RISK
FACTORS
Investing
in our Common Stock involves a high degree of risk. Before deciding whether to invest in our Common stock, you should consider carefully
the risks described below, together with the other information in this prospectus. See also “Risk Factors” beginning on
page 9 of the accompanying Prospectus, which are incorporated herein by reference. You should consider carefully these risks together
with all of the other information contained in this Prospectus Supplement and the accompanying Prospectus before making a decision to
purchase Common Stock.
Risk
Related to this Offering
This
offering and future sales of substantial amounts of Common Stock in the public market, or the perception that such sales may occur, could
cause the market price for our Common Stock to decline.
The
sale of shares of our Common Stock in the public market, or the perception that such sales could occur, could harm the prevailing market
price of shares of our Common Stock. These sales, or the possibility that these sales may occur, also might make it more difficult for
us to sell equity securities in the future at a time and at a price that we deem appropriate.
We
have broad discretion over the use of net proceeds we receive from the sale of Common Stock in this offering, and despite our efforts
may not use them in a manner that increases the value of your investment.
Our
management has broad discretion to use the net proceeds we receive from the sale of Common Stock in this offering for general corporate
purposes and could spend these funds in ways that do not improve our results of operations or enhance the value of our Common Stock.
The failure by our management to apply these funds effectively could have an adverse effect on our business and cause the price of our
Common Stock to decline.
The
underwriters of this offering may waive or release parties to the lock-up agreements entered into in connection with this offering, which
could adversely affect the price of our Common stock.
We
and all of our directors and executive officers have entered or will enter into lock-up agreements pursuant to which we and they will
be subject to certain restrictions with respect to the sale or other disposition of our Common Stock for a period of [●] days following
the date of this prospectus. The underwriter, at any time and without notice, may release all or any portion of the Common Stock subject
to the foregoing lock-up agreements. See the section entitled “Underwriting” for more information on these agreements. If
the restrictions under the lock-up agreements are waived, then the Common Stock, subject to compliance with the Securities Act or exceptions
therefrom, will be available for sale into the public markets, which could cause the market price of our Common Stock to decline and
impair our ability to raise capital. Sales of a substantial number of shares upon expiration of the lock-up agreements, the perception
that such sales may occur, or early release of these agreements, could cause our market price to fall or make it more difficult for you
to sell your Common Stock at a time and price that you deem appropriate.
SUMMARY
OF EXPENSES
The
following table contains information about the costs and expenses that shareholders will bear directly or indirectly. The table is based
on the capital structure of the company as of December 31, 2021 (except as noted below), after giving effect to the anticipated net proceeds
of the shares of Common Stock offered by us in this Prospectus Supplement and the accompanying Prospectus and assuming that the company
incurs the estimated offering expenses. The purpose of the table and the example below is to help you understand the fees and expenses
that you, as a holder of Common Stock, would bear directly or indirectly.
| Shareholder Transaction Expenses | |
| |
| Sales load (as a percentage of offering price) | |
| 8.0 | %(1) |
| Offering expenses borne by the shareholders (as a percentage of offering price) | |
| [•] | %(2) |
| Annual Expenses | |
| Percentage of Net Assets Attributable to Common Shares (3) |
|
| Management fees(4) | |
| None |
|
| Annualized Interest Payments on Borrowed Funds | |
| [•] |
% |
| Annualized Other Expenses(5) | |
| [•] |
% |
| Total Annual Expenses before Taxes | |
| [•] |
% |
| | |
| |
|
| Estimated Annualized Tax Expense | |
| [•] |
% |
| Total Annual Expense after Taxes(6) | |
| [•] |
% |
| (1) |
Represents
the underwriting discounts with respect to the Common Stock being sold in this offering.
|
| (2) |
Represents
the costs associated with the company’s registration statement and any offerings pursuant to such registration statement.
|
| (3) |
Based
upon average monthly net assets applicable to shares of Common Stock during the period ended December 31, 2021 after giving effect
to the anticipated net proceeds of the Common Stock offered by this Prospectus Supplement. There is no guarantee that there will
be any sales of Common Stock pursuant to this Prospectus Supplement. The number of shares of Common Stock actually sold pursuant
to this Prospectus Supplement may be less than as assumed herein.
|
| (4) |
The
company does not pay a management fee.
|
| (5) |
Annualized
Other Expenses are based on estimated amounts for current fiscal year.
|
| (6) |
The
company has significant net operating loss and capital loss carry forwards and for the foreseeable future no adjustments to tax liabilities
or operations is necessary. However, the company is subject to state and local taxes where the annualized impact to operations is
approximately [•]%. |
Example
As
required by relevant SEC regulations, the following Example illustrates the expenses that you would pay on a $1,000 investment in shares
of Common Stock, assuming (1) “Total annual expenses” of [•]% of net assets attributable to shares of Common Stock,
(2) the sales load of $[•] and estimated offering expenses of $[•], and (3) a 5% annual return. The Example should not be
considered a representation of future expenses or returns. Actual expenses may be higher or lower than those assumed. Moreover, the company’s
actual rate of return may be higher or lower than the hypothetical 5% return shown in the Example. The Example assumes that all dividends
and distributions are reinvested at net asset value.
| | |
1 Year | | |
3 Years | |
| 5 Years | |
| 10 Years | |
| Total Expenses Incurred | |
$ |
[•] | | |
$ |
[•] | |
| $ |
[•] | |
| $ |
[•] | |
FINANCIAL
HIGHLIGHTS
The
table below sets forth financial data for weighted average shares of stock outstanding for the most recent fiscal year and period and
for one share of capital stock outstanding throughout the periods presented. The investment return does not reflect sales load.
| | |
Six Months Ended
June 30, 2022
(Unaudited) | | |
Year Ended
December 31, 2021 | |
| Net Asset Value Per Share, Beginning of Year | |
$ | 5.24 | | |
$ | 3.89 | |
| | |
| | | |
| | |
| Income (loss) from operations: | |
| | | |
| | |
| Net investment (loss) income | |
| (0.07 | ) | |
| (0.20 | ) |
| Net realized and unrealized gain from investments, options and securities borrowed | |
| 0.00 | | |
| 0.21 | |
| Net realized and unrealized loss from operating division | |
| (0.38 | ) | |
| 1.16 | |
| Other | |
| (0.01 | ) | |
| 0.00 | |
| Total gain from Operations | |
| (0.46 | ) | |
| 1.17 | |
| | |
| | | |
| | |
| Capital share transactions: | |
| | | |
| | |
| Increase in net assets from stock based compensation | |
| 0.07 | | |
| 0.18 | |
| | |
| | | |
| | |
| (Decrease) Increase in Net Asset Value Per Share | |
| (0.39 | ) | |
| 1.35 | |
| | |
| | | |
| | |
| Net Asset Value Per Share, End of Year | |
$ | 4.85 | | |
$ | 5.24 | |
| | |
| | | |
| | |
| Market Price Per Share of Common Stock, Beginning of Year | |
$ | 11.29 | | |
$ | 12.50 | |
| Market Price Per Share of Common Stock, End of Year | |
| 13.20 | | |
| 11.29 | |
| Change in Price Per Share of Common Stock | |
$ | 1.91 | | |
$ | (1.21 | ) |
| | |
| | | |
| | |
| Total Investment Return | |
| 16.92 | % | |
| (9.68 | )% |
| | |
| | | |
| | |
| Weighted Average Shares Outstanding | |
| 4,040,018 | | |
| 4,036,660 | |
| | |
| | | |
| | |
| Ratios/Supplemental Data | |
| | | |
| | |
| | |
| | | |
| | |
| Net assets, End of Period (in 000’s) | |
$ | 19,616 | | |
$ | 21,153 | |
| | |
| | | |
| | |
| Ratio of total expenses to average net assets | |
| 2.30 | % | |
| 7.29 | % |
| | |
| | | |
| | |
| Ratio of net investment (loss) income after income taxes to average net assets | |
| (1.37 | )% | |
| (3.53 | )% |
| | |
| | | |
| | |
| Portfolio turnover rate | |
| 0 | % | |
| 0 | % |
CAPITALIZATION
The
company is offering [•] shares of our Common Stock, par value $0.01 per share at a purchase price of $[•] per share of Common
Stock pursuant to this Prospectus Supplement and the accompanying Prospectus.
During
any 12-month period, the aggregate market value of securities we may offer under this registration statement may not exceed one third
of the aggregate market value of voting and non-voting common equity held by persons who are not affiliates of our company, and this
amount is currently $[•].
There
is no guarantee that the company will sell all of the shares of Common Stock available for sale hereunder or that there will be any sales
of Common Stock hereunder.
The
following table sets forth the company’s capitalization at December 31, 2021:
| i. |
on
a historical basis; and |
| |
|
| ii. |
on
an as adjusted basis to reflect the sale of [•] shares of Common Stock at a price of $[•] per share, in an offering under
this Prospectus Supplement and the accompanying Prospectus less the underwriting discounts of $[•] and estimated offering expenses
payable by the company of $[•]. |
Net
asset value (10,000,000 shares authorized, 5,316,530 issued and 4,038,996 outstanding 12/31/21)
| | |
Actual 12/31/21 | | |
As Adjusted | |
| | |
| | | |
| (Unaudited) | |
| Capital paid in | |
$ | 12,167,491 | | |
| $[•] | |
| Total Undistributed earnings | |
| 19,608,231 | | |
| [•] | |
| Treasury Stock | |
| (10,623,003 | ) | |
| [•] | |
| Net Assets | |
$ | 21,152,719 | | |
| $[•] | |
USE
OF PROCEEDS
Assuming
the sale of the [•] shares of Common Stock offered herein, the net proceeds to the company from this offering will be approximately
$[•] after deducting the underwriting discounts and estimated offering expenses.
The
company intends to use the net proceeds of $[•] from the sale of the securities offered hereby for working capital and other general
corporate purposes, including to develop our products, fund capital expenditures, make investments in or acquisitions of other businesses,
solutions or technologies or repay a portion of our outstanding borrowings. We currently have no plan or proposal to make any particular
such investment or acquisition. Pending these uses, we intend to invest the net proceeds in, interest-bearing, investment-grade securities.
Specifically, the interest bearing securities are preferred stocks with perpetual maturities that are rated investment grade (Baa3/BBB-/BBB-
or higher) using the middle rating of Moody’s, S&P and Fitch.
UNDERWRITING
Joseph
Gunnar & Co., LLC is acting as the representative of the underwriters of this offering. We have entered into an underwriting agreement
with Joseph Gunnar & Co., LLC, dated November [●], 2022, with respect to the shares of our Common Stock subject to this offering.
Subject to the terms and conditions in the underwriting agreement, we have agreed to sell to the underwriters, and the underwriters have,
severally and not jointly, agreed to purchase from us on a firm commitment basis, the number of shares of our Common Stock set forth
opposite its name in the table below:
| Underwriters |
|
Number
of Shares |
|
| [●] |
|
|
|
|
| |
|
|
|
|
| Total |
|
|
|
|
The
underwriting agreement provides that the obligations of the underwriters to pay for and accept delivery of the shares of Common Stock
offered by this Prospectus Supplement are subject to various conditions and representations and warranties, including the approval of
certain legal matters by their counsel and other conditions specified in the underwriting agreement. The shares of Common Stock are offered
by the underwriters, subject to prior sale, when, as and if issued to and accepted by them. The underwriters reserve the right to withdraw,
cancel or modify the offer to the public and to reject orders in whole or in part. The underwriters are obligated to take and pay for
all of the shares of Common Stock offered by this Prospectus Supplement if any such shares of Common Stock are taken, other than those
shares of Common Stock covered by the over-allotment option described below.
The
Common Stock sold in this offering are expected to be ready for delivery on or about November [●], 2022, against payment in immediately
available funds. The underwriters may reject all or part of any order.
Over-Allotment
Option
We
have granted to the underwriters an option to purchase up to an additional [●] shares of Common Stock from us at the same price
to the public, and with the same underwriting discount, as set forth in the table below. The underwriters may exercise this option any
time during the 45-day period after the date of this Prospectus Supplement, but only to cover over-allotments, if any. To the extent
the underwriters exercise the option, the underwriters will become obligated, subject to certain conditions, to purchase the shares of
Common Stock for which they exercise the option.
Discounts
and Commissions
The
underwriters have advised us that they propose to offer the shares of Common Stock to the public at a price of $[●] per share.
The underwriters propose to offer the shares of Common Stock to certain dealers at the same price less a concession of not more than
$[●] per share. After the offering, these figures may be changed by the underwriters.
The
table below summarizes the underwriting discounts that we will pay to the underwriters. These amounts are shown assuming both no exercise
and full exercise of the over-allotment option.
| | |
Per Share | |
| Total without
Over-Allotment
Option
| |
| Total with
Over-Allotment
Option
| |
| Public offering price | |
$ |
[●] | |
| $ |
[●] | |
| $ |
[●] | |
| Underwriting discounts and commissions (8.0%) | |
$ |
[●] | |
| $ |
[●] | |
| $ |
[●] | |
| Proceeds, before expenses to us | |
$ |
[●] | |
| $ |
[●] | |
| $ |
[●] | |
We
have agreed to pay the underwriter’s out-of-pocket accountable expenses, including its legal fees, up to a maximum amount of $[●]
if this offering is completed. The fees and expenses of the underwriters that we have agreed to reimburse are not included in the underwriting
discounts set forth in the table above. The underwriting discount and reimbursable expenses the underwriters will receive were determined
through arms’ length negotiations between us and the underwriters.
We
estimate that the total expenses of the offering payable by us, not including the underwriting discount, will be approximately $[●].
These expenses are payable by us.
Lock-Up
Agreements
We
and our directors and officers shall enter into customary “lock-up” agreements in favor of the underwriter pursuant to which
such persons shall agree, for a period of [●] days after this offering is completed that they shall neither offer, issue, sell,
contract to sell, encumber, grant any option for the sale of or otherwise dispose of any securities of the company without the underwriter’s
prior written consent.
Indemnification
We
have agreed to indemnify the underwriter against certain liabilities, including certain liabilities under the Securities Act. If we are
unable to provide this indemnification, we have agreed to contribute to payments the underwriters may be required to make in respect
of those liabilities.
Discretionary
Accounts
The
underwriters do not intend to confirm sales of the securities offered hereby to any accounts over which they have discretionary authority.
Other
Relationships
The
underwriters and their affiliates have engaged in, and may in the future engage in, investment banking and other commercial dealings
in the ordinary course of business with us or our affiliates. They have received, or may in the future receive, customary fees and commissions
for these transactions.
Nasdaq
Capital Market Listing
Our
shares of Common Stock are listed on the Nasdaq Capital Market under the symbol “DXR”.
Electronic
Distribution
A
prospectus in electronic format may be made available on websites or through other online services maintained by the underwriter of this
offering, or by their affiliates. Other than the prospectus in electronic format, the information on any underwriter’s website
and any information contained in any other website maintained by an underwriter is not part of this prospectus or the registration statement
of which this prospectus forms a part, has not been approved and/or endorsed by us or any underwriter in its capacity as underwriter,
and should not be relied upon by investors.
Price
Stabilization, Short Positions
In
connection with this offering, the underwriters may engage in transactions that stabilize, maintain or otherwise affect the price of
our Common Stock. Specifically, the underwriters may over-allot in connection with this offering by selling more shares of our Common
Stock than are set forth on the cover page of this Prospectus Supplement. This creates a short position in our Common Stock for its own
account. The short position may be either a covered short position or a naked short position. In a covered short position, the number
of shares of Common Stock over-allotted by the underwriters is not greater than the number of shares of Common Stock that they may purchase
in the over-allotment option. In a naked short position, the number of shares of Common Stock involved is greater than the number of
shares Common Stock in the over-allotment option. To close out a short position, the underwriters may elect to exercise all or part of
the over-allotment option. The underwriters may also elect to stabilize the price of our Common Stock or reduce any short position by
bidding for, and purchasing, Common Stock in the open market.
The
underwriters may also impose a penalty bid. This occurs when a particular underwriter or dealer repays selling concessions allowed to
it for distributing shares of Common Stock in this offering because the underwriter repurchases the shares of Common Stock in stabilizing
or short covering transactions.
Finally,
the underwriters may bid for, and purchase, shares of our Common Stock in market making transactions, including “passive”
market making transactions as described below.
These
activities may stabilize or maintain the market price of our Common Stock at a price that is higher than the price that might otherwise
exist in the absence of these activities. The underwriters are not required to engage in these activities, and may discontinue any of
these activities at any time without notice. These transactions may be effected on the national securities exchange on which our shares
of Common Stock are traded, in the over-the-counter market, or otherwise.
Affiliations
The
underwriter and its affiliates are full service financial institutions engaged in various activities, which may include securities trading,
commercial and investment banking, financial advisory, investment management, investment research, principal investment, hedging, financing
and brokerage activities. The underwriter and its affiliates may from time to time in the future engage with us and perform services
for us or in the ordinary course of their business for which they will receive customary fees and expenses. In the ordinary course of
their various business activities, the underwriter and its affiliates may make or hold a broad array of investments and actively trade
debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account
and for the accounts of their customers, and such investment and securities activities may involve securities and/or instruments of us.
The underwriter and its affiliates may also make investment recommendations and/or publish or express independent research views in respect
of these securities or instruments and may at any time hold, or recommend to clients that they acquire, long and/or short positions in
these securities and instruments.
Transfer
Agent and Registrar
The
transfer agent and registrar for our Common Stock is Continental Stock Transfer & Trust Co.
Passive
Market Making
In
connection with the offering, the underwriters may engage in passive market making transactions in shares of Common Stock on the NASDAQ
Capital Market in accordance with Rule 103 of Regulation M under the Securities and Exchange Act of 1934, as amended, during the period
before the commencement of offers or sales of shares of Common Stock and extending through the completion of distribution. A passive
market maker must display its bids at a price not in excess of the highest independent bid of the security. However, if all independent
bids are lowered below the passive market maker’s bid, that bid must be lowered when specified purchase limits are exceeded.
Investment
Company Act
Under
the Investment Company Act, the company may not sell shares of Common Stock at a price below the then current NAV per share, after taking
into account any commission or discount.
Selling
Restrictions
No
action has been taken in any jurisdiction (except in the United States) that would permit a public offering of our shares of Common Stock,
or the possession, circulation or distribution of this Prospectus Supplement, the accompanying prospectus or any other material relating
to us or our shares of Common Stock in any jurisdiction where action for that purpose is required. Accordingly, our shares of Common
Stock may not be offered or sold, directly or indirectly, and none of this Prospectus Supplement, the accompanying Prospectus or any
other offering material or advertisements in connection with our shares of Common Stock may be distributed or published, in or from any
country or jurisdiction, except in compliance with any applicable rules and regulations of any such country or jurisdiction.
