CAUTION REGARDING FORWARD-LOOKING STATEMENTS

The following discussion of the our financial condition and results of our operations should be read in conjunction with the Condensed Consolidated Financial Statements and Notes thereto included elsewhere in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2008. This Quarterly Report on Form 10-Q contains forward-looking statements based on our current expectations, assumptions, estimates and projections about us and our industry. These forward-looking statements are usually accompanied by words such as "believes," "may," "should," "anticipates," "estimates," "expects," "future," "intends," "hopes," "plans," and similar expressions, and the negative thereof. Forward-looking statements involve risks and uncertainties and our actual results may differ materially from the results anticipated in these forward-looking statements as a result of certain factors.

BUSINESS OVERVIEW

Daxor Corporation is a medical device manufacturing company that offers additional biotech services, such as cryobanking, through its wholly owned subsidiary Scientific Medical Systems Corp. The main focus of Daxor Corporation has been the development and marketing of an instrument that rapidly and accurately measures human blood volume. This instrument is used in conjunction with a single use diagnostic injection and collection kit that the Company also sells to its customers.

RECENT DEVELOPMENTS

Daxor has actively engaged in participating in several clinical trials in three strategic areas: Intensive Critical Care Medicine, Heart Failure/Hypertension and Dialysis. Of the five current clinical trials, one has recently been completed, Blood Volume Analysis in treating ICU Patients - A Prospective, Randomized Outcome Study. The basis of this study was to investigate if the inclusion of a measured blood volume analysis from Daxor's BVA-100 would result in (1) a change in treatment; (2) improved clinical outcomes; and (3) reductions in the cost of care. Results of this study are expected to be published sometime prior to the first quarter of 2010.

Daxor is also coordinating its first multi-center, prospective, blinded outcome study in heart failure. The TEAM HF (Treatment to Euvolemia by Assessment and Measured Blood Volume in Heart Failure) will be comprised of nine
(9) medical centers and a total of 300 patients. This study will investigate if utilizing a measured blood volume while treating heart failure patients following a hospital stay will decrease a patient's need to revisit the hospital, decrease the mortality rate and improve their overall treatment and quality of life while living with heart failure. The TEAM HF study is a six month study currently anticipated to begin by July 2009.

RESULTS OF OPERATIONS

Three months ended March 31, 2009 as compared with three months ended March 31, 2008:

Operating Revenues and Expenses

For the three months ended March 31, 2009, consolidated operating revenues increased to $434,037 from $420,913 for the same period in 2008, an increase of $13,124 or 3.11%. This was mainly the result of an increase in Blood Volume Kit Sales. There were no Blood Volume Analyzers being sold during the current quarter or during the same period last year.

For the three months ended March 31, 2009, revenue from Blood volume kit sales increased by $15,075 or 5.12% to $309,452 from $294,377 for the same period in 2008. This can mainly be attributed to an increase in the number of kits sold from 868 in 2008 to 979 during the current period for an increase of 12.78%. There were 56 Blood Volume Analyzers placed at March 31, 2009 versus 53 at March 31, 2008. For the three months ended March 31, 2009, the Company provided 105 Volumex doses free of charge to facilities utilizing the BVA-100 for research versus 111 during the same period in 2008.

                                                           Equipment
                                                           Sales and
                                   Kit Sales Three        Other Three          Total Three
 Equipment Sales and Related      Months Ended March      Months Ended        Months Ended
          Services:                    31, 2009          March 31, 2009      March 31, 2009

Revenue                           $          309,452     $       35,511     $         344,963
Cost of Goods Sold                           107,415             32,624               140,039

Gross Profit                      $          202,037     $        2,887     $         204,924

Gross Profit Percentage                         65.2 %              8.1 %                59.4 %




                                                           Equipment
                                                           Sales and
                                   Kit Sales Three        Other Three          Total Three
 Equipment Sales and Related      Months Ended March      Months Ended        Months Ended
          Services:                    31, 2008          March 31, 2008      March 31, 2008

