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. In our Form 10-Q for the quarter ended March 31, 2009, filed on May 12, 2009 we announced an expected start date of July 2009 for this study. We are now expecting the start date to be September 2009.

RESULTS OF OPERATIONS

Three months ended June 30, 2009 as compared with three months ended June 30, 2008:

Operating Revenues and Expenses

For the three months ended June 30, 2009, consolidated operating revenues decreased to $380,420 from $556,587 for the same period in 2008, a decrease of $176,167 or 31.65%. This was mainly due to no Blood Volume Analyzers being sold during the current quarter versus three during the same period last year for a total of $195,000.

For the three months ended June 30, 2009, revenue from Blood volume kit sales increased by $7,994 or 3.24% to $254,814 from $246,820 for the same period in 2008. This can mainly be attributed to an increase in the number of kits sold from 771 in 2008 to 880 during the current period for an increase of 14.14%. There were 56 Blood Volume Analyzers placed at June 30, 2009 versus 52 at June 30, 2008. For the three months ended June 30, 2009, the Company provided 99 Volumex doses free of charge to facilities utilizing the BVA-100 for research versus 162 during the same period in 2008.

                                                      Equipment Sales
                                                      and Other Three
  Equipment Sales and       Kit Sales Three Months     Months Ended      Total Three Months
   Related Services:          Ended June 30, 2009      June 30, 2009     Ended June 30, 2009

Revenue                     $               254,814   $        38,821    $           293,635
Cost of Goods Sold                          114,920            77,390                192,310

Gross Profit (Loss)         $               139,894   $       (38,569 )  $           101,325

Gross Profit (Loss)
Percentage                                     54.9 %           (99.4 )%                34.5 %




                                                      Equipment Sales
                                                      and Other Three
  Equipment Sales and       Kit Sales Three Months     Months Ended      Total Three Months
   Related Services:          Ended June 30, 2008      June 30, 2008     Ended June 30, 2008

Revenue                     $               246,820   $       221,178    $           467,998
Cost of Goods Sold                          120,100            44,076                164,176

Gross Profit                $               126,720   $       177,102    $           303,822

Gross Profit Percentage                        51.3 %            80.0 %                 64.9 %

The additional revenues for Equipment Sales and Other during the current and previous quarters consist almost entirely of shipping charges and service contract revenue.

The Company had a gross loss of ($38,569) on Equipment Sales and Other for the three months ended June 30, 2009 versus a gross profit for the three months ended June 30, 2008 of $177,102. The reason for the difference is that three Blood Volume Analyzers were sold during the second quarter of 2008 for a total of $195,000 versus no machines sold during the current three month period. The Company still incurs costs for items such as convenience kit production and related supplies even when Blood Volume Analyzers are not sold.

Total S,G&A (selling, general and administrative) and R&D (Research and Development) costs for Equipment Sales and Related Services were $1,283,180 for the three months ended June 30, 2009 versus $1,418,920 for the same period in 2008, for a decrease of $135,740 or 9.56%. The main reason for this was decreased payroll and related costs of $108,365 for the three months ended June 30, 2009 as compared to the same period in 2008.

Research & Development expenses for Equipment Sales and Related Services were $624,058 for the three months ended June 30, 2009 versus $614,979 for the same period in 2008 for an increase of $9,079 or 1.48%. 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 $86,785 in 2009 from $88,589 in 2008, for a decrease of $1,804 or 2.03%. The main reason for this was a decrease in Semen Analysis fees of $2,280 for the three months ended June 30, 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 $241,260 for the three months ended June 30, 2009 versus $187,416 for the same period in 2008, for an increase of $53,844 or 28.73%. The main reason for this was an increase of $35,624 in professional fees attributable to a non-material legal action.

Consolidated Operating Expenses

The total consolidated operating expenses including cost of sales for the second quarter of 2009 were $1,726,526 versus $1,780,838 in 2008 for a decrease of $54,312 or 3.04% which is mainly attributable to a reduction in payroll and related expenses of $43,020.