European
Economic Area
In
relation to each Member State of the European Economic Area which has implemented the Prospectus Directive, each a “Relevant Member
State”, with effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State,
or the “Relevant Implementation Date”, our securities will not be offered to the public in that Relevant Member State prior
to the publication of a prospectus in relation to our securities that has been approved by the competent authority in that Relevant Member
State or, where appropriate, approved in another Relevant Member State and notified to the competent authority in that Relevant Member
State, all in accordance with the Prospectus Directive, except that, with effect from and including the Relevant Implementation Date,
an offer of our securities may be made to the public in that Relevant Member State at any time:
|
● |
to any legal
entity that is a qualified investor as defined in the Prospectus Directive; |
| |
● |
to fewer than 100 or, if
the Relevant Member State has implemented the relevant provision of the 2010 PD Amending Directive, 150 natural or legal persons
(other than qualified investors as defined in the Prospectus Directive), as permitted under the Prospectus Directive, subject to
obtaining the prior consent of the manager for any such offer; or |
| |
|
|
| |
● |
in any other circumstances
which do not require the publication by the issuer of a prospectus pursuant to Article 3(2) of the Prospectus Directive, provided
that no such offer of the securities shall require the issuer or any underwriter to publish a prospectus pursuant to Article 3 of
the Prospectus Directive. |
For
the purposes of this provision, the expression an “offer of securities to the public” in relation to any securities in any
Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and securities
to be offered so as to enable an investor to decide to purchase or subscribe securities, as the same may be varied in that Relevant Member
State by any measure implementing the Prospectus Directive in that Relevant Member State and the expression “Prospectus Directive”
means Directive 2003/71/EC (and amendments thereto, including the 2010 PD Amending Directive, to the extent implemented in the Relevant
Member State), and includes any relevant implementing measure in each Relevant Member State and the expression “2010 PD Amending
Directive” means Directive 2010/73/EU.
United
Kingdom
In
the United Kingdom, this document is being distributed only to, and is directed only at, and any offer subsequently made may only be
directed at persons who are “qualified investors” (as defined in the Prospectus Directive) (i) who have professional experience
in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion)
Order 2005, as amended (the Order), and/or (ii) who are high net worth companies (or persons to whom it may otherwise be lawfully communicated)
falling within Article 49(2)(a) to (d) of the Order (all such persons together, the relevant persons). This document must not be acted
on or relied on in the United Kingdom by persons who are not relevant persons. In the United Kingdom, any investment or investment activity
to which this document relates is only available to, and will be engaged in with, relevant persons.
Canada
The
offering of our shares of Common Stock in Canada is being made on a private placement basis in reliance on exemptions from the prospectus
requirements under the securities laws of each applicable Canadian province and territory where our shares of Common Stock may be offered
and sold, and therein may only be made with investors that are purchasing, or deemed to be purchasing, as principal and that qualify
as both an “accredited investor” as such term is defined in National Instrument 45-106 Prospectus Exemptions or subsection
73.3(1) of the Securities Act (Ontario) and as a “permitted client” as such term is defined in National Instrument
31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations. Any offer and sale of our shares of Common Stock
in any province or territory of Canada may only be made through a dealer that is properly registered under the securities legislation
of the applicable province or territory wherein our shares of Common Stock is offered and/or sold or, alternatively, where such registration
is not required.
Any
resale of our shares of Common Stock by an investor resident in Canada must be made in accordance with applicable Canadian securities
laws, which require resales to be made in accordance with an exemption from, or in a transaction not subject to, prospectus requirements
under applicable Canadian securities laws. These resale restrictions may under certain circumstances apply to resales of the shares of
Common Stock outside of Canada.
Securities
legislation in certain provinces or territories of Canada may provide a purchaser with remedies for rescission or damages if this prospectus
(including any amendment thereto) contains a misrepresentation, provided that the remedies for rescission or damages are exercised by
the purchaser within the time limit prescribed by the securities legislation of the purchaser’s province or territory. The purchaser
should refer to any applicable provisions of the securities legislation of the purchaser’s province or territory for particulars
of these rights or consult with a legal advisor.
Pursuant
to section 3A.3 (or, in the case of securities issued or guaranteed by the government of a non-Canadian jurisdiction, section 3A.4) of
National Instrument 33-105 Underwriting Conflicts (“NI 33-105”), the underwriters are not required to comply with
the disclosure requirements of NI 33-105 regarding underwriter conflicts of interest in connection with this offering.
Upon
receipt of this Prospectus Supplement, each Québec investor hereby confirms that it has expressly requested that all documents
evidencing or relating in any way to the sale of the securities described herein (including for greater certainty any purchase confirmation
or any notice) be drawn up in the English language only. Par la réception de ce document, chaque investisseur québecois
confirme par les présentes qu’il a expressément exigé que tous les documents faisant foi ou se rapportant
de quelque manière que ce soit à la vente des valeurs mobilières décrites aux présentes (incluant,
pour plus de certitude, toute confirmation d’achat ou tout avis) soient rédigés en anglais seulement.
LEGAL
MATTERS
Certain
legal matters will be passed on by Foley & Lardner LLP, Milwaukee, Wisconsin, as counsel to the company in connection with the offering
of Common Stock. Certain legal matters will be passed on by Ellenoff Grossman & Schole LLP, New York, New York, as counsel to Joseph
Gunnar & Co., LLC in connection with the offering of Common Stock.
ADDITIONAL
INFORMATION
Daxor
Corporation has filed a Registration Statement on Form N-2, including amendments thereto, with the Securities and Exchange Commission,
Washington, D.C. This Prospectus Supplement does not contain all of the information set forth in the Registration Statement, including
any exhibits and schedules thereto. For further information with respect to the company, reference is made to the Registration Statement.
Statements contained in this Prospectus Supplement or the Prospectus as to the contents of any contract or other document referred to
are not necessarily complete and in each instance reference is made to the copy of such contract or other document filed as an exhibit
to the Registration Statement, each such statement being qualified in all respects by such reference.
The
SEC allows Daxor Corporation to “incorporate by reference” information into this Prospectus Supplement and the Prospectus,
which means that the company can disclose important information to you by referring you to other documents filed separately with the
SEC. The information incorporated by reference is considered part of this prospectus. The company incorporates by reference any future
filings it will make with the SEC under Sections 13(a), 13(c), 14, or 15(d) of the Exchange Act or pursuant to Rule 30b2-1 under the
1940 Act, including those made after the date of this Prospectus Supplement (excluding any information furnished, rather than filed),
until the company has sold all of the offered securities to which this Prospectus Supplement, or the offering is otherwise terminated.
The documents incorporated by reference herein include:
| ● | Semi-Annual
Report on Form N-CSRS for the period ended June 30, 2022, file on August 25, 2022; and |
| | | |
Daxor
Corporation will provide without charge upon written or oral request to each person a copy of any and all of the documents which are
incorporated by reference into this prospectus but not delivered with this prospectus (other than exhibits unless such exhibits are specifically
incorporated by reference in such documents).
You
may request a copy of these documents by writing or telephoning Daxor Corporation at:
Investor
Relations
Daxor
Corporation
109
Meco Lane Oak Ridge, TN 37830
(888)774-3268
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page intentionally left blank.
DAXOR
CORPORATION
BASE
PROSPECTUS
$50,000,000
Daxor
Corporation
Common
Stock
Daxor
Corporation is an investment company with medical instrumentation and biotechnology operations. While the company is not primarily
engaged in the business of investing, reinvesting, owning, holding or trading in securities, the company is dependent upon earnings
from its investment portfolio to fund operations and has registered as a closed-end investment company under the Investment Company
Act of 1940, as amended. While Daxor Corporation is registered as a closed-end investment company, it has always conducted
its business as an operating company and has never been in, or held itself out to be in, the business of investing, reinvesting,
owning, holding or trading in securities.
Our
major focus is the development of the BVA-100 ® Blood Volume Analyzer, an instrument that rapidly and accurately measures
human blood volume. This instrument is used in conjunction with Volumex ®, a single-use radiopharmaceutical diagnostic injection
and collection kit. We own the Daxor Oak Ridge Operations (DORO) facility in Oak Ridge, Tennessee, which manufactures, tests,
and develops next-generation models of the BVA-100 ®.
We
may offer shares of our common stock, par value $0.01 per share, from time to time under this prospectus, together with any applicable
prospectus supplement, at prices and on terms to be determined by market conditions at the time of offering. This prospectus provides
you with a description of the common stock we may offer. Each time we offer securities, we will provide a prospectus supplement
that will describe the specific amounts, prices and other important terms of the offering. During any 12-month period, the aggregate
market value of securities we may offer may not exceed one third of the aggregate market value of voting and non-voting common
equity held by persons who are not affiliates of our company.
In
addition, we are registering shares of our common stock for resale by the selling shareholder named in this prospectus, or its
transferees, pledges, donees or successors. We will not receive any proceeds from the sale of these shares, although we have paid
the expenses of preparing this prospectus and the related registration statement.
Holders
of our common stock are entitled to dividends as our board of directors may declare from time to time out of legally available
funds. Each holder of our common stock is entitled to one vote per share. Our common stock is described in greater detail in this
prospectus under “Daxor Corporation Common Stock”.
A
prospectus supplement that we may authorize to be provided to you may also add, update or change information contained in this
prospectus or in documents we have incorporated by reference. However, no prospectus supplement will offer a security that is
not registered and described in this prospectus at the time of the effectiveness of the registration statement of which this prospectus
is a part.
We
may offer shares of common stock (1) directly to one or more purchasers, (2) through agents that we may designate from time to
time or (3) to or through underwriters or dealers. We, and our underwriters or agents, reserve the right to accept or reject all
or part of any proposed purchase of securities. If we do offer securities through underwriters or agents, we will include in the
applicable prospectus supplement: (1) the names of those underwriters or agents; (2) applicable fees, discounts and commissions
to be paid to them; (3) details regarding over-allotment options, if any; and (4) the net proceeds to us.
You
should rely only on the information that we have provided or incorporated by reference in this prospectus, and any applicable
prospectus supplement that we may authorize to be provided to you. We have not authorized any dealer, salesman or other person
to give any information or to make any representation other than those contained or incorporated by reference in this prospectus,
and any applicable prospectus supplement. You must not rely upon any information or representation not contained or incorporated
by reference in this prospectus, and the accompanying prospectus supplement. We take no responsibility for, and can provide no
assurance as to the reliability of, any other information that others may give you.
This
prospectus and the accompanying supplement to this prospectus do not constitute an offer to sell or the solicitation of an offer
to buy any securities other than the registered securities to which they relate, nor do this prospectus and the accompanying supplement
to this prospectus constitute an offer to sell or the solicitation of an offer to buy securities in any jurisdiction to any person
to whom it is unlawful to make such offer or solicitation in such jurisdiction. You should not assume that the information contained
in this prospectus and any applicable prospectus supplement is accurate on any date subsequent to the date set forth on the front
of the document or that any information we have incorporated by reference therein is correct on any date subsequent to the date
of the document incorporated by reference, even though this prospectus and any applicable prospectus supplement is delivered or
the applicable securities are sold on a later date.
Our
common stock has continuously been traded since its initial public offering. The company’s common stock is traded on the
NYSE American Exchange under the symbol DXR.
There
are risks involved in investing in the Daxor Corporation’s stock. See the “Risk Factors” section beginning on
page 9 of this prospectus.
This
prospectus sets forth concisely the information about Daxor Corporation that a prospective investor ought to know before investing.
This prospectus should be retained for future reference. Additional information about the company, in the form of a Statement
of Additional Information, dated as of the date of this prospectus, is incorporated herein by reference. You may request a free
copy of the Statement of Additional Information, the table of contents of which is on page 23 of this prospectus, or request other
information about the company (including our annual and semi-annual reports) or make shareholder inquiries by calling (888) 774-3268
or by writing to us at 109 Meco Lane, Oak Ridge, TN 37830 , Attention Corporate Secretary; or you may obtain a copy (and other
information regarding the company) from the SEC’s website (www.sec.gov). Free copies of our reports and the SAI will also
be available from our website at www.Daxor.com.
You
may elect to receive shareholder reports and other communications from Daxor or your financial intermediary electronically, by
calling Daxor at 212-330-8500 or by sending an email to Robert J. Michel, CFO at rmichel@daxor.com, or by contacting your financial
intermediary.
You
may elect to receive all future reports in paper free of charge. You can inform Daxor that you wish to continue receiving paper
copies of your shareholder reports by calling Daxor at 212-330-8500 or by sending an email to Robert J. Michel, CFO at rmichel@daxor.com.
Your election to receive reports in paper will apply to all funds held with your financial intermediary.
The
date of this prospectus is July 16, 2021.
Neither
the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or
determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. This Prospectus
is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.
TABLE
OF CONTENTS
You
should rely only on the information included or incorporated by reference in this prospectus. Daxor Corporation has not authorized
anyone to provide you with different information. If anyone provides you with different or inconsistent information, you should
not rely on it. You should not assume that the information included in this prospectus is accurate as of any date other than the
date on the front of this prospectus. The company’s prospects and its business, financial condition and results of operations,
each may have changed since the date on the front of this prospectus.
FEE
TABLE AND SYNOPSIS
The
following table contains information about the costs and expenses that shareholders will bear directly or indirectly. The table
is based on the capital structure of the company as of December 31, 2020 (except as noted below). The purpose of the table and
the example below is to help you understand the fees and expenses that you, as a holder of common stock, would bear directly or
indirectly.
| Common Shareholder Transaction Expenses | |
| | |
| Sales load paid by you (as a percentage of offering price) | |
| - | %(1) |
| Offering expenses borne by shareholders (as a percentage of offering price) | |
| - | %(2) |
| | |
Percentage of Net Assets | |
| Annual Expenses | |
Attributable to Common Shares (3) | |
| | |
| | |
| Management Fees(4) | |
| None | |
| Interest Payments on Borrowed Funds | |
| 0.06 | % |
| Other Expenses (5) | |
| 5.63 | % |
| Total Annual Expenses before Taxes | |
| 5.69 | % |
| Annualized Tax Expense | |
| 0.10 | % |
| Total Annual Expenses after Taxes(6) | |
| 5.79 | % |
| (1) |
If
shares of Common Stock to which this prospectus relates are sold to or through underwriters, the prospectus supplement will
set forth any applicable sales load and the estimated expenses borne by the Company. |
| |
|
| (2) |
The
company will bear the costs of the offering expenses and the prospectus supplement will set forth the estimated offering costs. |
| |
|
| (3) |
Based
upon average monthly net assets applicable to shares of Common Stock during the period ended December 31, 2020. |
| |
|
| (4) |
The
company does not pay a management fee. |
| |
|
| (5) |
“Other
Expenses” are estimated based on actual expenses from the prior fiscal year. |
| |
|
| (6) |
As
explained in the company’s Form N-CSR, as filed on February 25, 2021, the company has significant net operating loss
and capital loss carry forwards and for the foreseeable future no adjustments to tax liabilities or operations is necessary. However,
the company is subject to state and local taxes where the annualized impact to operations is approximately 0.10%. |
As
required by relevant Securities and Exchange Commission regulations, the following example illustrates the expenses that you would pay
on a $1,000 investment in shares of common stock, assuming (1) “Total annual expenses after Taxes” of 5.79% of net
assets attributable to shares and (2) a 5% annual return.
The
Example should not be considered a representation of future expenses or returns. Actual expenses may be higher or lower than those
assumed. Moreover, the company’s actual rate of return may be higher or lower than the hypothetical 5% return shown in the
example. The example assumes that all dividends and distributions are reinvested at net asset value.
| | |
1 Year | | |
3 Years | | |
5 Years | | |
10 Years | |
| Total Expenses paid by Common Shareholders | |
$ | 758 | | |
$ | 787 | | |
$ | 816 | | |
$ | 886 | |
The
example above does not include sales loads or estimated offering costs. In connection with an offering of shares of common stock,
the prospectus supplement will set forth an Example including sales load and estimated offering costs.
Financial
Highlights
The table below sets forth selected
financial information which has been derived from the Company’s financial statements in the Company’s Annual Report to Shareholders.
The information in the table below has been audited. The total investment return below does not reflect sales load. The
auditors’ report is contained in the Company’s Annual Report to Shareholders. A free copy of the Annual Report, which includes
the auditors’ report, may be obtained by calling (888) 774-3268. Annual financial information for the Company prior to its registration
as an investment company is available in it’s Annual Report on Form 10-K for the year ended December 31, 2011, filed with the Securities
and Exchange Commission on March 28, 2012, copy of which is available at no charge by calling (888) 774-3268.
