------------------- | ---- | --- | ---- |  | ---- | --
|
| | Statutory tax rate           |      | (35 | )%   |  | (35  | )%
| | Loss not subject to taxation |      | 35  | %    |  | 35   | % 
|
| | Provision for income taxes   |      | 0   |      |  | 0    |   
|
| | Effective federal tax rate   |      | 0   | %    |  | 0    | % 
|

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|The Company, due to current losses and loss carry forwards from previous years, has not accrued
or paid taxes based on income. It has, however, paid State and City taxes which were assessed on
its Capital Base and/or personal holdings in that jurisdiction. In accordance with SFAS No. 109,
Accounting for Income Taxes, these Capital Base assessments were not classified as income taxes.
(10) 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:

|  |           |  |     
|- | --------- |  | ----
|
|
|$ | 235,136   |  | 2015
|$ | 1,587,180 |  | 2016
|$ | 1,640,538 |  | 2017
|$ | 1,637,963 |  | 2018
|$ | 1,388,852 |  | 2019
|$ | 1,335,707 |  | 2020
|$ | 1,004,363 |  | 2021
|$ | 1,478,897 |  | 2022
|$ | 2,384,043 |  | 2023
|$ | 2,045,087 |  | 2024
|$ | 2,000,000 |  | 2025

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|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 2005 and 34% in 2004, are as follows:

| |                                                                      | 2005 |            | 2004 |  
| | -------------------------------------------------------------------- | ---- | ---------- | ---- | -
| | Deferred tax assets:                                                 |      |            |      |  
| | Net operating loss carry forwards                                    | $    | 5,858,218  |      | $
| | Valuation allowance                                                  |      | (5,858,218 | )    |  
| |                                                                      |      |            |      |  
| | Total deferred tax assets                                            |      | 0          |      |  
| |                                                                      |      |            |      |  
| | Deferred tax liabilities:                                            |      |            |      |  
| | Fair market value adjustment
      for available-for-sale securities | $    | 11,058,788 |      | $
| |                                                                      |      |            |      |  

|51
|--



|(11) CONCENTRATION OF CREDIT RISK
Financial instruments which potentially subject the Company to concentrations of credit risk consist
primarily of marketable securities. The Company maintains its investments in four difference brokerage
accounts, all of which are insured by Securities Investor Protection Corporation (SIPC). The limits
of this insurance are up to $100,000 for the total amount of cash on deposit with each Broker, and
up to $500,000 for the total amount of securities held by each Broker. 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, 2005, the fair market value of securities in excess of the SIPC
insured limit is $57,246,006, while there is no cash on deposit in excess of the insured limit.
(12) RELATED PARTY TRANSACTIONS
The Company subleases a 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 in the years ended December 31, 2005, 2004 and
2003 was $9,750, $8,571 and $8,571.
(13) 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, 2005, 2004 and 2003 were $2,152,261, $1,566,115 and $1,246,526.
These amounts have been calculated according to the criteria specified in SFAS No. 2  Accounting for Research and Development Costs.
(14) INTEREST EXPENSE AND INCOME
Interest expense was $319,145, $111,745, and $86,675, and interest income was $23,031, $2,795, and
$3,542 in 2005, 2004, and 2003 respectively.
(15) COMMITMENTS AND CONTINGENCIES
(A) Operating Leases
The Company leases office and laboratory space in both New York City and Tennessee. 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 Tennessee facility is currently leased
on a month-to-month basis.
The Company subleases space in its New York facility to a related party and a third party. Both subtenants
lease on a month to month basis with no formal agreement. The amount of rental income received for
the years ended December 31, 2005, 2004 and 2003 was $14,686, $15,245 and $15,571 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:
2005 $284,1472006 $284,1472007 $284,1472008 $284,1472009 $284,147Thereafter $293,151
Rent expense for all non-cancelable operating leases was $284,147, $262, 916, and $281,506 for the
years ended December 31, 2005, 2004 and 2003 respectively.
(B) Contingent Liabilities
The Company has incurred several 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.
The Company was involved in a dispute with its landlord in New York City. This dispute arose out of
a rental rate dispute. In February 2005, the dispute was settled and the Company voluntarily agreed
to pay the landlord approximately $45,000 in additional rent. This $45,000 liability was accrued
at December 31, 2004 and 2003, and recorded in Accounts Payable and Accrued Liabilities.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|52
|--



