RECENT DEVELOPMENTS

The Centers for Medicare and Medicaid Services (CMS) implemented a significant policy change affecting the reimbursement for all diagnostic radiopharmaceutical products and contrast agents which became effective as of January 1, 2008. Diagnostic radiopharmaceuticals such as Daxor's Volumex will not be separately reimbursable by Medicare for outpatient services. At this time, it is unclear if this policy change will also be implemented by private third party health insurance companies or non-hospital providers.

The previous reimbursement for hospital outpatients includes payment for both the cost of the procedure to perform a blood volume analysis (BVA) and the radiopharmaceutical (Daxor's Volumex radiopharmaceutical). CMS's new policy became effective as of January 1, 2008 and will only include the reimbursement for the procedure and would require the hospital to absorb the cost of the radiopharmaceutical. There will be an upward adjustment for the procedure code to include some of the costs of the radiopharmaceutical. However, this upward adjustment may not entirely cover the costs associated with the procedure and the radiopharmaceutical.

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

RESULTS OF OPERATIONS

Three months ended September 30, 2008 as compared with three months ended September 30, 2007:

Operating Revenues and Expenses

For the three months ended September 30, 2008, consolidated operating revenues increased to $451,253 from $349,547 for the same period in 2007, an increase of $101,706 or 29.09%. This was mainly the result of one Blood Volume Analyzer being sold during the current quarter for $65,000 versus no Blood Volume Analyzers sold during the same period last year.

For the three months ended September 30, 2008, revenue from Blood volume kit sales increased by $28,423 or 12.73% to $251,697 from $223,274 for the same period in 2007. This can mainly be attributed to an increase in the number of kits sold from 644 in 2007 to 770 during the current period for an increase of 19.56%. There were 53 Blood Volume Analyzers placed at September 30, 2008 versus 55 at September 30, 2007. For the three months ended September 30, 2008, the Company provided 125 Volumex doses free of charge to facilities utilizing the BVA-100 for research versus 100 during the same period in 2007. Effective February 1, 2007, the Company raised prices by approximately 5% on Blood Volume Kits.

                                                      Equipment
                                                      Sales and
                                                     Other Three
                                  Kit Sales Three      Months         Total Three        Total Three
                                   Months Ended         Ended        Months Ended       Months Ended
Equipment Sales And Related        September 30,      September      September 30,      September 30,
Serivces                               2008           30, 2008           2008               2007

Revenue                           $       251,697    $    98,264    $       349,961    $       246,263
Cost of Goods Sold                        120,478         68,006            188,484            210,215
Gross Profit                      $       131,219    $    30,258    $       161,477    $        36,048
Gross Profit Percentage                     52.13 %        30.79 %            46.14 %            14.64 %

There was one Blood Volume Analyzer sold during the quarter ended September 30, 2008 for a total of $65,000 versus none during the quarter ended September 30, 2007. The additional revenue of $33,264 for Equipment Sales and Other during the current quarter consists almost entirely of shipping charges and service contract revenue.

Total S G & A (selling, general and administrative) and R&D (Research and Development) costs for Equipment Sales and Related Services were $1,263,540 for the three months ended September 30, 2008 versus $ 1,489,098 for the same period in 2007, for a decrease of $225,558 or 15.15%. The main reason for this was decreased payroll and related costs of $157,181 for the three months ended September 30, 2008 as compared to the same period in 2007.

Research & Development expenses for Equipment Sales and Related Services were $560,914 for the three months ended September 30, 2008 vs. $600,201 for the same period in 2007 which is a decrease of $39,287 or 6.54%. Daxor is committed to making Blood Volume Analysis a standard of care in at least three different disease states. In order to achieve this goal, we are continuing to spend time and money in research and development to get the best product to the market. We are still working on the following three projects: 1) GFR: Glomerular Filtration Rate, 2) Total Body Albumin Analysis, and 3) Wipes tests for radiation contamination/detection. We are also progressing on the next version of the delivery device for the radioactive dose Volumex. The current version is the "Max-100" which has a patent. The next version, the "Max-200" will be without a needle and should afford the company extended protection with a second patent when it is completed.

Operating revenues for the cryobanking segment, which includes both blood banking and semen banking, decreased to $101,292 in 2008 from $103,284 in 2007, for a decrease of $1,992 or 1.92%. The main reason for this was a decrease in Semen Bank Storage fees and related items of $5,596 for the three months ended September 30, 2008 as compared to 2007.