| | |
Year Ended
December 31, 2020 | | |
Year Ended
December 31, 2019 | |
| | |
| | |
| |
| Net Asset Value Per Share, Beginning of Year | |
$ | 3.41 | | |
$ | 3.49 | |
| | |
| | | |
| | |
| Income (loss) from operations: | |
| | | |
| | |
| Net investment (loss) income | |
| (0.08 | ) | |
| (0.03 | ) |
| Net realized and unrealized (loss)gain from investments, options and securities borrowed | |
| (0.32 | ) | |
| 0.59 | |
| Net realized and unrealized gain (loss) from operating division | |
| 0.11 | | |
| (0.69 | ) |
| Other | |
| 0.01 | | |
| 0.01 | |
| Total loss from Operations | |
| (0.28 | ) | |
| (0.13 | ) |
| | |
| | | |
| | |
| Capital share transactions: | |
| | | |
| | |
| Proceeds from sale of treasury stock and exercise of stock options | |
| 0.70 | | |
| - | |
| Increase in net assets from stock based compensation | |
| 0.06 | | |
| 0.05 | |
| | |
| | | |
| | |
| Increase (Decrease) in Net Asset Value Per Share | |
| 0.48 | | |
| (0.08 | ) |
| | |
| | | |
| | |
| Net Asset Value Per Share, End of Year | |
$ | 3.89 | | |
$ | 3.41 | |
| | |
| | | |
| | |
| Market Price Per Share of Common Stock, Beginning of Year | |
$ | 9.40 | | |
$ | 8.20 | |
| Market Price Per Share of Common Stock, End of Year | |
$ | 12.50 | | |
$ | 9.40 | |
| Change in Price Per Share of Common Stock | |
$ | 3.10 | | |
$ | 1.20 | |
| | |
| | | |
| | |
| Total Investment Return | |
| 32.98 | % | |
| 14.63 | % |
| | |
| | | |
| | |
| Weighted Average Shares Outstanding | |
| 3,935,902 | | |
| 3,746,858 | |
| | |
| | | |
| | |
| Ratios/Supplemental Data | |
| | | |
| | |
| | |
| | | |
| | |
| Net assets, End of Year (in 000’s) | |
$ | 15,675 | | |
$ | 12,766 | |
| | |
| | | |
| | |
| Ratio of total expenses to average net assets | |
| 5.79 | % | |
| 4.26 | % |
| | |
| | | |
| | |
| Ratio of net investment (loss) income after income taxes to average net assets | |
| (3.53 | )% | |
| (1.12 | )% |
| | |
| | | |
| | |
| Portfolio turnover rate | |
| 12.54 | % | |
| 0.00 | % |
| | |
Year Ended December 31, 2018 | | |
Year Ended
December 31, 2017 | | |
Year Ended
December 31, 2016 | |
| | |
| | |
| | |
| |
| Net Asset Value Per Share, Beginning of Year | |
$ | 3.68 | | |
$ | 4.04 | | |
$ | 3.74 | |
| | |
| | | |
| | | |
| | |
| Income (loss) from operations: | |
| | | |
| | | |
| | |
| Net investment income | |
| 0.00 | | |
| 0.07 | | |
| 0.03 | |
| Net realized and unrealized gain (loss) from investments, options and securities borrowed | |
| 0.03 | | |
| 0.23 | | |
| 0.56 | |
| Net realized and unrealized loss from operating division | |
| (0.36 | ) | |
| (0.62 | ) | |
| (0.21 | ) |
| Income tax (expense) benefit | |
| 0.09 | | |
| - | | |
| - | |
| Other | |
| 0.05 | | |
| (0.01 | ) | |
| (0.05 | ) |
| Total income (loss) from Investment Operations | |
| (0.19 | ) | |
| (0.33 | ) | |
| 0.33 | |
| Less: | |
| | | |
| | | |
| | |
| Distributions to shareholders from net investment income | |
| (0.00 | ) | |
| (0.03 | ) | |
| (0.03 | ) |
| | |
| | | |
| | | |
| | |
| Increase (decrease) in Net Asset Value Per Share | |
| (0.19 | ) | |
| (0.36 | ) | |
| 0.30 | |
| | |
| | | |
| | | |
| | |
| Net Asset Value Per Share, End of Year | |
$ | 3.49 | | |
$ | 3.68 | | |
$ | 4.04 | |
| | |
| | | |
| | | |
| | |
| Market Price Per Share of Common Stock, Beginning of Year | |
$ | 4.57 | | |
$ | 8.24 | | |
$ | 7.60 | |
| Market Price Per Share of Common Stock, End of Year | |
| 8.20 | | |
| 4.57 | | |
| 8.24 | |
| Change in Price Per Share of Common Stock | |
$ | 3.63 | | |
$ | (3.67 | ) | |
$ | 0.64 | |
| | |
| | | |
| | | |
| | |
| Total Investment Return | |
| 79.43 | % | |
| (44.54 | )% | |
| 8.42 | % |
| | |
| | | |
| | | |
| | |
| Weighted Average Shares Outstanding | |
| 3,741,954 | | |
| 3,767,756 | | |
| 3,825,476 | |
| | |
| | | |
| | | |
| | |
| Ratios/Supplemental Data | |
| | | |
| | | |
| | |
| | |
| | | |
| | | |
| | |
| Net assets, End of Year (in 000’s) | |
$ | 13,062 | | |
$ | 13,758 | | |
$ | 15,344 | |
| Ratio of total expenses to average net assets | |
| 3.14 | % | |
| 1.90 | % | |
| 2.44 | % |
| Ratio of net investment income before income taxes to average net assets | |
| 0.07 | % | |
| 1.89 | % | |
| 0.86 | % |
| Ratio of net investment (loss) income after income taxes to average net assets | |
| 2.55 | % | |
| 1.72 | % | |
| 0.78 | % |
| Portfolio turnover rate | |
| 0.52 | % | |
| 3.63 | % | |
| 7.59 | % |
| |
|
Year Ended
December 31, 2015 |
|
|
Year Ended
December 31, 2015
(restated) |
|
|
Year Ended December 31, 2013 |
|
| |
|
|
|
|
|
|
|
|
|
| Net Asset Value Per Share, Beginning of Year |
|
$ |
6.16 |
|
|
$ |
6.45 |
|
|
$ |
8.50 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Income (loss) from operations: |
|
|
|
|
|
|
|
|
|
|
|
|
| Net investment income |
|
|
0.11 |
|
|
|
0.23 |
|
|
|
1.26 |
|
| Net realized and unrealized gain (loss) from investments, options and securities borrowed |
|
|
(2.12 |
) |
|
|
(1.34 |
) |
|
|
(3.26 |
) |
| Net realized and unrealized loss from operating division |
|
|
- |
|
|
|
- |
|
|
|
- |
|
| Income tax (expense) benefit |
|
|
(0.32 |
) |
|
|
0.87 |
|
|
|
- |
|
| Other |
|
|
(0.05 |
) |
|
|
(0.02 |
) |
|
|
- |
|
| Total income (loss) from Investment Operations |
|
|
(2.36 |
) |
|
|
(0.26 |
) |
|
|
(2.00 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Less: |
|
|
|
|
|
|
|
|
|
|
|
|
| Distributions to shareholders from net investment income |
|
|
(0.04 |
) |
|
|
(0.03 |
) |
|
|
(0.05 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Increase (decrease) in Net Asset Value Per Share |
|
|
(2.42 |
) |
|
|
(0.29 |
) |
|
|
(2.05 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Net Asset Value Per Share, End of Year |
|
$ |
3.74 |
|
|
$ |
6.16 |
|
|
$ |
6.45 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Market Price Per Share of Common Stock, Beginning of Year |
|
$ |
6.80 |
|
|
$ |
6.83 |
|
|
$ |
7.62 |
|
| Market Price Per Share of Common Stock, End of Year |
|
|
7.60 |
|
|
|
6.98 |
|
|
|
6.83 |
|
| Change in Price Per Share of Common Stock |
|
$ |
0.80 |
|
|
$ |
0.15 |
|
|
$ |
(0.79 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Total Investment Return (2015, 2014 only) |
|
|
11.76 |
% |
|
|
2.20 |
% |
|
|
- |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Total Return on Average Net Assets (2013 only) |
|
|
- |
|
|
|
- |
|
|
|
(27.40 |
)% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Weighted Average Shares Outstanding |
|
|
3,921,697 |
|
|
|
4,040,242 |
|
|
|
4,114,591 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Ratios/Supplemental Data |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Net assets, End of Year (in 000’s) |
|
$ |
14,427 |
|
|
$ |
24,580 |
|
|
$ |
26,370 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Ratio of total expenses to average net assets |
|
|
3.06 |
% |
|
|
2.70 |
% |
|
|
2.04 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Ratio of net investment income before income taxes to average net assets |
|
|
2.31 |
% |
|
|
3.63 |
% |
|
|
4.62 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Ratio of net investment (loss) income after income taxes to average net assets |
|
|
(4.18 |
)% |
|
|
17.48 |
% |
|
|
16.86 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Portfolio turnover rate |
|
|
7.43 |
% |
|
|
3.34 |
% |
|
|
8.90 |
% |
| | |
Year
Ended December 31, 2012 | |
| | |
| |
| Net
Asset Value Per Share, January 1, 2012 | |
$ | 8.41 | |
| | |
| | |
| Net
investment income | |
| 1.36 | |
| Net
realized and unrealized (loss) from investments | |
| (1.08 | ) |
| Other | |
| 0.01 | |
| Total
from Investment Operations | |
| 0.29 | |
| | |
| | |
| Less: | |
| | |
| Dividends
paid | |
| (0.20 | ) |
| | |
| | |
| Increase
in Net Asset Value Per Share, Year Ended December 31, 2012 | |
| 0.09 | |
| | |
| | |
| Net
Asset Value Per Share, December 31, 2012 | |
$ | 8.50 | |
| | |
| | |
| Total
Return on Average Net Assets | |
| 1.05 | % |
| | |
| | |
| Ratios/Supplemental
Data | |
| | |
| | |
| | |
| Net
assets, end of period (in 000’s) | |
$ | 35,113 | |
| | |
| | |
| Ratio
of total expenses to average net assets | |
| 1.66 | % |
| | |
| | |
| Ratio
of net investment income before income taxes to average net assets | |
| 5.15 | % |
| | |
| | |
| Ratio
of net investment income to average net assets | |
| 16.15 | % |
| | |
| | |
| Portfolio
turnover rate | |
| 18.92 | % |
PLAN
OF DISTRIBUTION
We
may sell the securities being offered hereby in one or more of the following ways from time to time:
| |
● |
through
agents to the public or to investors; |
| |
|
|
| |
● |
to
underwriters for resale to the public or to investors; and |
| |
|
|
| |
● |
directly
to investors; or through a combination of any of these methods of sale. |
We
will set forth in a prospectus supplement the terms of that particular offering of securities, including:
| |
● |
the
name or names of any agents or underwriters; |
| |
|
|
| |
● |
the
purchase price of the securities being offered and the proceeds we will receive from the sale; |
| |
|
|
| |
● |
any
over-allotment options under which underwriters may purchase additional securities from us; |
| |
|
|
| |
● |
any
agency fees or underwriting discounts and other items constituting agents’ or underwriters’ compensation; and |
| |
|
|
| |
● |
any
discounts or concessions allowed or reallowed or paid to dealers. |
Agents
We
may designate agents who agree to use their reasonable efforts to solicit purchases of our securities for the period of their
appointment or to sell our securities on a continuing basis.
Underwriters
If
we use underwriters for a sale of securities, the underwriters will acquire the securities for their own account. The underwriters
may resell the securities in one or more transactions, including negotiated transactions, at a fixed public offering price or
at varying prices determined at the time of sale. The obligations of the underwriters to purchase the securities will be subject
to the conditions set forth in the applicable underwriting agreement. The underwriters will be obligated to purchase all the securities
of the series offered if they purchase any of the securities of that series. We may change from time to time any initial public
offering price and any discounts or concessions the underwriters allow or reallow or pay to dealers. We may use underwriters with
whom we have a material relationship. We will describe the nature of any such relationship in any prospectus supplement naming
any such underwriter. Only underwriters we name in the prospectus supplement are underwriters of the securities offered by the
prospectus supplement.
Direct
Sales
We
may also sell securities directly to one or more purchasers without using underwriters or agents. Underwriters, dealers and agents
that participate in the distribution of the securities may be underwriters as defined in the Securities Act of 1933, as amended
(the “Securities Act”), and any discounts or commissions they receive from us and any profit on their resale
of the securities may be treated as underwriting discounts and commissions under the Securities Act. We will identify in the applicable
prospectus supplement any underwriters, dealers or agents and will describe their compensation. We may have agreements with the
underwriters, dealers and agents to indemnify them against specified civil liabilities, including liabilities under the Securities
Act. Underwriters, dealers and agents may engage in transactions with or perform services for us in the ordinary course of their
businesses.
Stabilization
Activities
Any
underwriter may engage in overallotment, stabilizing transactions, short covering transactions and penalty bids in accordance
with Regulation M under the Securities Exchange Act of 1934, as amended, or the Exchange Act. Overallotment involves sales in
excess of the offering size, which create a short position. Stabilizing transactions permit bids to purchase the underlying security
so long as the stabilizing bids do not exceed a specified maximum. Short covering transactions involve purchases of the securities
in the open market after the distribution is completed to cover short positions. Penalty bids permit the underwriters to reclaim
a selling concession from a dealer when the securities originally sold by the dealer are purchased in a covering transaction to
cover short positions. Those activities may cause the price of the securities to be higher than it would otherwise be. The underwriters
may discontinue any of these activities, if commenced, at any time.
General
Agents,
underwriters, or dealers participating in an offering of Common Shares may be deemed to be underwriters, and any discounts and
commission received by them and any profit realized by them on resale of the offered shares of common stock for whom they act
as agent, may be deemed to be underwriting discounts and commissions under the Securities Act.
We
may offer to sell securities either at a fixed price or at prices that may vary, at market prices prevailing at the time of sale,
at prices related to prevailing market prices or at negotiated prices.
Under
agreements entered into with us, underwriters and agents may be entitled to indemnification by us against certain civil liabilities,
including liabilities under the Securities Act, or to contribution for payments the underwriters or agents may be required to
make.
The
underwriters, agents, and their affiliates may engage in financial or other business transactions with us in the ordinary course
of business.
Pursuant
to a requirement of the Financial Industry Regulatory Authority, or FINRA, the maximum compensation to be received by any FINRA
member or independent broker-dealer may not be greater than eight percent (8%) of the gross proceeds received by us for the sale
of any securities being registered pursuant to Rule 415 under the Securities Act.
The
aggregate offering price specified on the cover of this prospectus relates to the offering of the shares of common stock not yet
issued as of the date of this prospectus.
To
the extent permitted under the Investment Company Act of 1940, as amended (the “1940 Act”), and the rules and
regulations promulgated thereunder, the underwriters may from time to time act as a broker or dealer and receive fees in connection
with the execution of portfolio transactions on behalf of the company after the underwriters have ceased to be underwriters and,
subject to certain restrictions, each may act as a broker while it is an underwriter.
A
prospectus and accompanying prospectus supplement in electronic form may be made available on the websites maintained by underwriters.
The underwriters may agree to allocate a number of shares of common stock for sale to their online brokerage account holders.
Such allocations of shares of common stock for internet distributions will be made on the same basis as other allocations. In
addition, shares of common stock may be sold by the underwriters to securities dealers who resell shares of common stock to online
brokerage account holders.
SENIOR
SECURITIES
We
have no instruments that are senior securities. While we have margin loans, which could be considered senior securities if we
did not take appropriate steps to segregate assets or otherwise “cover” the margin loan obligations, we have covered
our commitments under the margin loans, and do not treat the margin loans as senior securities. Therefore, we have not included
a senior securities table.
SELLING
SHAREHOLDER
We
are registering certain of the shares covered by this prospectus on behalf of the selling shareholder named in the table below
(including its donees, pledgees, transferees or other successors-in-interest who receive any of the shares covered by this prospectus),
the Joseph Feldschuh Estate. We are registering the shares to permit the selling shareholder to offer these shares for resale
from time to time. The selling shareholder may sell all, some or none of the shares covered by this prospectus. All information
with respect to beneficial ownership has been furnished to us by the selling shareholder.
The
estate of Joseph Feldschuh, M.D., controls more than 50% of the company’s voting power, and shareholders and members of
the company’s board of directors submit nominees for election to the company’s board to Mr. Michael Feldschuh, executor
of the Joseph Feldschuh estate, for his consideration.
| | |
NUMBER OF | | |
NUMBER OF | | |
| |
| | |
SHARES | | |
SHARES | | |
| |
| | |
OWNED PRIOR | | |
BEING | | |
| |
| | |
TO THIS | | |
OFFERED | | |
SHARES OWNED AFTER | |
| SELLING SHAREHOLDER | |
OFFERING | | |
HEREBY | | |
OFFERING (1) | |
| | |
| | |
| | |
NUMBER | | |
PERCENTAGE (2) | |
| Joseph Feldschuh Estate | |
| 2,549,455 | | |
| 150,000 | | |
| 2,399,455 | | |
| 59.5 | % |
| (1) |
Assumes
that the shareholder disposes of all of the shares of common stock covered by this prospectus and does not acquire or dispose
of any additional shares of common stock. However, the selling shareholder is not representing that any of the shares covered
by this prospectus will be offered for sale, and the selling shareholder reserves the right to accept or reject, in whole
or in part, any proposed sale of shares. |
| |
|
| (2) |
The
percentage of common stock beneficially owned is based on the shares of common stock outstanding on June 30, 2021. This prospectus
also covers any additional shares of common stock that become issuable in connection with the shares being registered by reason of
any stock dividend, stock split, recapitalization or other similar transaction effected without the receipt of consideration which
results in an increase in the number of outstanding shares of our common stock. |
USE
OF PROCEEDS
Except
as described in any applicable prospectus supplement in connection with a specific offering, we currently intend to use the net
proceeds from the sale of the securities offered hereby for working capital and other general corporate purposes, including to
develop our products, fund capital expenditures, make investments in or acquisitions of other businesses, solutions or technologies
or repay a portion of our outstanding borrowings. We currently have no plan or proposal to make any particular such investment
or acquisition. Pending these uses, we intend to invest the net proceeds in, interest-bearing, investment-grade securities. Specifically,
the interest bearing securities are preferred stocks with perpetual maturities that are rated investment grade (Baa3/BBB-/BBB-
or higher) using the middle rating of Moody’s, S&P and Fitch.
The
selling shareholder will receive all of the proceeds from the sale of the common stock offered by this prospectus for the selling
shareholder. We will not receive any of the proceeds from the sale of such common stock.
GENERAL
DESCRIPTION OF DAXOR CORPORATION
General
Daxor
Corporation is an investment company with medical instrumentation and biotechnology operations. Daxor Corporation was originally
incorporated in New York State as Iatric Corporation in May 1971 for cryobanking services and discontinued these services through
its wholly-owned subsidiary, Scientific Medical Systems in 2017. In October 1971, the name Iatric Corporation was changed to Idant
Corporation. In May 1973, the name Idant Corporation was changed to Daxor Corporation.
Our
principal executive offices are located at 109 Meco Lane, Oak Ridge, TN 37830.
While
the company is not primarily engaged in the business of investing, reinvesting, owning, holding or trading in securities, the
company is dependent upon earnings from its investment portfolio to fund operations. While Daxor Corporation is registering as
a closed-end investment company, Daxor Corporation’s major focus will remain the development of the BVA-100 ® Blood
Volume Analyzer, an instrument that rapidly and accurately measures human blood volume. This instrument is used in conjunction
with Volumex ®, a single-use radiopharmaceutical diagnostic injection and collection kit.
We
also own the Daxor Oak Ridge Operations (DORO) facility in Oak Ridge, TN, which manufactures, tests, and develops next-generation
models of the BVA-100 ®.
We
maintain an internet website at www.daxor.com. Except as expressly incorporated herein by reference, the information contained
on the website is not incorporated by reference into this prospectus or into any other document filed by us with the Securities
and Exchange Commission.
Investment
Objectives and Policies
Our
objective is to support and expand our operating businesses, through organic growth (i.e., the rate of business expansion through
internal enhancement of the business and operations as opposed to mergers, acquisitions and takeovers). The company is not primarily
engaged in the business of investing, reinvesting, owning, holding or trading in securities. Funds in excess of the company’s
business needs are placed in instruments designed to maximize capital preservation and assure liquidity. The foregoing policies
may be changed without a shareholder vote.
We
concentrate our investments in the utility industry and have an investment policy that calls for a minimum of 80% of the company’s
investment portfolio to consist of electric utility stocks. The Board of Directors has authorized this minimum to be temporarily
lowered to 70% when management deems it to be necessary. At least once a year, the company reviews its investment strategy, and
more frequently as needed, at board meetings.
The
investment portfolio primarily consists of electric utility companies which are publicly traded common and preferred stock. In
addition to receiving income from dividends from the securities held in the investment portfolio, we also have an investment policy
of selling puts on stocks that we are willing to own. Such options usually have a maturity of less than 1 year. The company will
also sell covered calls on securities within its investment portfolio. Covered calls involve stocks, which usually do not exceed
15% of the value of the company’s portfolio.
We
will, at times, sell naked or uncovered calls, as well as, engage in short sales as part of an income strategy, and to a lesser
extent a strategy to mitigate risk. Our net short position will usually amount to less than 15% of the company’s portfolio
value.
At
this time, investments in debt instruments and foreign securities are not a principal investment strategy, and we expect any such
investments to be minimal.
Risk
Factors
Investment
Portfolio Risks
Market
Risks
Loss
of money is a risk of investing in the company. The net asset value of the company can be expected to change daily and you may
lose money. There is no guarantee that the performance of our investment portfolio will be positive over any period of time, either
short-term or long-term. Market risk may affect a single issuer, industry, sector of the economy, or the market as a whole.
U.S.
and international markets have experienced significant periods of volatility in recent years due to a number of economic, political
and global macro factors, including the impact of the coronavirus (COVID-19) as a global pandemic and related public health issues,
growth concerns in the U.S. and overseas, uncertainties regarding interest rates, trade tensions and the threat of tariffs imposed
by the U.S. and other countries. In particular, the spread of the novel coronavirus worldwide has resulted in disruptions to supply
chains and customer activity, stress on the global healthcare system, rising unemployment claims, quarantines, cancellations,
market declines, the closing of borders, restrictions on travel and widespread concern and uncertainty. Health crises and related
political, social and economic disruptions caused by the spread of the recent coronavirus outbreak may also exacerbate other pre-existing
political, social and economic risks in certain countries. It is not possible to know the extent of these impacts, and they may
be short term or may last for an extended period of time. These developments as well as other events, such as the U.S. presidential
election, could result in further market volatility and negatively affect security prices, the liquidity of certain securities
and the normal operations of securities exchanges and other markets, despite government efforts to address market disruptions.