|(16) SEGEMENT REPORTING
The Company has two operating segments: the sale of blood volume analysis equipment and related services,
and cryobanking services which encompasses blood and semen storage and related services. In addition,
the Company reports an additional segment, Investment Activity, although it is not deemed to be an
operating segment.
The following tables summarize the results of each segment described above for the years ended December
31, 2005, 2004 and 2003.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

|                                                                        | RestatedDecember 31, 2005 |           
|----------------------------------------------------------------------- | ------------------------- | ----------
|
|
|
|
|Revenues                                                                | $                         | 751,071   
|Cost of sales                                                           |                           | 530,652   
|Selling, general and administrative expenses                            |                           | 5,199,555 
|                                                                        |                           |           
|Operating income (loss)                                                 |                           | (4,979,136
|                                                                        |                           |           
|                                                                        |                           |           
|Investment income, net                                                  |                           |           
|Dividends                                                               |                           |           
|Gain on sales of securities, net                                        |                           |          
|Mark to market of short positions                                       |                           |          
|Investment Recovery                                                     |                           |           
|Administrative expenses relating to
              portfolio investments |                           |          
|                                                                        |                           |           
|Total Investment income, net                                            |                           |          
|                                                                        |                           |           
|                                                                        |                           |           
|Interest expense, net                                                   |                           |           
|Other income                                                            |                           | 13,850    
|                                                                        |                           |           
|Income (loss) before income taxes                                       |                           | (4,965,286
|                                                                        |                           |           
|Income tax expense                                                      |                           |          
|                                                                        |                           |           
|                                                                        |                           |           
|Net income (loss)                                                       | $                         | (4,965,286
|                                                                        |                           |           
|                                                                        |                           |           
|Total assets                                                            | $                         | 2,191,982 
|                                                                        |                           |           

|53
|--



|                                                                          | RestatedDecember 31, 2004 |           
|------------------------------------------------------------------------- | ------------------------- | ----------
|
|
|
|
|Revenues                                                                  | $                         | 643,592   
|Cost of sales                                                             |                           | 224,724   
|Selling, general and administrative expenses                              |                           | 3,882,490 
|                                                                          |                           |           
|Operating income (loss)                                                   |                           | (3,463,622
|                                                                          |                           |           
|                                                                          |                           |           
|Investment income                                                         |                           |           
|Dividends                                                                 |                           |          
|Gain on sales of securities, net                                          |                           |          
|Mark to market of short positions                                         |                           |          
|Administrative expenses relating to
              portfolio investments * |                           |          
|                                                                          |                           |           
|Total Investment income, net                                              |                           |          
|                                                                          |                           |           
|                                                                          |                           |           
|Interest expense, net                                                     |                           |           
|Other income                                                              |                           | 15,071    
|                                                                          |                           |           
|Income (loss) before income taxes                                         |                           | (3,448,551
|                                                                          |                           |           
|Income tax expense                                                        |                           |          
|                                                                          |                           |           
|                                                                          |                           |           
|Net income (loss)                                                         | $                         | (3,448,551
|                                                                          |                           |           
|                                                                          |                           |           
|Total assets                                                              | $                         | 904,837   
|                                                                          |                           |           

|                                                                         |   |           
|------------------------------------------------------------------------ | - | ----------
|
|
|
|
|Revenues                                                                 | $ | 559,169   
|Cost of sales                                                            |   | 192,338   
|Selling, general and administrative expenses                             |   | 3,409,436 
|                                                                         |   |           
|Operating income (loss)                                                  |   | (3,042,605
|                                                                         |   |           
|                                                                         |   |           
|Investment income                                                        |   |           
|Dividends                                                                |   |          
|Gain on sales of securities, net                                         |   |          
|Mark to market of short positions                                        |   |          
|*Administrative expenses relating to
              portfolio investments |   |          
|                                                                         |   |           
|Total Investment income, net                                             |   |          
|                                                                         |   |           
|                                                                         |   |           
|Interest expense, net                                                    |   |           
|Other income                                                             |   | 15,571    
|                                                                         |   |           
|Income (loss) before income taxes                                        |   | (3,027,034
|                                                                         |   |           
|Income tax expense                                                       |   |          
|                                                                         |   |           
|                                                                         |   |           
|Net income (loss)                                                        | $ | (3,027,034
|                                                                         |   |           
|                                                                         |   |           
|Total assets                                                             | $ | 1,280,892 
|                                                                         |   |           