Revenue                           $          294,377     $       29,403     $         323,780
Cost of Goods Sold                           120,168             18,446               138,614

Gross Profit                      $          174,209     $       10,957     $         185,166

Gross Profit Percentage                         59.2 %             37.3 %                57.2 %

The additional revenues for Equipment Sales and Other during the current and previous quarters consist 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 $1,178,962 for the three months ended March 31, 2009 versus $1,329,904 for the same period in 2008, for a decrease of $150,942 or 11.34%. The main reason for this was decreased payroll and related costs of $108,365 for the three months ended March 31, 2009 as compared to the same period in 2008.

Research & Development expenses for Equipment Sales and Related Services were $547,593 for the three months ended March 31, 2009 versus $559,309 for the same period in 2008 which is a decrease of $11,716 or 2.09%. 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 $89,074 in 2009 from $97,133 in 2008, for a decrease of $8,059 or 8.30%. The main reason for this was a decrease in Semen Bank Storage fees and related items of $6,015 for the three months ended March 31, 2009 as compared to 2008.

Total S G & A (selling, general and administrative) and R&D (Research and Development) costs for the Cryobanking and related services segment were $217,103 for the three months ended March 31, 2009 versus $207,796 for the same period in 2008, for an increase of $9,307 or 4.48%.

Consolidated Operating Expenses

The total consolidated operating expenses including cost of sales for the first quarter of 2009 were $1,548,533 versus $1,689,714 in 2008 for a decrease of $141,181 or 8.36%, which is mainly attributable to a reduction in payroll and related expenses of $106,512.

Dividend Income

Dividend income earned on the Company's security portfolio for the three months ended March 31, 2009 was $987,097 versus $630,782 for the same period in 2008 for an increase of $356,315 or 56.49%. The main reason for this increase was the receipt of a onetime special dividend of $282,425 on a stock which was still in the Company's investment portfolio at March 31, 2009.

Investment Gains (Losses)

Gains on the sale of investments were $5,070,441 for the three months ended March 31, 2009 versus $5,830,999 for the same period in 2008 for a decrease of $760,558 or 13.04%. 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 ($6,264,931) versus a gain of $2,176,041 for the same period in 2008. Interest expense net of interest income was $67,699 for the three months ended March 31, 2009 versus $29,515 for the three months ended March 31, 2008. Administrative expenses relating to portfolio investments were $31,886 in 2008 versus $ 21,414 for the same period in 2008. A detailed description of investment policies and historical records over the past 16 years was included in the recent 10-K filing for the year ended December 31, 2008.

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.

As of March 31, 2009, cash and cash equivalents totaled $37,612 versus $2,545,040 at December 31, 2008. Cash used in operating activities was $2,966,222 for the three month period ended March 31, 2009. The decrease in cash and cash equivalents was primarily due to funding the operating loss for the current quarter.

Cash used in investing activities was $7,436,268 for the three months ended March 31, 2009. The decrease is attributable to the acquisition of property and equipment of $987,725 and the Company's investment activities of $6,448,543.

A total of $7,895,062 of cash was provided during the current quarter from financing activities and this was primarily due to the proceeds obtained from margin loans payable.

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

The Company's investment portfolio has been a critical source of supplemental income to partially offset the continuing losses from operations. Without the income from the investment portfolio, the Company would have needed to raise additional operating funds through either debt or equity financing or a combination of the two. The Company's portfolio has maintained a net value above historical cost for each of the past 97 consecutive quarters.

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 80% of its portfolio in electric utilities. The Board of Directors has authorized this minimum to be temporarily lowered to 70% when Company management deems it to be necessary. Investments in utilities are primarily in electric companies. Investments in non-utility stocks will generally not exceed 20% of the value 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 five 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 the Company's CEO, Dr. Joseph Feldschuh.

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 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.

Our critical accounting policies, are described in our Annual Report on Form 10-K for the year ended December 31, 2008. There have been no material changes to our critical accounting policies as of and for the three months ended March 31, 2009.