Equity
Investments
Because
we invest in equity securities, fluctuations in the stock market in general, as well as in the value of particular equity securities
held by us, can affect the performance of our investment portfolio. The value of equity securities will fluctuate due to many
factors, including the past and predicted earnings of the issuer, the quality of the issuer’s management, general market
conditions, forecasts for the issuer’s industry and the value of the issuer’s assets.
Industry
Concentration
We
concentrate our investments within the electric utility industry. Because of its narrow industry focus, the performance of our
investment portfolio is tied closely to and affected by developments in the electric utility industry, such as competition and
weather. The electric utility industry is also sensitive to increased interest rates because of the industry’s capital intensive
nature. Also, an increase in interest rates could cause some electric utilities to decrease dividends paid to shareholders which
would reduce our investment income. The earnings of electric utility companies could also be negatively affected by power outages.
Electric utilities operate in an environment of federal, state and local regulations, and these regulations may disproportionately
affect an individual utility.
Short
Sale Risks
Our
investment portfolio will suffer a loss if it sells a security short and the value of the security rises rather than falls. It
is possible that the investment portfolio’s long positions will decline in value at the same time that the value of its
short positions increase, thereby increasing potential losses to the portfolio. Short sales expose our investment portfolio to
the risk that it will be required to buy the security sold short (also known as “covering” the short position) at
a time when the security has appreciated in value, thus resulting in a loss to the portfolio. The investment performance of our
investment portfolio will also suffer if it is required to close out a short position earlier than it had intended. In addition,
our investment portfolio may be subject to expenses related to short sales that are not typically associated with investing in
securities directly, such as costs of borrowing. These expenses may negatively impact the performance of the investment portfolio.
Short positions introduce more risk to the investment portfolio than long positions (purchases) because the maximum sustainable
loss on a security purchased (held long) is limited to the amount paid for the security plus the transaction costs, whereas there
is no maximum attainable price of the shorted security. Therefore, in theory, securities sold short have unlimited risk.
Put
and Call Options Risk
The use of options involves
investment strategies and risks different from those associated with ordinary portfolio securities transactions. If a strategy is applied
at an inappropriate time or market conditions or trends are judged incorrectly, the use of options may lower the return on the investment.
There can be no guarantee that the use of options will increase the return or income on an investment. In addition, there may be an imperfect
correlation between the movement in prices of options and the securities underlying them and there may at times not be a liquid secondary
market for various options. An abrupt change in the price of an underlying security could render an option worthless. The prices of options
are volatile and are influenced by, among other things, actual and anticipated changes in the value of the underlying instrument, or
in interest or currency exchange rates, including the anticipated volatility of the underlying instrument (known as implied volatility),
which in turn are affected by fiscal and monetary policies and by national and international political and economic events, as will the
performance of the issuer of the underlying instrument. As such, prior to the exercise or expiration of the option, the Company is exposed
to implied volatility risk, meaning the value, as based on implied volatility, of an option may increase due to market and economic conditions
or views based on the sector or industry in which issuers of the underlying instrument participate, including company-specific factors.
By writing put options, the
Company takes on the risk of declines in the value of the underlying instrument, including the possibility of a loss up to the entire
strike price of each option it sells, but without the corresponding opportunity to benefit from potential increases in the value of the
underlying instrument. When the Company writes a put option, it assumes the risk that it must purchase the underlying instrument at a
strike price that may be higher than the market price of the instrument. If there is a broad market decline and the Company is not able
to close out its written put options, it may result in substantial losses. By writing a call option, the Company may be obligated to
deliver instruments underlying an option at less than the market price. In the case of an uncovered call option, there is
a risk of unlimited loss. When an uncovered call is exercised, the Company must purchase the underlying instrument to meet its call obligations
and the necessary instruments may be unavailable for purchase. When the Company writes a covered call option, it gives up the opportunity
to profit from a price increase in the underlying instrument above the strike price. If a covered call option that the Company has written
is exercised, the Company will experience a gain or loss from the sale of the underlying instrument, depending on the price at which
the Company purchased the instrument and the strike price of the option. The Company will receive a premium from writing options, but
the premium received may not be sufficient to offset any losses sustained from exercised options. In the case of a covered call, the
premium received may be offset by a decline in the market value of the underlying instrument during the option period. If an option that
the Company has purchased is never exercised or closed out, the Company will lose the amount of the premium it paid and the use of those
funds.
Operating
Company Risks
Our
business is at an early stage of commercial development and we may struggle to generate significant commercial uptake in our products
with our current resources.
Our
business is at an early stage of commercial development. We have a base of installed devices or tests run at approximately 65
hospitals and clinics and approximately 40,000 kits have been sold to clinicians. These sites are covered by a sales, marketing,
technical, and clinical support team of 12 individuals composed of employees and consultants. Investment in expanding these resources
will be required to reach larger target customers at hospitals and clinics across the country.
In
addition, significant research and clinical studies on the potential benefits of blood volume analysis to guide therapeutic decisions
will be required to gain acceptance into the guidelines of care and for broader clinical adoption. There is no guarantee that
these studies will be successful or completed in a timely or cost-effective manner allowing the company to benefit commercially
from their completion.
We
will need additional capital to conduct our operations and develop our products, and our ability to obtain the necessary funding
is uncertain.
We
have used a significant amount of cash and retained earnings since inception to finance the continued development and testing
of our BVA-100 system, and we expect to need additional capital resources in order to further commercialize the product as well
as develop related products and updates to our existing device.
We
may not be successful in maintaining operating cash flow, and the timing of our capital expenditures and other expenditures may
impede our commercialization efforts if not sufficient. If financing is not sufficient and additional financing is not available
or available only on terms that are detrimental to our long-term survival, it could have a material adverse effect on our ability
to successfully commercialize our technology.
Additional
financing through strategic collaborations, public or private equity or debt financings or other financing sources may not be
available on acceptable terms for our operating company, or at all. Additional equity financing could result in dilution to our
shareholders. Further, if we obtain additional funds through arrangements with collaborative partners, these arrangements may
require us to relinquish rights to some of our technologies, product or products that we would otherwise seek to develop and commercialize
on our own.
If
sufficient capital is not available, we may be required to delay, reduce the scope of or eliminate one or more of our research
or product development initiatives, any of which could have an adverse effect on our financial condition or business prospects.
Our
financial reporting reflects our status as a closed-end investment fund with an operating medical device division whose financial
performance is not broken out in detail and reported on a regular basis as is the case with traditional operating companies. As
a result, shareholders could lose confidence in our financial and other public reporting, which would harm our business and the
trading price of our common stock.
Shareholders
seek detailed financial information in their investments and our reporting structure conforms to that of an investment fund. Investors
may become dissatisfied with the level of reporting detail that our current fund structure maintains and require greater transparency
in the future or lose confidence in the management resulting in a negative impact on the stock price. While the company intends
to file for a change of reporting structure in the future to a traditional operating company with the SEC as revenues from the
operating division increase whether that will be achievable and at what date remains unknown at this point in time.
If
our efforts to protect our intellectual property related to our technologies are not adequate, we may not be able to compete effectively
in our market and our business would be harmed.
We
rely upon a combination of patents, trade secret protection and confidentiality agreements to protect the intellectual property
related to our technologies. Any disclosure to or misappropriation by third parties of our trade secrets or other confidential
information could assist competitors in duplicating or surpassing our technological achievements, thus eroding the competitive
advantage we may derive from these patents or know-how.
The
strength of patents in the medical diagnostic field involves complex legal and scientific questions and can be uncertain. The
patent applications we own may fail to result in issued patents in the United States or in foreign countries and existing patents
on parts of our technology have entered the public domain. Third parties may challenge the validity, enforceability or scope of
any issued patents we own or license or any applications that may issue as patents in the future, which may result in those patents
being narrowed, invalidated or held unenforceable. Even if they are unchallenged, our patents and patent applications may not
adequately protect our intellectual property or prevent others from developing similar products that do not fall within the scope
of our patents. If the breadth or strength of protection provided by the patents we hold or pursue is threatened, our ability
to commercialize any product candidates with technology protected by those patents could be threatened. Since patent applications
in the United States and most other countries are confidential for a period of time after filing, we cannot be certain at the
time of filing that we are the first to file any patent application related to our technology.
In
addition to the protection afforded by patents, we seek to rely on trade secret protection and confidentiality agreements to protect
proprietary know-how that is not patentable, processes for which patents are difficult to enforce and any other elements of our
discovery platform and drug development processes that involve proprietary know-how, information or technology that is not covered
by patents or not amenable to patent protection. Although we endeavor that all of our employees and certain consultants and advisors
to assign inventions to us, and all of our employees, consultants, advisors and any third parties who have access to our proprietary
know-how, information or technology to enter into confidentiality agreements, our trade secrets and other proprietary information
may be disclosed or competitors may otherwise gain access to such information or independently develop substantially equivalent
information. Further, the laws of some foreign countries do not protect proprietary rights to the same extent or in the same manner
as the laws of the United States. As a result, we may encounter significant difficulty in protecting and defending our intellectual
property both in the United States and abroad. If we are unable to prevent material disclosure of the trade secret intellectual
property related to our technologies to third parties, we may not be able to establish or maintain the competitive advantage that
we believe is provided by such intellectual property, which could materially adversely affect our market position and business
and operational results.
We
may be involved in lawsuits to protect or enforce our patent, which could be expensive, time-consuming and unsuccessful.
Competitors
may infringe our patents. To attempt to stop infringement or unauthorized use, we may need to enforce one or more of our patents,
which can be expensive and time-consuming and distract management. If we pursue any litigation, a court may decide that a patent
of ours or our licensor’s is not valid or is unenforceable, or may refuse to stop the other party from using the relevant
technology on the grounds that our patents do not cover the technology in question. Further, the legal systems of certain countries,
particularly certain developing countries, do not favor the enforcement of patents, which could reduce the likelihood of success
of any infringement proceeding we pursue in any such jurisdiction. An adverse result in any infringement litigation or defense
proceedings could put one or more of our patents at risk of being invalidated, held unenforceable, or interpreted narrowly and
could put our patent applications at risk of not issuing, which could limit our ability to exclude competitors from directly competing
with us in the applicable jurisdictions.
Interference
proceedings provoked by third parties or brought by the U.S. PTO may be necessary to determine the priority of inventions with
respect to our patents or patent applications or those of our licensors. An unfavorable outcome could require us to cease using
the related technology or to attempt to license rights to use it from the prevailing party. Our business could be harmed if the
prevailing party does not offer us a license on commercially reasonable terms, or at all. Litigation or interference proceedings
may fail and, even if successful, may result in substantial costs and distract our management and other employees.
If
we are unsuccessful in obtaining or maintaining patent protection for intellectual property in development, our business and competitive
position would be harmed.
We
are seeking patent protection for some of our technology and future products. Patent prosecution is a challenging process and
is not assured of success. If we are unable to secure patent protection for our technology and product candidates, our business
may be adversely impacted.
In
addition, issued patents and pending international applications require regular maintenance. Failure to maintain our portfolio
may result in loss of rights that may adversely impact our intellectual property rights, for example by rendering issued patents
unenforceable or by prematurely terminating pending international applications.
If
we are unable to protect the confidentiality of our trade secrets, our business and competitive position would be harmed.
In
addition to seeking patents for some of our technology and product candidates, we also rely on trade secrets, including unpatented
know-how, technology and other proprietary information, to maintain our competitive position. We currently, and expect in the
future to continue to, seek to protect these trade secrets, in part, by entering into confidentiality agreements with parties
who have access to them, such as our employees, collaborators, contract manufacturers, consultants, advisors and other third parties.
We also enter into confidentiality and invention or patent assignment agreements with our employees and consultants. Despite these
efforts, any of these parties may breach the agreements and disclose our proprietary information, including our trade secrets,
and we may not be able to obtain adequate remedies for any such disclosure. Enforcing a claim that a party illegally disclosed
or misappropriated a trade secret is difficult, expensive and time-consuming, and the outcome is unpredictable. In addition, some
courts inside and outside the United States are less willing or unwilling to protect trade secrets. If any of our trade secrets
were to be lawfully obtained or independently developed by a competitor, we would have no right to prevent them, or those to whom
they disclose the trade secrets, from using that technology or information to compete with us. If any of our trade secrets were
to be disclosed to or independently developed by a competitor, our competitive position would be harmed.
We
will have to hire additional executive officers and employees to expand our business. If we are unable to hire qualified personnel,
we may not be able to implement our business strategy.
The
loss of the services of any of our key product or business development employees could delay our product development programs
and our research and development efforts. We do not maintain key person life insurance on any of our officers, employees or consultants.
In order to develop our business in accordance with our business strategy, we will have to hire additional qualified personnel,
including in the areas of sales, physician education, manufacturing, clinical trials management, regulatory affairs, and business
development. We will need to raise sufficient funds to hire the necessary employees and have commenced our search for additional
key employees.
We
depend on key personnel for our continued operations and future success, and a loss of certain key personnel could significantly
hinder our ability to move forward with our business plan.
Because
of the specialized nature of our business, we are highly dependent on our ability to identify, hire, train and retain highly qualified
scientific and technical personnel for the research and development activities we conduct or sponsor. The loss of one or more
key executive officers, or scientific officers, would be significantly detrimental to us. In addition, recruiting and retaining
qualified scientific personnel to perform research and development work is critical to our success. Our anticipated growth and
expansion into areas and activities requiring additional expertise will require the addition of new management personnel and the
development of additional expertise by existing management personnel.
Our
employees may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements,
which could cause our business to suffer.
We
are exposed to the risk of employee fraud or other misconduct. Misconduct by employees could include intentional failures to comply
with regulations of governmental authorities, such as the FDA or the European Medicines Agency, or EMA, to provide accurate information
to the FDA or EMA, to comply with manufacturing standards we have established, to comply with federal, state and international
healthcare fraud and abuse laws and regulations as they may become applicable to our operations, to report financial information
or data accurately or to disclose unauthorized activities to us. Employee misconduct could also involve the improper use of information
obtained in the course of clinical trials, which could result in regulatory sanctions and serious harm to our reputation. It is
not always possible to identify and deter employee misconduct, and the precautions we currently take and the procedures we may
establish in the future as our operations and employee base expand to detect and prevent this type of activity may not be effective
in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits
stemming from a failure by our employees to comply with such laws or regulations. If any such actions are instituted against us,
and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our
business and results of operations, including the imposition of significant fines or other sanctions.
If
we experience delays or difficulties in clinical outcome studies or lack the funding to conduct them, receipt of necessary outcome
data could be delayed or prevented.
Clinical
trials using our BVA-100 depend upon the successful funding, enrollment, and initiation of studies in coordination with research
institutions and hospitals. The company does not have sufficient funds to fully sponsor as many outcome studies as may be warranted
for adoption of our diagnostic as a standard of care. As such, the company depends upon a combination of grants and research agreements
with sponsoring institutions for many of the studies that have been conducted with its technology and anticipates continuing to
do so for the foreseeable future.
We
and our suppliers are subject to extensive FDA regulation, which can be costly and time consuming and can subject us to unanticipated
business costs or difficulties. Even though regulatory approval for products may have been granted, those products may still face
regulatory difficulties.
All
of our current and potential products, as well as those supplied to Daxor by third parties, processing and manufacturing activities,
are subject to comprehensive regulation by the FDA in the United States and by comparable authorities in other countries. The
company has spent considerable resources and time obtaining FDA and other required regulatory approvals but is still subject to
regulatory action from the FDA if it chooses to revoke or enforce an interpretation of the regulations that would make distribution
or manufacture of our products disallowed.
If
we, or third-party manufacturers we may contract with, violate regulatory requirements at any stage the FDA may take enforcement
action(s) against us, which could include issuing a warning or untitled letter, placing a clinical hold on an ongoing clinical
trial, product seizure, enjoining our operations, refusal to consider our applications for pre-market approval, refusal of an
investigational new drug application, fines, or even civil or criminal liability, any of which could materially harm our reputation
and financial results. In addition, if manufacturing problems occur, regulators may withdraw their approval or demand additional
changes in product manufacture or marketing practices.
Enforcement
actions we and our suppliers are subject to include:
| |
● |
warning
letters or other actions requiring changes in product manufacturing processes or restrictions on product marketing or distribution; |
| |
|
|
| |
● |
product
recalls or seizures or the temporary or permanent withdrawal of a product from the market; |
| |
|
|
| |
● |
suspending
any ongoing clinical trials; |
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|
|
| |
● |
temporary
or permanent injunctions against our production operations; and |
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|
|
| |
● |
fines,
restitution or disgorgement of profits or revenue, the imposition of civil penalties or criminal prosecution. |
The
occurrence of any of these actions would likely cause a material adverse effect on our business, financial condition and results
of operations.
Any
difficulties or failures that we encounter regarding regulatory approval for our products or those of third-party suppliers would
likely have a substantial adverse impact on our ability to generate product sales, and could make any search for a collaborative
partner more difficult.
For
some of our products, we currently lack sufficient manufacturing capabilities to produce our products in-house and rely upon third
party suppliers. Disruption in our manufacturing supply, could negatively impact our ability to meet any future demand for the
product.
We
expect that we would need to significantly expand our manufacturing capabilities to meet potential demand for our diagnostic devices
and Volumex kits. In addition, we depend upon a single manufacturer for components of our products and a disruption in that supply
could materially impact our business disrupting out ability to meet demand.
We
currently manufacture our BVA-100 device in a 20,000 square foot facility in Oak Ridge, Tennessee. If our facilities where our
products are currently being manufactured or equipment were significantly damaged or destroyed, or if there were other disruptions,
delays or difficulties affecting manufacturing capacity, including if such facilities are deemed not in compliance with current
Good Manufacturing Practice, or GMP, requirements, future clinical studies and commercial production for our products would likely
be significantly disrupted and delayed. It would be both time-consuming and expensive to replace this capacity with third parties,
particularly since any new facility would need to comply with the regulatory requirements.
Ultimately,
if we are unable to supply our products to meet commercial demand, whether because of processing constraints or other disruptions,
delays or difficulties that we experience, our production costs could dramatically increase and sales of our products and their
long-term commercial prospects could be significantly damaged.
To
be successful, our diagnostic products must be broadly accepted by the healthcare community, which can be very slow to adopt or
unreceptive to new technologies and products.
The
products that we manufacture represent substantial departure from more established methods of volume assessment and compete with
a number of more conventional therapies based upon measures of pressure or hemodynamics manufactured and marketed by major medical
device companies. The degree of market acceptance and uptake of our products depends on a number of factors, including:
| |
● |
our
establishment and demonstration to the medical community the clinical efficacy and safety of our proposed products; |
| |
|
|
| |
● |
our
ability to demonstrate that our products are superior to alternatives currently on the market in accuracy and ease of use; |
| |
|
|
| |
● |
our
ability to establish in the medical community the potential advantage of our diagnostic over alternative diagnostic methods;
and |
| |
|
|
| |
● |
reimbursement
policies of government and third-party payers. |
If
the healthcare community does not accept our products for any of these reasons, or for any other reason, our business would be
materially harmed.
Our
competition includes diagnostic companies that have significant advantages over us.