|                                                                                                                                                                                            
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|* Due to a change in computer systems and accounting software, the administrative expenses relating to portfolio investments was not readily available for the year ended December 31, 2003.
|                                                                                                                                                                                            

|54
|--



|(17) SELECTED FINANCIAL DATA                                                                                                                                                                          
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                      
|As a result of the audit a number of changes were made with respect to the profit and loss statement. The changes that were made, effective for 2004 through to the present, pertained to three areas:
|                                                                                                                                                                                                      

| | (1).Change in revenue recognition for cryobanking from cash to accrual method.                                                                                                                                  
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                 
| | (2.) Change in valuation of certain investments (options and shorts)  from cost to mark-to-market, with the Fair Market Value adjustment on the options and shorts running through the Statement of Operations.
| |                                                                                                                                                                                                                 
| | (3).Change in the method of accounting for the blood volume analyzer equipment that is out on loan/rental.
We now capitalize and depreciate the equipment instead of expensing it directly to cost of goods.    
| |                                                                                                                                                                                                                 
| | (4) Reclassification Certain accounts balances have been reclassified (regrouped) in order to present comparable
financial statement information for all years presented                                       

|                                                                        
|------------------------------------------------------------------------
|Summary of Quarterly Financial Data for the Year Ended December 31, 2005
|                                                                        

|Description              | Amount 
      Originally
      Reported 
      Quarter 
      ended 
      03/31/05 |           | Amount 
      Restated
      Quarter 
      ended 
      03/31/05 |   | Difference |   |   |          |   |  | Reason        |  | Amount 
      Originally 
      Reported 
      Quarter ended
      06/30/05 |                     | Amount 
      Restated 
      Quarter ended
      06/30/05 |   | Difference |   | Reason |           
|------------------------ | ----------------------------------------------------------------------------------- | --------- | ----------------------------------------------------------------- | - | ---------- | - | - | -------- | - |  | ------------- |  | ---------------------------------------------------------------------------- | ------------------- | ---------------------------------------------------------- | - | ---------- | - | ------ | ----------
|                         |                                                                                    
|Operating
      Revenues | $                                                                                   | 296,583   |                                                                   | $ | 300,356    |   | $ | 3,773    |   |  | (1)           |  |                                                                              |                     |                                                            | $ | 270,659    |   | $      | 287,690   
|Operating
      Expenses | $                                                                                   | 1,527,717 |                                                                   | $ | 1,538,413  |   | $ | 10,696   |   |  | (3)
      (4) |  | $
      $                                                                    | 10,483
      213    |                                                            | $ | 1,492,405  |   | $      | 1,484,751 
|Other
      Income(Loss) | $                                                                                   | 891,095   |                                                                   | $ | 767,930    |   | $ | (123,165 | ) |  | (2)
      (4) |  | $
      $                                                                    | (122,952
      (213 | )
      )                                                  | $ | 129,680    |   | $      | (68,006   
|Net Loss                 | $                                                                                   | (340,039  | )                                                                 | $ | (470,127   | ) | $ | (130,088 | ) |  |               |  |                                                                              |                     |                                                            | $ | (1,092,066 | ) | $      | (1,265,067
|Loss Per
      Share     | $                                                                                   | (0.07     | )                                                                 | $ | (0.10      | ) | $ | (0.03    | ) |  |               |  |                                                                              |                     |                                                            | $ | (0.24      | ) | $      | (0.27     