Total S G & A (selling, general and administrative) and R&D (Research and Development) costs for the Cryobanking and related services segment were $209,835 for the three months ended September 30, 2008 vs. $209,038 for the same period in 2007, for an increase of $797.

Consolidated Operating Expenses

The total consolidated operating expenses including cost of sales for the third quarter of 2008 were $1,672,976 versus $1,918,386 in 2007 for a decrease of $245,410.

Dividend Income

Dividend income earned on the Company's security portfolio for the three months ended September 30, 2008 was $750,909 versus $711,578 for the same period in 2007 for an increase of $39,331 or 5.53%.

Investment Gains

Gains on the sale of investments were $9,787,106 for the three months ended September 30, 2008 versus $6,110,405 for the same period in 2007 for an increase of $3,676,701 or 60.17%. For the current quarter, the Company had a loss from the marking to the market of short positions of stocks and put and call options of $ 532,300 versus a loss of $3,251,811 for the same period in 2007. Interest expense net of interest income was $32,936 for the three months ended September 30, 2008 versus $34,976 for the three months ended September 30, 2007. Administrative expenses relating to portfolio investments were $27,984 in 2008 versus $ 13,479 for the same period in 2007 for an increase of $14,505 or 107.61%. A detailed description of investment policies and historical records over the past 15 years was included in the recent 10-K filing for the year ended December 31, 2007.

LIQUIDITY AND CAPITAL RESOURCES

The Company's management has pursued a policy of maintaining sufficient liquidity and capital resources in order to assure continued availability of necessary funds for the viability and projected growth of all ongoing projects.

At September 30, 2008 the Company had total assets of $91,761,470 with stockholders' equity of $53,628,415 as compared to total assets of $102,560,500 with stockholders' equity of $54,915,885 at December 31, 2007. At September 30, 2008, the Company had a net unrealized gain on available for sale securities of $24,173,858 and a deferred tax liability of $8,460,850 for net unrealized capital gains on available-for-sale securities of $15,713,008. At December 31, 2007, the company had a net unrealized gain of $44,932,036 and a deferred tax liability of $15,726,213 for net unrealized capital gains on available-for-sale securities of $29,205,823. These amounts are included in the calculation of Total Stockholders' Equity. At September 30 2008, the Company's available for sale securities had a fair market value of $66,888,238 with short-term loans payable of $2,264,318 and a receivable due from brokers of $8,175,317. The Company has current liabilities of $37,732,383 which includes the deferred tax liability of $8,460,850 and the short term loans payable of $2,264,318. The deferred tax liability would be due if the Company chose to sell its entire portfolio. The Company's investment portfolio has been a critical source of supplemental income to partially offset the continuing losses from operations. Without this income, the Company would have been in a precarious financial situation because of its operating losses over the past 15 years. The Company's portfolio has maintained a net value above historical cost for each of the past 95 consecutive quarters.

The Company currently has adequate resources for the current level of marketing and research and development expenses for the BVA-100 Blood Volume Analyzer as well as capital to sustain its localized semen and blood banking services. The Company may not, at the present time, have adequate resources to expand its marketing force to all areas of the country. The Company is simultaneously expanding its research and development efforts to develop additional instrumentation for renal function testing, specifically glomerular filtration testing. The Company recently explored the potential for raising additional capital but the terms would have been disadvantageous to existing shareholders. The current primary focus is on the BVA-100 Blood Volume Analyzer with respect to expenditure of resources. The Company anticipates hiring additional regional managers to the existing sales/marketing team. It is the goal of the marketing team to develop an individual sales team for each regional manager. The Company is also expanding its support services personnel.

The Board of Directors has voted to declare an additional dividend of $0.25 per share. A previous dividend of $0.25 per share was paid on August 27, 2008. The current dividend will be paid to shareholders of record on November 4, 2008. The payment date is November 26, 2008. The Company intends to maintain a policy of paying dividends on a quarterly basis if net income is available to maintain the dividend.

If any portions of the distributions are classified as dividends for Federal Income Tax Purposes, it will reduce the Company's undistributed personal holding company income which will in turn reduce the liability for personal holding company taxes.

RESULTS OF OPERATIONS

Nine months ended September 30, 2008 as compared with nine months ended September 30, 2007:

Operating Revenues and Expenses

For the nine months ended September 30, 2008, consolidated operating revenues increased to $1,428,753 from $1,400,747 for the same period in 2007, an increase of $28,006 or 1.99%. There were four Blood Volume Analyzers sold during the first nine months of 2008 for a total of $260,000 versus the sale of five Blood Volume Analyzers during the same period in 2007 for a total of $325,500.