The
market for medical diagnostic products is highly competitive. We expect that our most significant competitors will be fully integrated
and more established medical device companies with extensive product lines and distribution networks. These companies may seek
to develop similar products, and they have significantly greater capital resources and research and development, manufacturing,
testing, regulatory compliance, and marketing capabilities. As a result, our competitors may develop more competitive or affordable
products, or achieve earlier patent protection or product commercialization than we are able to achieve. Competitive products
may render our products or future products that we develop obsolete.
We
may be subject to litigation that will be costly to defend or pursue and uncertain in its outcome.
Our
business may bring us into conflict with our licensees, licensors or others with whom we have contractual or other business relationships,
or with our competitors or others whose interests differ from ours. If we are unable to resolve those conflicts on terms that
are satisfactory to all parties, we may become involved in litigation brought by or against us. That litigation is likely to be
expensive and may require a significant amount of management’s time and attention, at the expense of other aspects of our
business. The outcome of litigation is always uncertain, and in some cases could include judgments against us that require us
to pay damages, enjoin us from certain activities, or otherwise affect our legal or contractual rights, which could have a significant
adverse effect on our business.
We
are exposed to the risk of liability claims, for which we may not have adequate insurance.
Since
we participate in the health care industry, we may be subject to liability claims by employees, customers, end users and third
parties for past products and services as well as current or future products. While the company carries liability insurance there
can be no assurance that the liability insurance we carry will be adequate to cover claims asserted against us or that we will
be able to maintain such insurance in the future
We
currently have a marketing and sales force of approximately 12 employees and consultants. If we are unable to establish effective
marketing and sales capabilities or enter into agreements with third parties to market and sell our product candidates, we may
not be able to effectively market and scale our sales to a significant scale.
We
currently have a marketing and sales team for the marketing, sales and distribution of our BVA-100 device and kits. In order to
fully commercialize our products, we must expand our territory-by-territory basis marketing, sales, distribution, managerial and
other non-technical capabilities or make arrangements with third parties to perform these services, and we may not be successful
in doing so.
Any
failure or delay in the further development of our internal sales, marketing and distribution capabilities would adversely impact
the commercialization of any of our products that we obtain approval to market. We may choose to collaborate, either globally
or on a territory-by-territory basis, with third parties that have direct sales forces and established distribution systems, either
to augment our own sales force and distribution systems or in lieu of our own sales force and distribution systems. If we are
unable to enter into such arrangements when needed on acceptable terms or at all this will adversely affect our ability to rapidly
scale the sale of our products.
Our
business and operations would suffer in the event of system failures or natural and man-made disasters.
Despite
the implementation of security measures, our internal computer systems and those of our contractors and consultants are vulnerable
to damage from computer viruses, unauthorized access, natural disasters, terrorism, war and telecommunication and electrical failures.
While we have not experienced any such system failure, accident or security breach to date, if such an event were to occur and
cause interruptions in our operations, it could result in a material disruption of our operations. For example, a hurricane or
severe flood could disrupt one of our key suppliers disrupting our supply chain for weeks or months causing material losses. If
any disruption or security breach resulted in a loss of or damage to our data or applications, or inappropriate disclosure of
confidential or proprietary information, we could incur liability and additional costs despite some insurance products that the
company has purchased to mitigate such costs.
We
have incurred net operating losses in the past, and may incur them in the future.
We
have incurred cumulative net operating losses in the past. These losses have mainly resulted from ongoing expenses for marketing
and research and development as the company attempts to build a market for its products. In the past, the company’s cumulative
net income from investments and other items exceeded the operating losses and provided the necessary funds for its continued research
and development and marketing. It is the opinion of management that the financial health of the company would have been adversely
affected if net income from investments had been substantially less than losses from operations. There is no guarantee that future
net income from investments will continue to completely offset operating losses.
The
loss of any one customer could have an adverse effect on our consolidated operating business for a short period of time.
In
the past, the sale of Blood Volume Kits has accounted for a significant portion of the company’s total consolidated operating
revenue, and a small number of customers (hospitals) has comprised the majority of such sales. Management believes that the loss
of any one customer would have an adverse effect on our consolidated operating business for a short period of time. The company
continues to seek new customers, so that any one hospital will represent a smaller percentage of overall sales.
If
there is a decrease in the market value of our available for sale securities, this could have an adverse effect on our ability
to fund research and development and marketing efforts.
At
December 31, 2020, 40.33% of the fair market value of Daxor Corporation’s total net assets consisted of utility stocks whose
market price can be sensitive to rising interest rates. At December 31, 2019, 62.17% of the fair market value of Daxor Corporation’s
total net assets consisted of utility stocks whose market price can be sensitive to rising interest rates. The company’s
investment policy calls for a minimum of 80% of the investment portfolio to consist of electric utility stocks. At December 31,
2020, 39.94% of the fair market value of Daxor Corporation’s net assets value consisted of electric utility stocks. The
Board of Directors has authorized this minimum to be temporarily lowered to 70% when management deems it to be necessary. Given
the current volatility in the market, management feels this is a temporary situation. Depending on the duration of the current
market conditions the Board of Directors will revisit this investment policy.
At
December 31, 2020, the company’s investment portfolio consisted of 22 separate investments in common stocks and 1, preferred
stock.. The top five holdings as of this date in the investment portfolio were DTE Energy Company, PNM Resources,Entergy Corporation,
NiSource Inc., First Energy. These five holdings comprised 45.9% of the value of the investment in securities portfolio and accounted
for 42.6% of the dividend income for the year ended December 31, 2020.
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 Daxor
Corporation’s ability to fund research and development and marketing efforts necessary to build a market for the company’s
products.
The
absence of patents or the inability to defend patents could negatively impact our ability to compete for and obtain new business.
Daxor
Corporation’s patents for the BVA 100 expired in 2010. The company filed two additional patent applications for an automated
instrument to measure human blood volume which were granted April 7, 2015. The filings describe innovations which will be or have
been incorporated into the company’s BVA-100 Blood Volume Analyzer, these patents expanded the capabilities of the analyzer
to incorporate total body albumin measures and error correction software to improve accuracy. In addition, the company filed additional
patents on its blood volume technology in January of 2018, and has several more patents in various stages of development.
The
blood volume analyzer, however, works most efficiently with the tracer injection kit system which has a separate patent and which
expired in 2016. It is possible that another company could develop another version of the Blood Volume Analyzer which would use
a different tracer injection kit. To the best of the company’s knowledge, this has not happened yet and management views
the development of a competing tracer injection kit as unlikely.
If
the current manufacturer were to cease filling the Volumex syringes for us for any reason before we had a chance to make alternative
arrangements, this could have a material negative impact on our operating revenue.
All
of Daxor Corporation’s orders for Volumex syringes are filled by a single FDA inspected radio pharmaceutical manufacturer.
If this manufacturer were to cease filling the Volumex syringes for the company or were denied permission to do so by FDA for
any reason before the company had a chance to make alternative arrangements, the effect on the company’s operating revenue
could be material. In January 2007, we purchased two 10,000 square foot buildings in Oak Ridge, Tennessee to expand its research,
development, and manufacturing capabilities.
Other
Policies
Our
management expects that our investment portfolio will continue to consist primarily of publicly traded common and preferred stocks
of electric utilities. The percentage of investments other than electric utilities is expected to remain at less than 20% of the
investment portfolio.
With
regard to the non-principal investments for the investment portfolio, we are flexible in how we may allocate our investments.
We may allocate the non-principal investments among the following types of securities, in proportions which reflect the judgment
of our management of the potential returns and risks of such securities:
| |
● |
Common
stocks and other equity securities (including common stocks, preferred stocks, convertible preferred stocks, warrants, options
and American Depository Receipts); |
| |
● |
Bonds
and other debt securities (including U.S. Treasury Notes and Bonds, investment grade corporate debt securities, convertible
debt securities and debt securities below investment grade); and |
| |
● |
Money
market instruments. |
Forward-Looking
Statements Regarding Daxor Corporation
Statements
made by Daxor Corporation in this prospectus that are not historical facts may constitute “forward-looking statements”
within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21 of the Exchange Act. These forward-looking
statements are necessarily estimates reflecting the judgment of the company’s senior management based on its current estimates,
expectations, forecasts and projections and include comments that express the company’s current opinions about trends and
factors that may impact future operating results. Disclosures that use words such as “believe,” “anticipate,”
“estimate,” “intend,” “could,” “plan,” “expect,” “project”
or the negative of these, as well as similar expressions, are intended to identify forward-looking statements. These statements
are not guarantees of future performance, rely on a number of assumptions concerning future events, many of which are outside
of the company’s control, and involve known and unknown risks and uncertainties that could cause actual results, performance
or achievement, or industry results, to differ materially from any future results, performance or achievements, expressed or implied
by such forward-looking statements. These risks, uncertainties and other factors which could cause results to differ materially
from management’s expectations are discussed in this prospectus. Additional information regarding factors that could cause
results to differ materially from management’s expectations is found in the section entitled “Risk Factors”.
Any such forward-looking statements, whether made in this report or elsewhere, should be considered in the context of the various
disclosures made by the company about its businesses including, without limitation, the risk factors discussed above.
Daxor
Corporation intends that the forward-looking statements included herein be subject to the above-mentioned statutory safe harbor.
Investors are cautioned not to rely on forward-looking statements. Except as required under the federal securities laws and the
rules and regulations of the SEC, the company does not have any intention or obligation to update publicly any forward-looking
statements, whether as a result of new information, future events, changes in assumptions, or otherwise.
Investment
Management
The
responsibility of the Board of Directors is to exercise corporate powers and to oversee management of the business of Daxor Corporation.
The officers of the company are principally responsible for its operations. The company is not primarily engaged in the business
of investing, reinvesting, owning, holding or trading in securities. As such, the company has no investment advisors, administrator,
affiliated brokerage, dividend paying agent, non-resident managers, or portfolio managers. The nature of the instruments in which
funds in excess of immediate capital needs are placed are consistent with capital preservation and liquidity. Subject to the oversight
of the Board, the company’s Chief Executive Officer, Michael Feldschuh, is the only individual responsible for the day-to-day
management of Daxor’s investments.
We
will act as custodian of our securities in accordance with Section 17(f)(1)(C) and Rule 17f-2 of the 1940 Act, and we will deposit our securities and similar investments in the safekeeping of one or more requested broker-dealers under
the Securities Exchange Act of 1934. We will evidence these arrangements in written contracts (ratified and approvCed annually
by a majority of the board of directors), which will be filed with the SEC. These contracts require that (1) the securities be
physically segregated and marked to show that they are the property of the company; (2) the securities and other investments must
be verified three times annually by an independent accountant; (3) the broker-dealer not have the ability to hypothecate, pledge
or sell the securities, except at the direction of the company and for its account; and (4) the securities and investments may
not be subject to any lien or charge in favor of the broker-dealer. Our current broker-dealer is UBS Financial Services, located
at 200 Park Avenue, New York, NY 10166.
The
nature of the instruments in which funds in excess of immediate capital needs are placed are consistent with capital preservation
and liquidity. We are dependent on income from our investment portfolio to support our manufacturing operations and our biotechnology.
The Company’s Chief Executive Officer, Michael Feldschuh, is primarily responsible for the day-to-day management of any
such investments.
Michael
Feldschuh has been president of Daxor since 2017. He earned his bachelor’s degree in Pre-Med studies at Columbia College,
Columbia University in 1991. Prior to joining Daxor’s executive team in December of 2014 as Executive Vice President, he
served as a member of the board of directors for one and a half years prior. Mr. Feldschuh headed his own hedge fund, Aristarc
Capital, from 2009 to 2013 specializing in quantitative equity strategies. Prior to founding his own fund, Mr. Feldschuh was a
Managing Director at Morgan Stanley Investment Management from 2005 to 2009 and also served as a Managing Director and Portfolio
Manager at Millennium Partners in New York from 1997-2005. Mr. Feldschuh was a proprietary trader for Morgan Stanley & Co.
from 1994-1997. Mr. Feldschuh began his career at D.E. Shaw & Co. in New York, where he worked with Jeffery Bezos prior to
Mr. Bezos’s founding of Amazon.
The
compensation paid to Mr. Feldschuh is set forth in the following table. There is no “Fund Complex” as defined in the
1940 Act.
| | |
| | |
Pension or | |
| |
Compensation | |
| | |
Aggregate | | |
Benefits Accrues | |
| |
Fund Complex | |
| | |
Compensation | | |
as Part of | |
Annual Benefits | |
Paid | |
| Name | |
From Company | | |
Company Expenses | |
Upon Retirement | |
to Director | |
| Michael Feldschuh | |
$ | 100,000 | | |
None | |
None | |
$ | 100,000 | |
Mr.
Feldschuh has deliberately elected to draw a salary that is well below what the company believes is the market rate for someone
with his responsibilities and qualifications. It is the belief of the Board of Directors that annual compensation of two or three
times what he is currently earning could easily be justified. The decision to keep his annual compensation at well below market
rate has been made as part of an effort to preserve capital in light of the company’s ongoing losses from operations.
The
following table sets forth the share ownership of Mr. Feldschuh.
| | |
Number of Shares | | |
Percent of | |
| | |
Beneficially | | |
Common | |
| Name
of Beneficial Owner | |
Owned | | |
Stock | |
| Michael Feldschuh, President
and Director* | |
| 216,539 | | |
| 5.4 | % |
*Includes
154,007 shares of common stock and 50,000 shares of common stock issuable upon the exercise of options issued under the company’s
2004 Stock Option Plan. We ceased issuing options under the 2004 Option Plan. On April 24, 2020, we received an exemptive order
that permits us to adopt an incentive compensation plan, and shareholders approved our incentive compensation plan at our 2020
annual meeting.
Daxor
Corporation Common Stock
The
holders of the common stock have one vote per share for the election of directors, without provisions for cumulative voting, and
on all other matters. Thus, holders of more than 50% of the shares voting for the election of directors can elect all the directors
if they choose to do so. The common stock is not redeemable and has no conversion or preemptive rights. The company qualifies
as a “controlled company” under NYSE American LLC rules, as the estate of Joseph Feldschuh, M.D. controls more than
50% of the company’s voting power, as evidenced by the company’s ownership records.
Our
common stock has continuously been traded since its initial public offering. The company’s common stock is traded on the NYSE American
Exchange under the symbol DXR. As of June 30, 2021, the company’s authorized securities consisted of:
| | |
| | |
Amount Held by Company
or for | | |
| |
| Title of Class | |
Amount
Authorized | | |
its
Account | | |
Amount
Outstanding | |
| Common Stock | |
| 10,000,000 | | |
| 5,966,123 | | |
| 4,033,877 | |
The
following table sets forth, for each of the periods indicated, the high and low closing market prices for the shares of Common
Stock on the NYSE American Exchange, the net asset value per share and the premium or discount to net asset value per share at
which the shares were trading.
| |
|
Market |
|
|
Net
Asset Value |
|
|
Premium/(Discount)
to Net Asset Value |
|
| |
|
Price
Per Share |
|
|
per
Common |
|
|
High
and Low(1) |
|
| During
Quarter Ended |
|
High |
|
|
Low |
|
|
Share(1) |
|
|
High |
|
|
Low |
|
| 30-Jun-21 |
|
$ |
15.83 |
|
|
$ |
12.83 |
|
|
$ |
3.59 |
|
|
|
340.9 |
% |
|
|
257.4 |
% |
| 31-Mar-21 |
|
$ |
13.86 |
|
|
$ |
11.02 |
|
|
$ |
3.77 |
|
|
|
268.0 |
% |
|
|
192.6 |
% |
| 31-Dec-20 |
|
$ |
15.93 |
|
|
$ |
12.15 |
|
|
$ |
3.89 |
|
|
|
309.9 |
% |
|
|
212.7 |
% |
| 30-Sep-20 |
|
$ |
24.08 |
|
|
$ |
14.62 |
|
|
$ |
3.21 |
|
|
|
651.2 |
% |
|
|
356.1 |
% |
| 30-Jun-20 |
|
$ |
17.23 |
|
|
$ |
11.91 |
|
|
$ |
2.87 |
|
|
|
500.3 |
% |
|
|
315.0 |
% |
| 31-Mar-20 |
|
$ |
14.25 |
|
|
$ |
8.60 |
|
|
$ |
3.37 |
|
|
|
322.8 |
% |
|
|
155.2 |
% |
| 31-Dec-19 |
|
$ |
9.93 |
|
|
$ |
8.94 |
|
|
$ |
3.41 |
|
|
|
191.2 |
% |
|
|
162.2 |
% |
| 30-Sep-19 |
|
$ |
9.87 |
|
|
$ |
7.81 |
|
|
$ |
3.70 |
|
|
|
166.8 |
% |
|
|
111.1 |
% |
| 30-Jun-19 |
|
$ |
11.61 |
|
|
$ |
7.50 |
|
|
$ |
3.63 |
|
|
|
219.8 |
% |
|
|
106.6 |
% |
| 31-Mar-19 |
|
$ |
19.52 |
|
|
$ |
9.11 |
|
|
$ |
3.59 |
|
|
|
443.7 |
% |
|
|
153.8 |
% |
| 31-Dec-18 |
|
$ |
9.93 |
|
|
$ |
4.52 |
|
|
$ |
3.49 |
|
|
|
184.5 |
% |
|
|
29.5 |
% |
| 30-Sep-18 |
|
$ |
6.66 |
|
|
$ |
4.30 |
|
|
$ |
3.42 |
|
|
|
94.7 |
% |
|
|
25.7 |
% |
| 30-Jun-18 |
|
$ |
10.80 |
|
|
$ |
6.00 |
|
|
$ |
3.68 |
|
|
|
193.5 |
% |
|
|
63.0 |
% |
| 31-Mar-18 |
|
$ |
21.66 |
|
|
$ |
3.40 |
|
|
$ |
3.46 |
|
|
|
526.0 |
% |
|
|
(1.7 |
)% |
| (1) |
As
we calculate our Net Asset Value at month end, the table reflects the month end net asset value, and the premium/(discount)
to net asset value is based on the month end net asset value. Percentages are rounded. |
The
last reported sale price on July 7, 2021 was $10.70 per share. We cannot predict whether our shares will trade in the future
at a premium to or discount from net asset value, or the level of any premium or discount.
Directors
and Executive Officers of Daxor Corporation
The
following table sets forth the name, age, current and past five years’ business experience, directorships, and positions
held with Daxor Corporation by each person who is a director or executive officer.
| |
|
Principal
Occupation and |
|
Director
Continuously |
| Name
and Age |
|
Position
with the Company |
|
Since |
| Michael
Feldschuh, 51 |
|
Chairman
of the Board of Directors and President of the Company (1) |
|
2013 |
| James
Lombard, 86 |
|
Director
of Administrative Services Division, New York City Council (Retired), Director (2) |
|
1989 |
| Henry
D. Cremisi, MD, 63 |
|
Medical
Director, AstraZeneca Pharmaceuticals (3) |
|
2020 |
| Joy
S. Goudie, 64 |
|
Partner,
Wissing Miller, LLP patent attorney (4) |
|
2020 |
| Edward
Feuer, 65 |
|
Partner,
Feuer & Orlando, LLP (5) |
|
2016 |
| Jonathan
Feldschuh, 56 |
|
Chief
Scientific Officer of the Company (6) |
|
2017 |
| (1) |
Michael
Feldschuh has been president of Daxor since 2017. He earned his bachelor’s degree in Pre-Med studies at Columbia
College, Columbia University in 1991. Prior to joining Daxor’s executive team in December of 2014 as Executive Vice
President, he served as a member of the board of directors for one and a half years prior. Mr. Feldschuh headed his own hedge
fund, Aristarc Capital, from 2009 to 2013 specializing in quantitative equity strategies. Prior to founding his own fund,
Mr. Feldschuh was a Managing Director at Morgan Stanley Investment Management from 2005 to 2009 and also served as a Managing
Director and Portfolio Manager at Millennium Partners in New York from 1997-2005. Mr. Feldschuh was a proprietary trader for
Morgan Stanley & Co. from 1994-1997. Mr. Feldschuh began his career at D.E. Shaw & Co. in New York, where he worked
with Jeffery Bezos prior to Mr. Bezos’s founding of Amazon. |
| |
|
| (2)* |
James
A. Lombard holds an undergraduate degree in Business Administration (BBA) from Iona College and a Master’s Degree
(MBA) in Marketing, Banking, and Finance from New York University Graduate School of Business Administration. Mr. Lombard
has retired as Director, Administrative Services Division of the City Council of New York and actively participates in civic
and community affairs. Prior to joining the City Council, he worked in the banking industry and held various administrative
positions with Citicorp and other major banks. |
| |
|
| (3) |
Dr.