|55
|--



|Description                   | Amount 
      Originally 
      Reported 
      Quarter 
      ended
    09/30/05 |           | Amount 
      Restated 
      Quarter 
      ended
    09/30/05 |   | Difference |  | Reason |          | Quarter 
      ended
      12/31/05 | 
|----------------------------- | --------------------------------------------------------------------------------- | --------- | --------------------------------------------------------------- | - | ---------- |  | ------ | -------- | ----------------------------------- | 
|                             
|Operating
      Revenues      | $                                                                                 | 340,795   |                                                                 | $ | 447,652    |  | $      | 106,857  |                                     | 
|Operating
      Expenses      | $                                                                                 | 1,622,515 |                                                                 | $ | 1,569,677  |  | $      | (52,838  | )                                   | 
|Other Income                  | $                                                                                 | 2,277,541 |                                                                 | $ | 2,125,406  |  | $      | (152,135 | )                                   | 
|Net Income
      (Loss)       | $                                                                                 | 995,821   |                                                                 | $ | 1,003,381  |  | $      | 7,560    |                                     | 
|Income (Loss)
      Per Share | $                                                                                 | .21       |                                                                 | $ | .22        |  | $      | .01      |                                     | 
|                             

|The results for the quarter ended December 31, 2005 were not presented in the 10K for the year ended
December 31, 2005 as originally filed which means there is no restatement of these figures.
Summary of Quarterly Financial Data for the Year Ended December 31, 2004
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                         

|                         |   |           |   |   |           |   |   |         
|------------------------ | - | --------- | - | - | --------- | - | - | --------
|
|                        
|Operating
      Revenues | $ | 408,248   |   | $ | 294,364   |   | $ | (113,884
|Operating
      Expenses | $ | 1,091,319 |   | $ | 1,099,909 |   | $ | 8,590   
|Other
      Income(Loss) | $ | 702,835   |   | $ | 772,684   |   | $ | 69,849  
|Net Income
      (Loss)  | $ | 19,764    |   | $ | (32,861   | ) | $ | (52,625 
|Loss Per Share           | $ | (0.00     | ) | $ | ( 0.01    | ) | $ | (0.01   

|                         |   |           |   |   |           |   |   |         |   |  |               |  |           |                      |           |  
|------------------------ | - | --------- | - | - | --------- | - | - | ------- | - |  | ------------- |  | --------- | -------------------- | --------- | -
|
|                        
|Operating
      Revenues | $ | 277,975   |   | $ | 291,527   |   | $ | 13,552  |   |  | (1)
      (4) |  | $
      $ | 13,448
      104     |           | $
|Operating
      Expenses | $ | 1,143,538 |   | $ | 1,132,634 |   | $ | (10,904 | ) |  | (3)
      (4) |  | $
      $ | (10,768
        (136 | )
      ) | $
|Other
      Income(Loss) | $ | 806,595   |   | $ | 855,111   |   | $ | 48,516  |   |  | (2)
      (4) |  | $
      $ | 48,756
      (240    | )         | $
|Net Income
      (Loss)  | $ | (58,968   | ) | $ | 14,004    |   | $ | 72,972  |   |  |               |  |           |                      |           | $
|Loss Per
      Share     | $ | (0.01     | ) | $ | ( 0.00    | ) | $ | 0.01    |   |  |               |  |           |                      |           | $
|                         |   |           |   |   |           |   |   |        

|56
|--



|The consolidated statements of operations data for the years ended December 31, 2005, 2004 and 2003
are derived from our audited consolidated financial statements that are included herein. The consolidated
statements of operations data for the years ended December 31, 2002 and 2001 are derived from our
audited financial statements that area not included in this Form 10-K. Those statements were audited
by Frederick A. Kaden & Company and are not covered by the report of the independent registered
accounting firm included herein.
Operations Data:
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