For the nine months ended September 30, 2008, revenue from Blood volume kit sales increased by $112,201 or 16.48% to $792,894 from $680,693 for the same period in 2007. This can mainly be attributed to an increase in the number of kits sold from 2,409 in 2007 to 2,099 during the current period for an increase of 14.77%. There were 53 Blood Volume Analyzers placed at September 30, 2008 versus 55 at September 30, 2007. For the nine months ended September 30, 2008, the Company provided 398 Volumex doses free of charge to facilities utilizing the BVA-100 for research versus 298 during the same period in 2007. Effective February 1, 2007, the Company raised prices by approximately 5% on Blood Volume Kits.

The following table provides gross margin information on Equipment Sales & Related Services for the nine months ended September 30, 2008 and 2007:

                                                    Equipment
                                                    Sales and
                                Kit Sales Nine      Other Nine       Total Nine         Total Nine
                                 Months Ended      Months Ended     Months Ended       Months Ended
Equipment Sales And Related     September 30,       September       September 30,      September 30,
Serivces                             2008            30, 2008           2008               2007

Revenue                        $        792,894    $    348,845    $     1,141,739    $     1,078,947
Cost of Goods Sold                      357,505         133,769            491,274            482,975
Gross Profit                   $        435,389    $    215,076    $       650,465    $       595,972
Gross Profit Percentage                   54.91 %         61.65 %            56.97 %            55.24 %

There were four Blood Volume Analyzers sold during the nine months ended September 30, 2008 for a total of $260,000 versus five during the nine months ended September 30, 2007 for a total of $325,500. The additional revenue of $88,845 for Equipment Sales and Other consists almost entirely of shipping charges and service contract revenue.

Total S G & A (selling, general and administrative) and R&D (Research and Development) costs for Equipment Sales and Related Services were $4,012,364 for the nine months ended September 30, 2008 versus $ 4,237,206 for the same period in 2007.

Operating revenues for the cryobanking segment, which includes both blood banking and semen banking, decreased to $287,014 in 2008 from $321,800 in 2007, for a decrease of $34,786 or 10.81%. The main reason for this was a decrease in Semen Bank Storage fees and related items of $24,485 for the nine months ended September 30, 2008 as compared to 2007.

Total S G & A (selling, general and administrative) and R&D (Research and Development) costs for the Cryobanking and related services segment were $605,047 for the nine months ended September 30, 2008 vs. $655,698 for the same period in 2007, for a decrease of $50,651 or 7.72%. The main reason for this decrease was a reduction of $33,546 in payroll and related expenses for the nine months ended September 30, 2008 as compared to the same period in 2007.

Consolidated Operating Expenses

The total consolidated operating expenses including cost of sales for the nine months ended September 30, 2008 were $5,143,528 versus $5,409,714 for the same period in 2007 for a decrease of $266,186 or 4.92%. This decrease in operating expenses is mostly due to a decrease in payroll and related expenses of $189,110 for the nine months ended September 30, 2008 as compared to the same period in 2007.

INVESTMENT PORTFOLIO

Dividend Income

Dividend income earned on the Company's security portfolio for the nine months ended September 30, 2008 was $1,933,410 versus $1,942,178 for the same period in 2007.

Investment Gains

Gains on the sale of investments were $18,262,577 for the nine months ended September 30, 2008 versus $9,551,357 for the same period in 2007 for an increase of $8,711,220 or 91.20%. For the current period, the Company had a gain from the marking to the market of short positions of stocks and put and call options of $1,610,482 versus a gain of $79,021 for the same period in 2007. Interest expense net of interest income was $78,003 for the nine months ended September 30, 2008 versus $179,033 for the nine months ended September 30, 2007 for a decrease of $101,030 or 56.43%. Administrative expenses relating to portfolio investments were $70,554 in 2008 versus $ 37,400 for the same period in 2007 for an increase of $33,154 or 88.65%. A detailed description of investment policies and historical records over the past 15 years was included in the recent 10-K filing for the year ended December 31, 2007.