Henry D. Cremisi is a Medical Director (Renal) at AstraZeneca Pharmaceuticals with over 32 years of experience in medicine.
Prior, Dr. Cremisi served as Chairman of Medical Education and a Nephrologist and Hospitalist for Novant Health in Charlotte,
North Carolina. He is a Fellow of the American College of Physicians and certified by the American Board of Internal Medicine
in both internal medicine and nephrology. Dr. Cremisi has many scientific and professional memberships including the International
Society of Nephrology, American Society of Nephrology, Cardiorenal Society of America, Heart Failure Society of America, Society
of Hospital Medicine, American College of Physicians, Renal Physicians Association and the American Medical Association. Dr.
Cremisi graduated from Tufts University School of Medicine and did his residency at Emory Healthcare in internal medicine. |
| |
|
| (4)* |
Joy
Goudie, Esq. is currently a partner at Wissing Miller, LLP, following twelve years as Senior Patent Counsel for Revlon
leading cross-functional teams in the US and Spain. In addition, she served as Vice President managing Revlon’s global
R&D portfolio and driving new technologies. A published scientist, Ms. Goudie has worked with patents and R&D teams
in the development of new antibiotics and small molecules for treatment of solid tumor cancers. Ms. Goudie earned her JD degree
from Pace University, has a Masters Degree in Chemistry from Long Island University and graduated from Mercy College with
a BS in Medical Technology, Behavioral Science and Health Service Management. |
| (5)* |
Edward
Feuer has over 35 years’ experience as an accountant, and is a member of the AICPA and The New York State Society
of Certified Public Accountants where he has served on the State and Local Tax Committee and the Continuity of Practice Committee.
Mr. Feuer graduated from George Washington University and Scarsdale High School. Prior to founding this firm Edward worked
at the NYS Department of Taxation and Finance, Westvaco Corp., as well as two metropolitan CPA firms. His areas of specialty
are professional service companies, broker dealers, mutual funds, high net worth individuals, wealth management, financial
planning, business management and advisory. He reviews all financial statements issued by the firm. Mr. Feuer is proud of
the teamwork of the firm and its focus on the success of their clients. |
| |
|
| (6) |
Jonathan
Feldschuh has been Chief Scientific Officer of Daxor since 2017. Prior to that he served as a scientific consultant to
Daxor since 1985. He has been involved with developing Daxor’s technology and is a co-inventor on multiple Daxor patents,
including the original patent covering the blood volume analyzer (BVA-100). Mr. Feldschuh studied Physics at Harvard University,
receiving an A.B. degree summa cum laude in 1986. Prior to taking on the role of CSO at Daxor, Jonathan worked extensively
in technology and quantitative finance. He was the Chief Quantitative Officer at Aristarc Capital, overseeing the research,
development, and execution of quantitative trading strategies. Prior to Aristarc he worked in quantitative roles at financial
firms such as Morgan Stanley, Millennium Partners, and American Express. |
*
(Member of the Audit Committee)
As
of the date of this prospectus, the named executive officers of Daxor Corporation are:
MICHAEL
FELDSCHUH, Chairman of the Board and President, earned his bachelor’s degree in Pre-Med studies at Columbia College, Columbia
University in 1991. Prior to joining Daxor’s executive team in December of 2014 he served as a member of the board of directors
for one and a half years prior. Michael headed his own hedge fund, Aristarc Capital, from 2009 to 2013 specializing in quantitative
strategies. Prior to founding his own fund, Michael was a Managing Director at Morgan Stanley from 2005 to 2009 and also served
as a Managing Director and Portfolio Manager at Millennium Partners in New York from 1997-2005. Michael was a proprietary trader
for Morgan Stanley & Co. from 1994-1997. Michael began his career at D.E. Shaw & Co. in New York, where he worked with
Jeffery Bezos prior to Bezos’s founding of Amazon.
JONATHAN
FELDSCHUH, Chief Scientific Officer, has been Chief Scientific Officer of Daxor since 2017. Prior to that he served as a scientific
consultant to Daxor since 1985. He has been involved with developing Daxor’s technology and is a co-inventor on multiple
Daxor patents, including the original patent covering the blood volume analyzer (BVA-100). Mr. Feldschuh studied Physics at Harvard
University, receiving an A.B. degree summa cum laude in 1986. Prior to taking on the role of CSO at Daxor, Jonathan worked extensively
in technology and quantitative finance. He was the Chief Quantitative Officer at Aristarc Capital, overseeing the research, development,
and execution of quantitative trading strategies. Prior to Aristarc he worked in quantitative roles at financial firms such as
Morgan Stanley, Millennium Partners, and American Express.
ROBERT
J. MICHEL, Chief Financial Officer, Chief Compliance Officer and Corporate Secretary has over 30 years’ experience across
a wide array of industries, including serving on the board of a biometric solutions company. In addition, he has public company
experience in accounting and finance for companies specializing in consumer finance, engineering/manufacturing, marketing and
the healthcare industry, both privately held and publicly traded. Prior to joining Daxor he served as CFO of at Sher-Del Transfer
and Relocation Services, and prior spent seven years as CFO of Asta Funding, (Nasdaq: ASFI) a publicly traded diversified financial
services company. He is a Certified Public Accountant and holds a degree in Business Administration from the Villanova School
of Business and an MBA from St. John’s University.
Additional
Information about Daxor Corporation
Financial
information regarding Daxor Corporation is hereby incorporated by reference from the company’s Annual Report on Form N-CSR
for the year ended December 31, 2020.
TAX
MATTERS
The
following discussion is a brief summary of certain U.S. federal income tax considerations affecting the company and the purchase,
ownership and disposition of our shares of common stock. A more complete discussion of the tax rules applicable to the company
and our shares of common stock can be found in the SAI that is incorporated by reference into this prospectus.
This
summary is based upon U.S. federal income tax law as of the date of this prospectus, which is subject to change or differing interpretations,
possibly with retroactive effect. This summary does not discuss all aspects of U.S. federal income taxation that may be important
to particular investors in light of their individual circumstances, including investors subject to special tax rules (e.g., financial
institutions, insurance companies, broker-dealers, partnerships and their partners, tax-exempt organizations (including private
foundations), taxpayers that have elected mark-to-market accounting, S corporations, regulated investment companies, real estate
investment trusts, investors that will hold the common stock as part of a straddle, hedge, conversion, or other integrated transaction
for U.S. federal income tax purposes, former citizens or residents of the United States or investors that have a functional currency
other than the U.S. dollar), all of whom may be subject to tax rules that differ materially from those summarized below. In addition,
this summary does not discuss other U.S. federal tax consequences (e.g., estate or gift tax), any state, local, or non-U.S. tax
considerations or the Medicare tax or alternative minimum tax. In addition, this summary is limited to investors that will hold
our securities as “capital assets” (generally, property held for investment) under the Internal Revenue Code of 1986,
as amended, (the “Code”), and that acquired the common stock pursuant to this offering. No ruling from the Internal
Revenue Service, (the “IRS”) has been or will be sought regarding any matter discussed herein. No assurance can be
given that the IRS would not assert, or that a court would not sustain a position contrary to any of the tax aspects set forth
below.
For
purposes of this summary, a “U.S. Holder” is a beneficial holder of securities who or that, for U.S. federal income
tax purposes is:
| |
● |
An
individual who is a United States citizen or resident of the United States; |
| |
|
|
| |
● |
A
corporation, or other entity treated as a corporation for United States federal income tax purposes created in, or organized
under the laws of, the United States or any state or political subdivision thereof; |
| |
|
|
| |
● |
An
estate, the income of which is includible in gross income for United States federal income tax purposes regardless of its
source; or |
| |
|
|
| |
● |
A
trust (A) the administration of which is subject to the primary supervision of a United States court and which has one or
more United States persons (within the meaning of the Code) who have the authority to control all substantial decisions of
the trust or (B) that has in effect a valid election under applicable Treasury regulations to be treated as a United States
person. |
If
a partnership (including an entity or arrangement treated as a partnership for U.S. federal income tax purposes) holds the common
stock, the tax treatment of a partner in such partnership will generally depend upon the status of the partner, the activities
of the partnership and certain determinations made at the partner level. If you are a partner of a partnership holding the common
stock, you are urged to consult your tax advisor regarding the tax consequences of the ownership and disposition of our securities.
THIS
DISCUSSION OF U.S. FEDERAL INCOME TAX CONSIDERATIONS IS FOR GENERAL INFORMATION PURPOSES ONLY AND IS NOT TAX ADVICE. WE URGE PROSPECTIVE
HOLDERS TO CONSULT THEIR TAX ADVISORS CONCERNING THE U.S. FEDERAL INCOME TAX CONSEQUENCES TO THEM OF OWNING AND DISPOSING OF THE
COMMON STOCK, AS WELL AS THE APPLICATION OF ANY, STATE, LOCAL AND NON-U.S. INCOME, ESTATE AND OTHER TAX CONSIDERATIONS.
Personal
Holding Company Status
The
Company is subject to a second level of U.S Federal income tax on a portion of its income as a personal holding company (“PHC”)
for U.S Federal income tax purposes. As a PHC in a given year, the Company is subject to an additional PHC tax, currently 20%,
on its undistributed PHC income, which generally includes its taxable income, subject to certain adjustments. For the
year ended December 31, 2020, the Company was a PHC. The Company incurred no liability for PHC for the year ended December 31,
2020 due to the net operating losses applied to realized gains incurred during the year.
Taxation
of Distributions
If
the company pays cash distributions to U.S. Holders of shares of the common stock, such distributions will constitute dividends
for U.S. federal income tax purposes to the extent paid from the company’s current or accumulated earnings and profits,
as determined under U.S. federal income tax principles. Distributions in excess of current and accumulated earnings and profits
will constitute a return of capital that will be applied against and reduce (but not below zero) the U.S. Holder’s adjusted
tax basis in the common stock. Any remaining excess will be treated as gain realized on the sale or other disposition of the common
stock and will be treated as described under “Gain or Loss on Sale, Taxable Exchange or Other Taxable Disposition of the
Common Stock” below.
Gain
or Loss on Sale, Taxable Exchange or Other Taxable Disposition of the Common Stock
A
U.S. Holder will recognize gain or loss on the sale, taxable exchange or other taxable disposition of the common stock. Any such
gain or loss will be capital gain or loss, and will be long-term capital gain or loss if the U.S. Holder’s holding period
for the common stock so disposed of exceeds one year. The amount of gain or loss recognized will generally be equal to the difference
between (1) the sum of the amount of cash and the fair market value of any property received in such disposition and (2) the U.S.
Holder’s adjusted tax basis in its common stock so disposed of. A U.S. Holder’s adjusted tax basis in its common stock
will generally equal the U.S. Holder’s acquisition cost less any prior distributions treated as a return of capital. The
deductibility of capital losses is subject to limitations.
Information
Reporting and Backup Withholding
In
general, information reporting requirements may apply to dividends paid to a U.S. Holder and to the proceeds of the sale or other
disposition of shares of common stock, unless the U.S. Holder is an exempt recipient. Backup withholding may apply to such payments
if the U.S. Holder fails to provide a taxpayer identification number, a certification of exempt status or has been notified by
the IRS that it is subject to backup withholding (and such notification has not been withdrawn). Any amounts withheld under the
backup withholding rules will be allowed as a refund or a credit against a U.S. Holder’s U.S. federal income tax liability
provided the required information is timely furnished to the IRS.
LEGAL
MATTERS
Certain
legal matters will be passed on for the company by Foley & Lardner LLP, New York, New York, in connection with the offering
of the shares of common stock.
INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
WithumSmith+Brown,
PC is the independent registered public accounting firm of the company. The company’s independent registered public accounting
firm is expected to render an opinion annually on the financial statements of the Company.
PRIVACY
PRINCIPLES OF THE COMPANY
The
company is committed to maintaining the privacy of its shareholders and to safeguarding their non-public personal information.
The following information is provided to help you understand what personal information the company collects, how the company protects
that information and why, in certain cases, the company may share information with select other parties.
Generally,
the company does not receive any non-public personal information relating to its shareholders, although certain non-public personal
information of its shareholders may become available to the company. The company does not disclose any non-public personal information
about its shareholders or former shareholders to anyone, except as permitted by law or as is necessary in order to service shareholder
accounts (for example, to a transfer agent).
The
company restricts access to non-public personal information about its shareholders to its employees and its delegates and affiliates
with a legitimate business need for the information. As a result, we do not provide a means for opting out of our limited sharing
of your information. The company maintains physical, electronic and procedural safeguards designed to protect the non-public personal
information of its shareholders.
ADDITIONAL
INFORMATION
Daxor
Corporation has filed a Registration Statement on Form N-2, including amendments thereto, with the Securities and Exchange Commission,
Washington, D.C. This prospectus does not contain all of the information set forth in the Registration Statement, including any
exhibits and schedules thereto. For further information with respect to the company, reference is made to the Registration Statement.
Statements contained in this prospectus as to the contents of any contract or other document referred to are not necessarily complete
and in each instance reference is made to the copy of such contract or other document filed as an exhibit to the Registration
Statement, each such statement being qualified in all respects by such reference. Copies of the Registration Statement may be
inspected without charge at the Securities and Exchange Commission’s principal office in Washington, D.C., and copies of
all or any part thereof may be obtained from the Securities and Exchange Commission upon the payment of certain fees prescribed
by the Securities and Exchange Commission.
The
SEC allows Daxor Corporation to “incorporate by reference” information into this Prospectus and any accompanying prospectus
supplements, which means that the company can disclose important information to you by referring you to other documents filed
separately with the SEC. The information incorporated by reference is considered part of this prospectus. The company incorporates
by reference any future filings it will make with the SEC under Sections 13(a), 13(c), 14, or 15(d) of the Exchange Act or pursuant
to Rule 30b2-1 under the 1940 Act, including those made after the date of this Prospectus (excluding any information furnished, rather
than filed), until the company has sold all of the offered securities to which this Prospectus, the SAI and any accompanying Prospectus
Supplement relates, or the offering is otherwise terminated. The documents incorporated by reference herein include:
Daxor
Corporation will provide without charge upon written or oral request to each person, including any beneficial owner, to whom a
prospectus is delivered, a copy of any and all of the documents which are incorporated by reference into this prospectus but not
delivered with this prospectus (other than exhibits unless such exhibits are specifically incorporated by reference in such documents).
You
may request a copy of these documents by writing or telephoning Daxor Corporation at:
Investor
Relations
Daxor
Corporation
109
Meco Lane Oak Ridge, TN 37830
(888)774-3268
TABLE
OF CONTENTS FOR THE STATEMENT OF ADDITIONAL INFORMATION
STATEMENT
OF ADDITIONAL INFORMATION
Dated
July 16, 2021
DAXOR
CORPORATION
109
Meco Lane Oak Ridge, TN 37830
(212)-330-8500
Daxor
Corporation is an investment company with medical instrumentation and biotechnology operations. While the company is not primarily
engaged in the business of investing, reinvesting, owning, holding or trading in securities, the company is dependent upon earnings
from its investment portfolio to fund operations.
This
Statement of Additional Information (SAI) is not a prospectus and is authorized for distribution to investors only if preceded or accompanied
by Daxor Corporation’s prospectus dated July 16, 2021 (the “Prospectus”), as supplemented to date, which is
incorporated herein by reference. This SAI should be read in conjunction with the Prospectus, a copy of which may be obtained without
charge by contacting your financial intermediary or by calling the company at (888) 774-3268, by writing to the company at the address
above or from the company’s website (http://www.Daxor.com). You may also obtain a copy of the Prospectus on the website of the
Securities and Exchange Commission (“SEC”), http://www.sec.gov.
The
information contained in, or that can be accessed through, the Daxor Corporation’s website is not part of the Prospectus
or this SAI. Capitalized terms used but not defined in this SAI have the meanings ascribed to them in the Prospectus.
Table
of Contents
HISTORY
OF DAXOR CORPORATION
Daxor
Corporation is an investment company with medical instrumentation and biotechnology operations. The company was originally incorporated
in New York State as Iatric Corporation in May 1971 for cryobanking services and discontinued these services through its wholly-owned
subsidiary, Scientific Medical Systems in 2017. In October 1971, the name Iatric Corporation was changed to Idant Corporation.
In May 1973, the name Idant Corporation was changed to Daxor Corporation.
While
the company is not primarily engaged in the business of investing, reinvesting, owning, holding or trading in securities, the
company is dependent upon earnings from its investment portfolio to fund operations. On March 30, 2012, the company filed a Form
N-8A with the Securities and Exchange Commission to register as a closed-end management investment company under the 1940 Act. The company’s principal executive offices are located at 350
Fifth Avenue, Suite 4740, New York, NY 10118. The “Investor Relations” section of the company’s website currently
provides free copies of the company’s annual and semi-annual reports on Form N-CSR.
For
the past 21 years, the company’s major focus has been the creation and development of the BVA-100® Blood Volume Analyzer,
an instrument that rapidly and accurately measures human blood volume. This instrument is used in conjunction with Volumex®,
a single-use radiopharmaceutical diagnostic injection and collection kit. The company also owns the Daxor Oak Ridge Operations
(DORO) facility in Oak Ridge, TN, which manufactures, tests, and develops next-generation models of the BVA-100®.
The
company maintains an internet website at www.daxor.com. The website for Daxor describe the operation of the company.
INVESTMENT
OBJECTIVE AND INVESTMENT RESTRICTIONS
Daxor
Corporation’s objective is to support and expand its operating business segment through organic growth (i.e., the rate of
business expansion through internal enhancement of the business and operations as opposed to mergers, acquisitions and takeovers).
The company is not primarily engaged in the business of investing, reinvesting, owning, holding or trading in securities. As a
result, the company has no fundamental investment policies or significant investing practices, activities, objectives or techniques,
except as set forth below. Funds in excess of the company’s immediate capital needs are placed in instruments designed to
maximize capital preservation and assure liquidity. Objectives are achieved by focusing management and employee effort on the
company’s business of manufacturing medical devices and providing additional biotechnology services.
The
company’s investment policy calls for a minimum of 80% of the company’s investment portfolio to consist of electric
utility stocks. The Board of Directors has authorized this minimum to be temporarily lowered to 70% when management deems it to
be necessary. At least once a year, the company reviews its investment strategy, and more frequently as needed, at Board meetings.