|                                                                                | Year Ended December 31, |            |   |   |            |   |   |           
|------------------------------------------------------------------------------- | ----------------------- | ---------- | - | - | ---------- | - | - | ----------
|
|
|
|Operating revenues                                                              | $                       | 1,343,538  |   | $ | 1,066,314  |   | $ | 1,013,647 
|                                                                                |                         |           
|Total revenues                                                                  | $                       | 1,343,538  |   | $ | 1,066,314  |   | $ | 1,013,647 
|                                                                                |                         |           
|                                                                                |                         |            |   |   |            |   |   |           
|Costs and expenses:                                                             |                         |            |   |   |            |   |   |           
|Operations of laboratories & costs of production                                |                         | 565,742    |   |   | 251,622    |   |   | 246,206   
|Selling, general and administrative                                             |                         | 5,692,989  |   |   | 4,356,559  |   |   | 3,846,836 
|                                                                                |                         |           
|Total costs and expenses                                                        |                         | 6,258,731  |   |   | 4,608,181  |   |   | 4,093,042 
|                                                                                |                         |           
|
|Loss from operations                                                            |                         | (4,915,193 | ) |   | (3,541,867 | ) |   | (3,079,395
|                                                                                |                         |           
|                                                                                |                         |            |   |   |            |   |   |           
|Other Income and Expenses:                                                      |                         |            |   |   |            |   |   |           
|Dividend income                                                                 |                         | 2,511,054  |   |   | 1,990,669  |   |   | 1,897,669 
|Gains on sale of investments                                                    |                         | 1,515,653  |   |   | 989,599    |   |   | 238,550   
|Mark to Market of Short Positions                                               |                         | (204,225   | ) |   | 266,807    |   |   | 115,871   
|Other revenues                                                                  |                         | 14,686     |   |   | 15,245     |   |   | 15,571    
|Investment Recovery                                                             |                         | 75,000     |   |   | 0          |   |   | 0         
|Admin Expense relating to portfolio investments                                 |                         | (36,842    | ) |   | (1,126     | ) |   | 0         
|Interest expense, net of Interest Income                                        |                         | (296,114   | ) |   | (108,949   | ) |   | (83,133   
|                                                                                |                         |           
|Total Other Income and Expenses                                                 |                         | 3,579,212  |   |   | 3,152,245  |   |   | 2,184,528 
|                                                                                |                         |           
|                                                                                |                         |            |   |   |            |   |   |           
|Income (Loss) before income taxes                                               |                         | (1,335,981 | ) |   | (389,622   | ) |   | (894,867  
|                                                                                |                         |           
|Provision for income taxes                                                      |                         | 0          |   |   | 0          |   |   | 0         
|                                                                                |                         |           
|Net income/(loss)                                                               | $                       | (1,335,981 | ) | $ | (389,622   | ) | $ | (894,867  
|                                                                                |                         |           
|
|Weighted average number of common shares 
      outstanding - basic and diluted |                         | 4,638,384  |   |   | 4,615,993  |   |   | 4,645,700 
|                                                                                |                         |           
|Income (loss) per common equivalent share - 
      basic and diluted            | $                       | (0.29      | ) | $ | (0.08      | ) | $ | (0.19     
|                                                                                |                         |           

|                                                                                                                  
|------------------------------------------------------------------------------------------------------------------
|Item 9.  Changes in and Disagreements with Accountants on Accounting and
  Financial Disclosure.
  None to report.
|                                                                                                                  

|57
|--



|Item 9A. Controls and Procedures                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|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 which are presented in this document required
restatement from their previous filing. Management believes the internal controls and disclosure
controls and procedures in place at December 31, 2005 to be ineffective.
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.
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 2006
Annual Meeting of Shareholders, which will be filed with the Securities and Exchange Commission within
120 days after the close of our 2005 year end.
Item 11. Executive Compensation.
The
information required by item 11 is incorporated by reference to our proxy statement for our 2006
Annual Meeting of Shareholders, which will be filed with the Securities and Exchange Commission within
120 days after the close of our 2005 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 2006
Annual Meeting of Shareholders, which will be filed with the Securities and Exchange Commission within
120 days after the close of our 2005 year end.