CRITICAL ACCOUNTING POLICIES

The consolidated financial statements and accompanying footnotes included in this report have been prepared in accordance with accounting principles generally accepted in the United States with certain amounts based on management's best estimates and judgments. To determine appropriate carrying values of assets and liabilities that are not readily available from other sources, management uses assumptions based on historical results and other factors that they believe are reasonable. Actual results could differ from those estimates.

The Company recognized $17,436 and $9,362, respectively in total stock-based compensation expense during the three months ended September 30, 2008 and September 30, 2007.

The Company recognized $55,799 and $23,065, respectively in total stock-based compensation expense during the nine months ended September 30, 2008 and September 30, 2007.

Total unvested stock-based compensation expense was $25,432 at September 30, 2008 and had a total weighted average remaining term of 0.69 years. See Footnote #1 for more information on stock-based compensation.

The following is a summary of the accounting policies that the Company has deemed critical for reporting purposes in Form 10-Q at September 30, 2008. However, a comprehensive discussion of the Company's critical accounting policies and management estimates is included in Management's Discussion and Analysis of Financial Condition and Results of Operations in the Company's Annual Report on Form 10-K for the year ended December 31, 2007. There have been no significant changes in critical accounting policies or management estimates since the year ended December 31, 2007.

Available-for-Sale Securities

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

The company will also periodically engage in short selling of common stock. When this occurs, the short position is marked to the market and this adjustment is recorded in the Statement of Operations. Any gain or loss is recorded in the period presented.

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

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

1. The Company's investment goals are capital preservation and maintaining returns on capital with a high degree of safety.

2. The Company maintains a diversified securities portfolio comprised primarily of electric utility common and preferred stocks. The Company also sells covered calls on portions of its portfolio and also sells puts on stocks it is willing to own. It also sells uncovered calls and may have net short positions in common stock up to 15% of the value of the portfolio. The Company's net short position may temporarily rise to 15% of the Company's portfolio without any specific action because of changes in valuation, but should not exceed this amount. The Company's investment policy is to maintain a minimum of 85% of its portfolio in electric utilities. Investments in utilities are primarily in electric companies. Investments in non-utility stocks will not exceed 15% of the portfolio.

3. Investment in speculative issues, including short sales, maximum of 15%.

4. Limited use of options to increase yearly investment income.

a. The use of "Call" Options. Covered options can be sold up to a maximum of 20% of the value of the portfolio. This provides extra income in addition to dividends received from the company's investments. The risk of this strategy is that investments may be called away, which the company may have preferred to retain. Therefore, a limitation of 20% is placed on the amount of stock on which options can be written. The amount of the portfolio on which options are actually written is usually between 3-10% of the portfolio. The historical turnover of the portfolio is such that the average holding period is in excess of 5 years for available for sale securities.

b. The use of "Put" options. Put options are written on stocks which the company is willing to purchase. While the company does not have a high rate of turnover in its portfolio, there is some turnover; for example, due to preferred stocks being called back by the issuing company, or stocks being called away because call options have been written. If the stock does not go below the put exercise price, the company records the proceeds from the sale as income. If the put is exercised, the cost basis is reduced by the proceeds received from the sale of the put option. There may be occasions where the cost basis of the stock is lower than the market price at the time the option is exercised.

c. Speculative Short Sales/Short Options. The company normally limits its speculative transactions to no more than 15% of the value of the portfolio. The company may sell uncovered calls on certain stocks. If the stock price does not rise to the price of the call, the option is not exercised and the company records the proceeds from the sale of the call as income. If the call is exercised, the company will have a short position in the related stock. The company then has the choice of covering the short position, or selling a put against it. If the put is exercised, then the short position is covered. The company's current accounting policy is to mark to the market at the end of each quarter any short positions, and include it in the income statement. While the company may have so-called speculative positions equal to 15% of its accounts, in actual practice the net short stock positions usually account for less than 10% of the assets of the company.

5. In the event of a merger, the Company will elect to receive shares in the new company. In the event of a cash only offer, the Company will receive cash and be forced to sell it stock.

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

Revenue Recognition

The Company recognizes operational revenues from several sources. The first source is the outright sale of equipment, the Blood Volume Analyzer, to customers. The second source is the sale and associated shipping revenues of single-use radioactive doses (Volumex) that are injected into the patient and measured by the Blood Volume Analyzer. The third source of revenue is service contracts on the Blood Volume Analyzer, after it has been sold to a customer. The fourth source of revenue is the storage fees associated with cryobanked blood and semen specimens. The fifth is lab revenues from laboratory services, and the sixth is revenue from semen sales.