The
investment portfolio primarily consists of common stock and preferred stock of publicly traded electric utility companies. In
addition to receiving income from dividends from the securities held in the investment portfolio, the company also has an investment
policy of selling puts on stocks that it is willing to own. Such options usually have a maturity of less than one year. The company
will also sell covered calls on securities within its investment portfolio. Covered calls involve stocks, which usually do not
exceed 15% of the value of the company’s portfolio.
The
company may also sell uncovered calls and may have net short positions in common stock up to 15% of the value of the portfolio.
The company’s net short position may temporarily rise to 15% of the company’s portfolio without any specific action
because of changes in valuation, but should not exceed that amount. At December 31, 2020, the Company held a short position in
the Utilities Sector SPDR Fund ETF with proceeds of $561,881. .
The
company has adopted the following investment restrictions which are matters of fundamental policy. The company’s investment
restrictions cannot be changed without approval of the holders of (i) 67% of the company’s common stock present or represented
at a meeting of shareholders at which the holders of more than 50% of the common stock are present or represented; or (ii) more
than 50% of the outstanding interests of shareholders:
| |
1. |
The
company may borrow money to the extent permitted under the 1940 Act. |
| |
|
|
| |
2. |
The
company may issue senior securities to the extent permitted under the 1940 Act. |
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|
|
| |
3. |
The
company may not engage in the business of underwriting securities issued by other persons, except to the extent that it may
be deemed to be an “underwriter” within the meaning of the Securities Act of 1933 in the disposition of its investment
securities. |
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|
|
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4. |
The
company will concentrate its investments in the utility industry. |
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|
|
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5. |
The
company may invest in real estate or commodities to the extent permitted under the 1940 Act. |
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|
|
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6. |
The
company may make loans to other persons to the extent permitted under the 1940 Act. |
ADDITIONAL
INVESTMENT POLICIES AND RESTRICTIONS
Primary
investment strategies are described in the Prospectus. The following is a description of the various investment policies in which
Daxor Corporation may be engaged, whether as a primary or secondary strategy, and a summary of certain attendant risks.
Common
Stocks. Common stocks generally represent an ownership interest in an issuer, without preference over any other class of securities,
including such issuer’s debt securities, preferred stock and other senior equity securities. Common stocks are entitled
to the income and increase in the value of the assets and business of the issuer after all its debt obligations and obligations
to preferred shareholders are satisfied. Common stocks generally have voting rights. Common stocks fluctuate in price in response
to many factors, including historical and prospective earnings of the issuer, the value of its assets, general economic conditions,
interest rates, investor perceptions and market liquidity.
Preferred
Stocks. Preferred stocks with predominantly equity investment characteristics, like common stocks, represent an equity ownership
in an issuer. Generally, preferred stocks have a priority of claim over common stocks in dividend payments and upon liquidation
of the issuer. Unlike common stocks, preferred stocks do not usually have voting rights. Preferred stocks in some instances are
convertible into common stocks. Although they are equity securities, preferred stocks have certain characteristics of both debt
securities and common stocks. They are debt-like in that their promised income is contractually fixed. They are like common stocks
in that they do not have rights to precipitate bankruptcy proceedings or collection activities in the event of missed payments.
Furthermore, they have many of the key characteristics of equity due to their subordinated position in an issuer’s capital
structure and because their quality and value are heavily dependent on the profitability of the issuer rather than on any legal
claims to specific assets or cash flows.
In
order to be payable, dividends on preferred stock must be declared by the issuer’s board of directors. In addition, distributions
on preferred stock may be subject to deferral and thus may not be automatically payable. Income payments on some preferred stocks
are cumulative, causing dividends and distributions to accrue even if not declared by the board of directors or otherwise made
payable. Other preferred stocks are non-cumulative, meaning that skipped dividends and distributions do not continue to accrue.
Shares
of preferred stock have a liquidation value that generally equals their original purchase price at the date of issuance. The market
values of preferred stocks may be affected by favorable and unfavorable changes impacting the issuers’ industries or sectors.
They also may be affected by actual and anticipated changes or ambiguities in the tax status of the security and by actual and
anticipated changes or ambiguities in tax laws, such as changes in corporate and individual income tax rates or the characterization
of dividends as tax-advantaged.
Equity
Put and Call Options. The company may purchase and sell “call” and “put” options on securities and
securities indices which are listed on a national securities exchange or in the over-the- counter markets as a means of increasing
exposure or hedging the value of the company’s investment portfolio.
A
“call” option is a contract that gives the holder of the option the right to buy from the writer (i.e., the seller)
of the option, in return for a premium paid, the security underlying the option at a specified exercise price at any time during
the term of the option. The writer of the call option has the obligation upon exercise of the option to deliver the underlying
security upon payment of the exercise price during the option period. A “put” option is a contract that gives the
holder of the option the right to sell to the writer (i.e., the seller), in return for the premium, the underlying security at
a specified price during the term of the option. The writer of the put option, who receives the premium, has the obligation to
buy the underlying security upon exercise, at the exercise price during the option period.
If
the company has written an option, it may terminate its obligation by effecting a closing purchase transaction. This is accomplished
by purchasing an option of the same series as the option previously written. There can be no assurance that a closing purchase
transaction can be effected when the company so desires. An exchange-traded option may be closed out only on an exchange which
provides a secondary market for an option of the same series.
Short
Sales. A short sale is the sale of a security that the company does not own in anticipation of purchasing the same security
at a later date at a lower price. To make delivery to the counterparty, the company must borrow the security, and the company
is obligated to return the security to the lender, which is accomplished by a later purchase of the security by the company.
Portfolio
Trading and Turnover Rate. Portfolio trading may be undertaken to accomplish the investment objectives of the company. While
the company may engage in portfolio trading when considered appropriate, short-term trading in the company’s portfolio will
not be used as the primary means of achieving the company’s investment objective. The company expects a moderate level of
annual portfolio turnover. The turnover rate is not expected to exceed 100% under normal circumstances. However, there are no
limits on the rate of portfolio turnover, and investments may be sold without regard to length of time held when, in the company’s
opinion, investment considerations warrant such action. A higher portfolio turnover rate results in correspondingly greater brokerage
commissions and other transactional expenses that are borne by the company. The company’s portfolio turnover rate for 2020
was 12.54%, which indicates an average holding period in excess of five years.
MANAGEMENT
OF THE COMPANY
Directors
and Officers
The
management of Daxor Corporation is the responsibility of the Board of Directors. None of the directors who are not “interested
persons” of the company (as defined in the 1940 Act) has ever been a director or employee of, or consultant to, the company
or its affiliates. The officers of the company serve annual terms and are elected on an annual basis.
The
Board of Directors has an Audit Committee. The Board does not have a standing nominating committee or a charter with respect to
the process for nominating directors for election to the company’s Board. The company qualifies as a “controlled company”
under NYSE American LLC rules, as the estate of Joseph Feldschuh, M.D. controls more than 50% of the company’s voting power,
as evidenced by the company’s ownership records. As a result, the NYSE American LLC continued listing standards do not require
the company to have a nominating committee, compensation and stock option committee, or a written charter. Shareholders and members
of the Board submit nominees for election to the company’s Board to Mr. Michael Feldschuh, Executor of the Joseph Feldschuh
estate, for his consideration.
There
are no non-resident directors of the company, nor or there any arrangements or understandings between any director or officer
and any other persons pursuant to which he was selected as a director or officer. As the company has no investment advisers or
underwriters, there is no investment advisory contract that is approved by the directors.
The
names and business addresses of the Directors of the company, their principal occupations and other affiliations during the past
five years, the number of portfolios each oversees and other directorships they hold, or have held during the past five years,
are set forth below. Michael Feldschuh and Jonathan Feldschuh are brothers, and are classified as “interested persons”
due to their employment with the company. There is no “Fund Complex” as defined in the 1940 Act.
| Name,
Address and Age |
|
Position(s)
Held with
Company |
|
Term
of Office and Length of
Time Served |
|
Principal
Occupation(s)
During
Past Five Years |
|
Number
of Portfolios Overseen By
Directors |
|
Other
Directorships Held (during past five years)
by Director |
| “Noninterested
Persons” |
|
|
|
|
|
|
|
|
|
|
James
Lombard
109 Meco Lane, Oak Ridge, TN 37830
|
|
Director |
|
One
year term,
Director since 1989 |
|
Director
of Administrative Services
Division, New York City Council (Retired). |
|
None |
|
None |
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|
|
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|
|
|
|
|
|
|
| Age:
86 |
|
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|
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|
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|
|
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Henry
D Cremisi, MD
109 Meco Lane. Oak Ridge, TN 37830 |
|
Director |
|
One
year term,
Director since 2020 |
|
Medical
Director, AstraZeneca Pharmaceuticals |
|
None |
|
None |
| |
|
|
|
|
|
|
|
|
|
|
| Age:
63 |
|
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|
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|
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|
Edward
Feuer
109 Meco Lane, Oak Ridge, TN 37830 |
|
Director |
|
One
year term,
Director since 2016 |
|
Managing
Partner, Feuer & Orlando |
|
None |
|
None |
| |
|
|
|
|
|
|
|
|
|
|
| Age:
65 |
|
|
|
|
|
|
|
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| |
|
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|
|
|
|
|
|
Joy
Goudie, Esq.
109 Meco Lane, Oak Ridge, TN 37830 |
|
Director |
|
One
year term,
Director since 2020 |
|
Partner,
Wissing Miller, LLP
Patent Attorney. |
|
None |
|
None |
| |
|
|
|
|
|
|
|
|
|
|
| Age:
64 |
|
|
|
|
|
|
|
|
|
|
| Name,
Address and Age |
|
Position(s)
Held with
Company |
|
Term
of Office and Length of
Time Served |
|
Principal
Occupation(s)
During
Past Five Years |
|
Number
of Portfolios Overseen By
Directors |
|
Other
Directorships Held (during past five years)
by Director |
| “Interested
Persons” |
|
|
|
|
|
|
|
|
|
|
| Michael
Feldschuh |
|
Director |
|
One
year term, |
|
Executive
Vice President Chairman, |
|
One |
|
None |
| 109
Meco Lane, Oak Ridge, TN 37830 |
|
|
|
|
|
Director
since 2013 |
|
President,
CEO |
|
|
| |
|
|
|
|
|
|
|
|
|
|
| Age:
51 |
|
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|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
| Jonathan
Feldschuh |
|
Director |
|
One
year term, |
|
Chief
Scientific Officer
Director
since 2017 |
|
None |
|
None |
| 109
Meco Lane, Oak Ridge, TN 37830 |
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
| Age
56 |
|
|
|
|
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|
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Board
Leadership Structure
The
Board of Directors currently comprises six members, four of whom are independent or disinterested persons, which means that they
are not “interested persons” of the company as defined in Section 2(a)(19) of the 1940 Act (the “Independent
Directors”). The Board has general oversight responsibility with respect to the operation of the company, and has established
an Audit Committee to assist the Board in performing its oversight responsibilities.
As
Chairman of the Board, Mr. Feldschuh is the presiding officer at all meetings of the Board of Directors. The company does not
have a lead Independent Director. The company has determined that its leadership structure is appropriate given the size and structure
of the company.
Audit
Committee
The
Audit Committee operates pursuant to a Charter approved by the Board of Directors, a copy of which is available on the company’s
website. The Charter sets forth the responsibilities of the Audit Committee. The functions of the Audit Committee include, among
others, to meet with the independent registered public accounting firm of the company to review the scope of the company’s
audit, the company’s financial statements and internal accounting controls, and to meet with management concerning these
matters, internal audit activities and other matters. The Audit Committee currently consists of Edward Feuer, and James Lombard,
all of whom are considered independent under the rules promulgated by the NYSE American LLC and, in addition, are not “interested
persons” of the company as defined in Section 2(a)(19) of the 1940 Act. Edward Feuer serves as Chairperson of the Audit
Committee and has been designated as the audit committee financial expert under the Sarbanes-Oxley Act. The Audit Committee met
four times in fiscal 2020.
Board’s
Risk Oversight Role
The
day-to-day management of various risks relating to the administration and operation of the company is the responsibility of management
and other service providers retained by the Board of Directors or by management, most of whom employ professional personnel who
have risk management responsibilities. The Board oversees this risk management function consistent with and as part of its oversight
duties. The Board performs this risk management oversight function directly and, with respect to various matters, through its
committees. The Board has been advised that it is not practicable to identify all of the risks that may impact the company or
to develop procedures or controls that are designed to eliminate all such risk exposures, and that applicable securities law regulations
do not contemplate that all such risks be identified and addressed.
The
Board of Directors has overseen the company’s development and administration of a compliance program that meets the requirements
of Rule 38a-1 promulgated under the 1940 Act, and the development and administration of a code of ethics program that meets the
requirements of Rule 17j-1 promulgated under the 1940 Act. The Board meets regularly with the company’s Chief Compliance
Officer on all aspects of the company’s compliance requirements.
Qualifications
of the Trustees
Michael
Feldschuh has been the Chief Executive Officer since 2016 and a director of the company since 2013. His experience and skills
in the company’s business operations, as well as his familiarity with the company, led to the conclusion that he should
serve as a director. Jonathan Feldschuh has been the Chief Scientific Officer since 2017, and has served as a scientific consultant
to the company since 1985. His experience and knowledge regarding the company’s products, as well as his scientific background,
led to the conclusion that he should serve as a director. The company believes that the business and industry backgrounds of James
Lombard, Henry Cremisi, MD, Joy Goudie Esq., and Edward Feuer have provided them with the experience that will benefit the company
and its shareholders. Further, the company believes James Lombard, Dr. Henry Cremisi, Joy Goudie Esq., and Edward Feuer each take
a conservative and thoughtful approach to addressing issues facing the company. This combination of experience and skills led
to the conclusion that each of James Lombard, Dr. Henry Cremisi, Joy Goudie Esq., and Edward Feuer should serve as a director.
Equity
Ownership of Directors
The
following table sets forth the dollar range of shares of the company beneficially owned by each current director as of December
31, 2020, which is also the valuation date, using the following ranges: None; $1-$10,000; $10,001 - $50,000; $50,001 - $100,000;
and Over $100,000.
| Name
of Director | |
Share
Ownership | |
| Noninterested
Persons | |
| | |
| James Lombard | |
$ | 10,001
- $50,000 | |
| Joy Goudie | |
| None | |
| Henry Cremisi | |
| None | |
| Edward Feuer | |
| None | |
| Interested Persons | |
| | |
| Michael Feldschuh | |
| Over
$100,000 | |
| Jonathan Feldschuh | |
| Over
$100,000 | |
Board
Compensation
In
June 2020, three current outside directors attended the annual meeting and were paid $1,000 each for the meeting and a Board meeting
which took place on the same day. Joy Goudie was appointed to the Board of Directors after the Annual Meeting. The three other
Board meetings during the year were teleconference meetings in which each Director was paid $375 for each meeting. The company
also reimburses directors for any travel expense incurred to attend meetings. An employee director receives no fees for Board
participation.
The
compensation paid to current and former directors in 2020 is set forth in the following table. There is no “Fund Complex”
as defined in the 1940 Act.
| Name |
|
Aggregate
Compensation From Company |
|
|
Pension or Benefits Accrues as Part of Company Expenses |
|
Annual
Benefits Upon Retirement |
|
Compensation Fund Complex Paid to Director |
|
| Interested Person: |
|
|
|
|
|
|
|
|
|
|
|
|
| Michael Feldschuh |
|
$ |
100,000 |
|
|
None |
|
None |
|
$ |
100,000 |
|
| Jonathan Feldschuh |
|
$ |
127,920 |
|
|
None |
|
None |
|
$ |
127,920 |
|
| Noninterested Persons: |
|
|
|
|
|
|
|
|
|
|
|
|
| Edward Feuer |
|
$ |
2,125 |
|
|
None |
|
None |
|
$ |
2,125 |
|
| James Lombard |
|
$ |
2,125 |
|
|
None |
|
None |
|
$ |
2,125 |
|
| Henry Cremisi (1) |
|
$ |
1,750 |
|
|
None |
|
None |
|
$ |
1,750 |
|
| Joy Goudie(2) |
|
$ |
750 |
|
|
None |
|
None |
|
$ |
750 |
|
| |
(1) |
Dr.
Cremisi was elected to the Board of Directors effective June 25, 2020 |
| |
(2) |
Ms.
Goudie was appointed to the Board of Directors effective June 26, 2020. |
CONTROL
PERSONS
On
June 30, 2021, Daxor Corporation had issued and outstanding 4,033,877 shares of common stock, par value $.01 per share, each of
which entitled the holder to one vote.
Since
the estate of Dr. Feldschuh owns more than 50% of Daxor stock, and Michael Feldschuh is the executor of the estate, the company
is considered a controlled corporation.
The
following table sets forth certain information as of June 30, 2021, concerning the ownership of the common stock by (a) each person
who, to the company’s knowledge, beneficially owned on that date more than 5% of the outstanding common stock, (b) each of the
company’s then current directors and the named executive officers and (c) all then current directors and executive officers of
the company as a group.
| |
|
|
|
|
Percent of |
|
| |
|
Number of Shares |
|
|
Common |
|
| Name of Beneficial Owner (a) (b) |
|
Beneficially Owned(b) |
|
|
Stock(b) |
|
| Estate of Joseph Feldschuh(c) |
|
|
2,549,455 |
|
|
|
63.2 |
% |
| Michael Feldschuh, President and Director(d) |
|
|
216,539 |
|
|
|
5.4 |
% |
| Jonathan Feldschuh, Director(e) |
|
|
30,575 |
|
|
|
* |
|
| Robert J. Michel, Chief Financial Officer, Chief Compliance Officer(f) |
|
|
7,583 |
|
|
|
* |
|
| Dr. Henry Cremisi ( g ) |
|
|
23,666 |
|
|
|
* |
% |
| James A. Lombard, Director( h ) |
|
|
6,166 |
|
|
|
* |
|
| Joy M. Goudie, Esq (i) |
|
|
666 |
|
|
|
* |
|
| Edward Feuer, Director (j) |
|
|
2,666 |
|
|
|
* |
|
| All directors and officers as a Group (7 persons) (k) |
|
|
2,837,316 |
|
|
|
70.3 |
% |
| * |
Indicates less than 1%. |
| (a) |
Unless
otherwise indicated, the address of each person listed is c/o Daxor Corporation, 109 Meco Lane, Oak Ridge, TN 37830. |
| |
|
| (b) |
Beneficial
ownership is determined in accordance with the rules of the Securities and Exchange Commission (the “SEC”) and generally
includes voting or investment power with respect to securities. In accordance with SEC rules, shares of common stock issuable upon
the exercise of options or warrants which are currently exercisable or which become exercisable within 60 days following June
30, 2021 are deemed to be beneficially owned by, and outstanding with respect to, the holder of such option or warrant. Except
as indicated by footnote, and subject to community property laws where applicable, to the knowledge of the company, each person listed
is believed to have sole voting and investment power with respect to all shares of common stock beneficially owned by such person. |
| |
|
| (c) |
Includes
2,549,455 shares of common stock. |
| |
|
| (d) |
Includes
158,206 shares of common stock and 58,333 shares of common stock issuable upon the exercise of options issued under
the company’s 2004 Stock Option Plan (the “2004 Option Plan”), and the Company’s 2020 Incentive Compensation
Plan (the “2020 Plan”). |
| |
|
| (e) |
Includes
3,908 shares of common stock and 26,667 shares of Common Stock issuable upon the exercise of options issued under the Company’s
2004 Option Plan and the 2020 Plan. |
| |
|
| (f) |
Includes
4,250 shares of common stock and 3,333 shares of Common Stock issuable upon the exercise of options issued under the 2020
Plan. |
| (g) |
Includes
23,666 shares of Common Stock issuable upon the exercise of options issued under the company’s 2004 Option Plan and
2020 Incentive Compensation Plan. |
| |
|
| (h) |
Includes
2,500 shares of common stock and 3,666 shares of common stock issuable upon the exercise of options issued under the 2004
Option Plan and the 2020 Plan. |
| |
|
| (i) |
Includes 666 shares of Common Stock issuable upon exercise of options issued
under the 2020 Plan. |
| |
|
| (j) |
Includes 2,666 of Common Stock issuable upon exercise of options issued under
the 2004 Option Plan and the 2020 Plan. |
| |
|
| (k) |
See
Footnotes (c) through (j). |
Directors
currently serving have options totaling 81,000 shares of common stock exercisable at prices ranging from $7.75 to $14.11 per
share. We ceased issuing options under the 2004 Option Plan. On April 24, 2020, we received an exemptive order that permits us to adopt
an incentive compensation plan, and our shareholders approved the incentive compensation plan at our 2020 annual meeting. The outstanding
options as of June 30, 2021are provided below:
| | |
Number of Options | |
| Name | |
Granted | |
| Michael Feldschuh | |
| 75,000 | |
| Jonathan Feldschuh | |
| 40.000 | |
| Henry Cremisi, MD (1) | |
| 27,000 | |
| James A. Lombard | |
| 7,000 | |
| Joy Goudie, Esq.(2) | |
| 4,000 | |
| Edward Feuer | |
| 6,000 | |
| | |
| 159,000 | |
| |
(1) |
Dr.