|58
|--



|Item 13. Certain Relationships and Related Transactions.
Jonathan
Feldschuh, age 41, is the co-inventor of the BVA-100 Blood Volume Analyzer. He is the son of Dr.
Joseph Feldschuh. He is a Suma Cum Laude graduate in Physics from Harvard University. His primary
occupation is a computer programmer for a major brokerage firm. In 2005 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 2006. He has received 5,000 options.
There are no relationships or related transactions beyond those which have been disclosed in the 10-K.
Item 14. Principal Accounting Fees and Services.Audit Fees
Fees for audit services totaled approximately $61,000in2005 and $40,000 in 2004, including fees associated with the annual audit and the reviews of the Companys
quarterly reports on Forms 10-Q.
Tax Fees
Fees for tax services, including tax compliance, tax advice and tax planning, totaled approximately
$5,000in2005 and $5,000 in 2004.
All Other Fees
Rotenberg Meril Solomon Bertiger & Guttilla, P.C. did not provide any services not described above
in 2005 and 2004.
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, Financial Statement Schedules.
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: November 9, 2006

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

|59
|--



|*Signature*              |  |  | *Title*                          |  |  | *Date*            
|------------------------ |  |  | -------------------------------- |  |  | ------------------
|
|*/s/ Joseph Feldschuh*   |  |  | *President and Director*         |  |  | *November 9, 2006*
|                         |  |  | *Principal Executive Officer*    |  |  |                   
|*Joseph Feldschuh, M.D.* |  |  |                                  |  |  |                   
|                         |  | 
|                         |  |  |                                  |  |  |                   
|*/s/ Stephen Feldschuh*  |  |  | *Vice President of Operations*   |  |  | *November 9, 2006*
|                         |  |  | *& Principal Accounting Officer* |  |  |                   
|*Stephen Feldschuh*      |  |  |                                  |  |  |                   
|                         |  | 
|                         |  |  |                                  |  |  |                   
|*/s/ Gary Fischman, PhD* |  |  | *Vice President*                 |  |  | *November 9, 2006*
|                         |  |  |                                  |  |  |                   
|*Gary Fischman, PhD*     |  |  |                                  |  |  |                   
|                         |  | 
|                         |  |  |                                  |  |  |                   
|*/s/ David Frankel*      |  |  | *Corporate Treasurer*            |  |  | *November 9, 2006*
|                         |  |  |                                  |  |  |                   
|*David Frankel*          |  |  |                                  |  |  |                   
|                         |  | 
|                         |  |  |                                  |  |  |                   
|*/s/ Diane M. Meegan*    |  |  | *Corporate Secretary*            |  |  | *November 9, 2006*
|                         |  |  |                                  |  |  |                   
|*Diane M. Meegan*        |  |  |                                  |  |  |                   
|                         |  | 
|                         |  |  |                                  |  |  |                   
|*/s/ Robert Willens*     |  |  | *Director*                       |  |  | *November 9, 2006*
|                         |  |  |                                  |  |  |                   
|*Robert Willens*         |  |  |                                  |  |  |                   
|                         |  |  |                                  |  |  |                   
|*/s/ James Lombard*      |  |  | *Director*                       |  |  | *November 9, 2006*
|                         |  |  |                                  |  |  |                   
|*James Lombard*          |  |  |                                  |  |  |                   
|                         |  |  |                                  |  |  |                   
|*/s/ Martin Wolpoff*     |  |  | *Director*                       |  |  | *November 9, 2006*
|                         |  |  |                                  |  |  |                   
|*Martin Wolpoff*         |  |  |                                  |  |  |                   
|                         |  |  |                                  |  |  |                   
|*/s/ Stephen Valentine*  |  |  | *Director*                       |  |  | *November 9, 2006*
|                         |  |  |                                  |  |  |                   
|*Stephen Valentine*      |  |  |                                  |  |  |                   

|                       |                              |  | 
|---------------------- | ---------------------------- |  | 
|*Board of Directors:*  |                              |  | 
|                       |                              |  | 
|*Name*                 | *Title*                      |  | 
|                       |                              |  | 
|*Dr. Joseph Feldschuh* | *Chairman, President, & CEO* |  | 
|*James Lombard*        | *Director*                   |  | 
|*Martin Wolpoff*       | *Director*                   |  | 
|*Robert Willens*       | *Director*                   |  | 
|*Stephen Valentine*    | *Director*                   |  | 
|*Philip Hudson*        | *Director*                   |  | 

|
|
|

|60
|--