Cremisi was elected to the Board of Directors effective June 25, 2020 |
| |
|
|
| |
(2) |
Ms.
Goudie was appointed to the Board of Directors effective |
INVESTMENT
ADVISORY AND OTHER SERVICES
The
responsibility of the Board of Directors is to exercise corporate powers and to oversee management of the business of Daxor Corporation.
The officers of the company are principally responsible for its operations. The company is not primarily engaged in the business
of investing, reinvesting, owning, holding or trading in securities. As such, the company has no investment advisors, administrator,
affiliated brokerage, dividend paying agent, non-resident managers, or active portfolio manager. The nature of the instruments
in which funds in excess of immediate capital needs are placed are consistent with capital preservation and liquidity. The company’s
Chief Executive Officer, Michael Feldschuh, is primarily responsible for the day-to-day management of any such investments.
Since
the estate of Dr. Feldschuh owns more than 50% of Daxor stock, and Michael Feldschuh is the executor of the estate, the company
is considered a controlled corporation. In reviewing the salaries of Chief Executive Officers at pharmaceutical and scientific
companies, many of these individuals earn annual salaries from $300,000 to over $1,000,000.
Mr.
Feldschuh has deliberately elected to draw a salary that is well below what the company believes is the market rate for someone
with his responsibilities and qualifications. It is the belief of the Board of Directors that annual compensation of two or three
times what he is currently earning could easily be justified. The decision to keep his annual compensation at well below market
rate has been made as part of an effort to preserve capital in light of the company’s ongoing losses from operations.
The
Board of Directors reviews Mr. Feldschuh’s compensation each year. The Board votes on his salary at this time. The Board
is in agreement that his annual compensation is well below market rate for someone with his experience and qualifications.
Code
of Ethics
Pursuant
to Rule 17j-1 of the 1940 Act, the company has adopted a Code of Ethics governing personal trading activities of all directors
and officers of the company and persons who, in connection with their regular functions, play a role in the recommendation of
any purchase or sale of a security by the company or obtain information pertaining to such purchase or sale. The Code of Ethics
is intended to prohibit fraud against the company that may arise from personal trading. Personal trading is permitted by such
persons subject to certain restrictions; however, such persons are generally required to pre-clear many security transactions
with the company’s Chief Compliance Officer and to report all transactions on a regular basis.
The
Code of Ethics is available in the EDGAR Database on the SEC’s internet website at (http://www.sec.gov). You may obtain
copies of this information, after paying a duplication fee, by electronic request at the following e-mail address: publicinfo@sec.gov.
A copy of the Code of Ethics is also available for free at http://www.daxor.com/pdfs/daxor_codeofethics.pdf
Proxy
Voting Procedures
The
company is responsible for voting proxies on securities held in its portfolio. When the company receives a proxy, the decision
regarding how to vote such proxy will be made by Mr. Feldschuh in accordance with its proxy voting procedures.
The
vote with respect to most routine issues presented in proxy statements is expected to be cast in accordance with the position
of the issuer’s management, unless it is determined by Mr. Feldschuh or the Board of Directors that supporting management’s
position would adversely affect the investment merits of owning the issuer’s security. However, each issue will be considered
on its own merits, and a position of management found not to be in the best interests of the company’s shareholders will
not be supported.
Proxies
solicited by issuers whose securities are held by the company will be voted solely in the interests of the shareholders of the
company. Any conflict of interest will be resolved in the way that will most benefit the company and its shareholders. If the
conflict of interest is determined to be material, the conflict shall be disclosed to the Board of Directors and Mr. Feldschuh
will follow the instructions of the Board.
The
company is required to annually file Form N-PX, which lists the company’s complete proxy voting record for the most recent
12-month period ending June 30. The company’s proxy voting record is available without charge, upon request, by calling
the company toll-free at (888) 774-3268 and on the SEC’s website at www.sec.gov.
PORTFOLIO
TRANSACTIONS AND BROKERAGE
Subject
to the supervision of the Board of Directors, Mr. Feldschuh is responsible for decisions to purchase and sell securities for the
company, the negotiation of the prices to be paid and the allocation of transactions among various dealer firms. Transactions
on stock exchanges involve the payment by the company of brokerage commissions. There generally is no stated commission in the
case of securities traded in the over-the-counter market but the price paid by the company usually includes an undisclosed dealer
commission or mark-up. Transactions in the over-the-counter market can also be placed with broker-dealers who act as agents and
charge brokerage commissions for effecting over-the-counter transactions. The company may place its over-the-counter transactions
either directly with principal market makers, or with broker-dealers.
In
certain instances, the company may make purchases of underwritten issues at prices that include underwriting fees. Portfolio securities
may be purchased directly from an underwriter or in the over-the-counter market from the principal dealers in such securities,
unless it appears that a better price or execution may be obtained through other means. The company does not direct brokerage
transactions to brokers because of research services provided by such brokers.
The
company incurred total commission expense of $24,316 for the three years ended December 31, 2020 as follows: $15,988 in 2020;
$5,275 in 2019; and $3,053 in 2018. The cost basis of securities purchased includes any commissions paid and the proceeds of securities
sold is recorded net of any commissions paid.
DESCRIPTION
OF SHARES
The
holders of the common stock have one vote per share for the election of directors, without provisions for cumulative voting, and
on all other matters. Thus, holders of more than 50% of the shares voting for the election of directors can elect all the directors
if they choose to do so. The common stock is not redeemable and has no conversion or preemptive rights.
REPURCHASE
OF SHARES
Shareholders
do not have the right to cause the company to redeem their shares. The shares trade in the open market.
NET
ASSET VALUE
The
company will determine its net asset value as of the close of regular session trading on the New York Stock Exchange on the last
business day of its semi-annual reporting period and its fiscal year, and will make its net asset value available for publication
on those dates. Net asset value is computed by dividing the value of all of our assets (including accrued interest and distributions
and current and deferred income tax assets), less all of our liabilities (including accrued expenses, distributions payable, current
and deferred accrued income taxes, and any borrowings) and the liquidation value of any outstanding preferred stock, by the total
number of shares outstanding.
Publicly
traded securities with a readily available market price listed on any exchange other than the NASDAQ are valued, except as indicated
below, at the last sale price on the business day as of which such value is being determined. If there has been no sale on such
day, the securities are valued at the mean of the most recent bid and asked prices on such day. Securities admitted to trade on
the NASDAQ are valued at the NASDAQ official closing price. Portfolio securities traded on more than one securities exchange are
valued at the last sale price on the business day as of which such value is being determined at the close of the exchange representing
the principal market for such securities.
Equity
securities traded in the over-the-counter market, but excluding securities admitted to trading on the NASDAQ, are valued at the
closing bid prices. Debt securities that are considered bonds are valued by using the mean of the bid and ask prices provided
by an independent pricing service. For debt securities that are considered bank loans, the fair market value is determined by
using the mean of the bid and ask prices provided by the agent or syndicate bank or principal market maker. When price quotes
are not available, fair market value will be based on prices of comparable securities. In certain cases, the company may not be
able to purchase or sell debt securities at the quoted prices due to the lack of liquidity for these securities.
Any
derivative transaction that the company enters into may, depending on the applicable market environment, have a positive or negative
value for purposes of calculating the net asset value. Exchange-traded options and futures contracts are valued at the last sales
price at the close of trading in the market where such contracts are principally traded or, if there was no sale on the applicable
exchange on such day, at the mean between the quoted bid and ask price as of the close of such exchange.
For
any portfolio security held by us for which reliable market quotations are not readily available, valuations are determined in
a manner that most fairly reflects fair value of the security on the valuation date, pursuant to the oversight of the Board of
Directors. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market
value, the fair value of such investments may fluctuate from period to period. Additionally, the fair value of such investments
may differ from the values that would have been used had a ready market existed for such investments and may differ materially
from the values that company may ultimately realize.
UNITED
STATES FEDERAL INCOME TAX CONSIDERATIONS
The
following discussion is a summary of the U.S. federal income tax considerations generally applicable to the acquisition, ownership
and disposition of the common stock. This summary is based upon U.S. federal income tax law as of the date of this SAI, which
is subject to change or differing interpretations, possibly with retroactive effect. This summary does not discuss all aspects
of U.S. federal income taxation that may be important to particular investors in light of their individual circumstances, including
investors subject to special tax rules (e.g., financial institutions, insurance companies, broker-dealers, partnerships and their
partners, tax-exempt organizations (including private foundations), taxpayers that have elected mark-to-market accounting, S corporations,
regulated investment companies, real estate investment trusts, investors that will hold the common stock as part of a straddle,
hedge, conversion, or other integrated transaction for U.S. federal income tax purposes, former citizens or residents of the United
States or investors that have a functional currency other than the U.S. dollar), all of whom may be subject to tax rules that
differ materially from those summarized below. In addition, this summary does not discuss other U.S. federal tax consequences
(e.g., estate or gift tax), any state, local, or non-U.S. tax considerations or the Medicare tax or alternative minimum tax. In
addition, this summary is limited to investors that will hold our securities as “capital assets” (generally, property
held for investment) under the Internal Revenue Code of 1986, as amended, (the “Code”), and that acquired the common
stock pursuant to this offering. No ruling from the Internal Revenue Service, (the “IRS”) has been or will be sought
regarding any matter discussed herein. No assurance can be given that the IRS would not assert, or that a court would not sustain
a position contrary to any of the tax aspects set forth below.
For
purposes of this summary, a “U.S. Holder” is a beneficial holder of securities who or that, for U.S. federal income
tax purposes is:
| |
● |
An
individual who is a United States citizen or resident of the United States; |
| |
|
|
| |
● |
A
corporation, or other entity treated as a corporation for United States federal income tax purposes created in, or organized
under the laws of, the United States or any state or political subdivision thereof; |
| |
|
|
| |
● |
An
estate, the income of which is includible in gross income for United States federal income tax purposes regardless of its
source; or |
| |
|
|
| |
● |
A
trust (A) the administration of which is subject to the primary supervision of a United States court and which has one or
more United States persons (within the meaning of the Code) who have the authority to control all substantial decisions of
the trust or (B) that has in effect a valid election under applicable Treasury regulations to be treated as a United States
person. |
If
a partnership (including an entity or arrangement treated as a partnership for U.S. federal income tax purposes) holds the common
stock, the tax treatment of a partner in such partnership will generally depend upon the status of the partner, the activities
of the partnership and certain determinations made at the partner level. If you are a partner of a partnership holding the common
stock, you are urged to consult your tax advisor regarding the tax consequences of the ownership and disposition of our securities.
THIS
DISCUSSION OF U.S. FEDERAL INCOME TAX CONSIDERATIONS IS FOR GENERAL INFORMATION PURPOSES ONLY AND IS NOT TAX ADVICE. WE URGE PROSPECTIVE
HOLDERS TO CONSULT THEIR TAX ADVISORS CONCERNING THE U.S. FEDERAL INCOME TAX CONSEQUENCES TO THEM OF OWNING AND DISPOSING OF THE
COMMON STOCK, AS WELL AS THE APPLICATION OF ANY, STATE, LOCAL AND NON-U.S. INCOME, ESTATE AND OTHER TAX CONSIDERATIONS.
Personal
Holding Company Status
The
company would be subject to a second level of U.S. federal income tax on a portion of its income if it is determined to be a personal
holding company, or PHC, for U.S. federal income tax purposes. A U.S. corporation will generally be classified as a PHC for U.S.
federal income tax purposes in a given taxable year if (1) at any time during the last half of such taxable year, five or fewer
individuals (without regard to their citizenship or residency and including as individuals for this purpose certain entities such
as certain tax-exempt organizations, pension funds, and charitable trusts) own or are deemed to own (pursuant to certain constructive
ownership rules) more than 50% of the stock of the corporation by value and (2) at least 60% of the corporation’s adjusted
ordinary gross income, as determined for U.S. federal income tax purposes, for such taxable year consists of PHC income (which
includes, among other things, dividends, interest, certain royalties, annuities and, under certain circumstances, rents).
It
is possible that at least 60% of the company’s adjusted ordinary gross income may consist of PHC income as discussed above.
In addition, depending on the concentration of the common stock in the hands of individuals, it is possible that more than 50%
of our stock will be owned or deemed owned (pursuant to the constructive ownership rules) by such persons during the last half
of a taxable year. Thus, no assurance can be given that the company will not become a PHC following this offering or in the future.
If the company is or were to become a PHC in a given taxable year, the company would be subject to an additional PHC tax, currently
20%, on its undistributed PHC income, which generally includes its taxable income, subject to certain adjustments.
Taxation
of Distributions
If
the company pays cash distributions to U.S. Holders of shares of the common stock, such distributions will constitute dividends
for U.S. federal income tax purposes to the extent paid from the company’s current or accumulated earnings and profits,
as determined under U.S. federal income tax principles. Distributions in excess of current and accumulated earnings and profits
will constitute a return of capital that will be applied against and reduce (but not below zero) the U.S. Holder’s adjusted
tax basis in the common stock. Any remaining excess will be treated as gain realized on the sale or other disposition of the common
stock and will be treated as described under “Gain or Loss on Sale, Taxable Exchange or Other Taxable Disposition of the
Common Stock” below.
Dividends
the company pays to a U.S. Holder that is a taxable corporation generally will qualify for the dividends received deduction if
the requisite holding period is satisfied. With certain exceptions (including dividends treated as investment income for purposes
of investment interest deduction limitations), and provided certain holding period requirements are met, dividends the company
pays to a non-corporate U.S. Holder will generally constitute “qualified dividends” that will be subject to tax at
the maximum tax rate accorded to long-term capital gains.
Gain
or Loss on Sale, Taxable Exchange or Other Taxable Disposition of the Common Stock
A
U.S. Holder will recognize gain or loss on the sale, taxable exchange or other taxable disposition of the common stock. Any such
gain or loss will be capital gain or loss, and will be long-term capital gain or loss if the U.S. Holder’s holding period
for the common stock so disposed of exceeds one year. The amount of gain or loss recognized will generally be equal to the difference
between (1) the sum of the amount of cash and the fair market value of any property received in such disposition and (2) the U.S.
Holder’s adjusted tax basis in its common stock so disposed of. A U.S. Holder’s adjusted tax basis in its common stock
will generally equal the U.S. Holder’s acquisition cost less any prior distributions treated as a return of capital. The
deductibility of capital losses is subject to limitations.
Information
Reporting and Backup Withholding
In
general, information reporting requirements may apply to dividends paid to a U.S. Holder and to the proceeds of the sale or other
disposition of shares of common stock, unless the U.S. Holder is an exempt recipient. Backup withholding may apply to such payments
if the U.S. Holder fails to provide a taxpayer identification number, a certification of exempt status or has been notified by
the IRS that it is subject to backup withholding (and such notification has not been withdrawn). Any amounts withheld under the
backup withholding rules will be allowed as a refund or a credit against a U.S. Holder’s U.S. federal income tax liability
provided the required information is timely furnished to the IRS.
INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
WithumSmith+Brown,
P.C. has been appointed as independent registered public accounting firm for the company, providing audit services with respect to the preparation of filings with the SEC. WithumSmith+Brown, P.C.
is located at 1411 Broadway 23rd Floor New York, NY 10018.
ADDITIONAL
INFORMATION
Daxor
Corporation has filed a Registration Statement on Form N-2, including amendments thereto, with the Securities and Exchange Commission,
Washington, D.C. This SAI and the prospectus do not contain all of the information set forth in the Registration Statement, including
any exhibits and schedules thereto. For further information with respect to the company, reference is made to the Registration
Statement. Statements contained in this SAI as to the contents of any contract or other document referred to are not necessarily
complete and in each instance reference is made to the copy of such contract or other document filed as an exhibit to the Registration
Statement, each such statement being qualified in all respects by such reference. Copies of the Registration Statement may be
inspected without charge at the Securities and Exchange Commission’s principal office in Washington, D.C., and copies of
all or any part thereof may be obtained from the Securities and Exchange Commission upon the payment of certain fees prescribed
by the Securities and Exchange Commission.
Daxor
Corporation previously filed annual, quarterly and current reports, proxy statements and other information with the SEC. You may
read and copy any reports, statements or other information that we file with the SEC on
the EDGAR Database on the SEC’s Internet website at http://www.sec.gov. Copies of this information may be obtained, upon
payment of a duplicating fee, by electronic request at the following e-mail address: publicinfo@sec.gov.
The SEC allows Daxor Corporation
to “incorporate by reference” information into this SAI, which means that the company can disclose important information to
you by referring you to other documents filed separately with the SEC. The information incorporated by reference is considered part of
this SAI. The company incorporates by reference any future filings it will make with the SEC under Sections 13(a), 13(c), 14, or 15(d)
of the Exchange Act or pursuant to Rule 30b2-1 under the 1940 Act, including those made after the date of this SAI (excluding any information
furnished, rather than filed), until the company has sold all of the offered securities to which the Prospectus, this SAI and any accompanying
Prospectus Supplement relates, or the offering is otherwise terminated. The documents incorporated by reference herein include:
You
may request a copy of these documents by writing or telephoning Daxor Corporation at:
Investor
Relations
Daxor
Corporation
109
Meco laneOak Ridge, TN 37830
(888)
774-3268
FINANCIAL
STATEMENTS
Daxor
Corporation’s Annual Report on Form N-CSR for the fiscal year ended December 31, 2020, which includes the company’s
financial statements for that fiscal year, is incorporated herein by reference with respect to all information included therein.
Daxor (AMEX:DXR)
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