Dividend Income

Dividend income earned on the Company's security portfolio for the three months ended June 30, 2009 was $636,412 versus $551,719 for the same period in 2008 for an increase of $84,693 or 15.35%. The main reason for this increase is that the Company owned additional dividend paying stocks during the quarter ended June 30, 2009 versus the quarter ended June 30, 2008.

Investment Gains (Losses)

Gains on the sale of investments were $444,036 for the three months ended June 30, 2009 versus $2,644,472 for the same period in 2008 for a decrease of $2,200,436 or 83.21%. For the current quarter, the Company had a gain from the marking to the market of short positions of stocks and put and call options of $6,978,825 versus a loss of ($33,259) for the same period in 2008. Interest expense net of interest income was $59,828 for the three months ended June 30, 2009 versus $15,552 for the three months ended June 30, 2008. Administrative expenses relating to portfolio investments were $31,414 in 2008 versus $ 21,156 for the same period in 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 June 30, 2009, cash and cash equivalents totaled $234,371 versus $2,545,040 at December 31, 2008. Cash used in operating activities was $3,671,440 for the six month period ended June 30, 2009. The decrease in cash and cash equivalents was primarily due to funding the operating loss for the current six month period.

Cash used in investing activities was $2,798,257 for the six months ended June 30, 2009. The decrease is attributable to the acquisition of property and equipment of $1,498,225 during the current six month period, of which $1,420,900 is for the construction project at 109 Meco Lane and the Company's investment activities of $1,300,032.

In November of 2008, a construction project commenced at 109 Meco Lane. Management expects the project to be completed by the end of 2009 and the total cost to be approximately $1,800,000. The project involves the construction of laboratory and office space.

A total of $4,159,028 of cash was provided during the current six month period from financing activities and this was primarily due to the proceeds obtained from margin loans payable.

During the six months ended June 30, 2009, the President of the Company loaned a total of $1,140,000 to the Company in a series of advances ranging from $40,000 to $500,000. The loan due to the President of the Company never exceeded $650,000 and all advances were repaid within two weeks without interest.

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 98 consecutive quarters.

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

1. The Company's investment goals are capital preservation, maintaining returns on capital with a high degree of safety and generating income from dividends and option sales to help offset operating losses.

2. In order to achieve these goals, 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 if this is an option. If the proposed merger is a cash only offer, the Company will receive cash and be forced to sell the 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.

RESULTS OF OPERATIONS

Six months ended June 30, 2009 as compared with six months ended June 30, 2008:

Operating Revenues and Expenses

For the six months ended June 30, 2009, consolidated operating revenues decreased to $814,457 from $977,500 for the same period in 2008, a decrease of $163,043 or 16.68%. This was mainly due to no Blood Volume Analyzers being sold during the current six month period versus three during the same period last year for a total of $195,000.

For the six months ended June 30, 2009, revenue from Blood volume kit sales increased by $23,069 or 4.26% to $564,266 from $541,197 for the same period in 2008. This can mainly be attributed to an increase in the number of kits sold from 1,639 in 2008 to 1,851 during the current period for an increase of 12.94%. There were 56 Blood Volume Analyzers placed at June 30, 2009 versus 52 at June 30, 2008. For the six months ended June 30, 2009, the Company provided 204 Volumex doses free of charge to facilities utilizing the BVA-100 for research versus 273 during the same period in 2008.

The following tables provide gross margin information on Equipment Sales & Related Services for the six months ended June 30, 2009 and 2008:

                                Kit Sales Six       Equipment Sales and
   Equipment Sales and        Months Ended June    Other Six Months Ended     Total Six Months
    Related Services:             30, 2009             June 30, 2009         Ended June 30, 2009

Revenue                      $           564,266   $               74,332    $           638,598
Cost of Goods Sold                       222,335                  110,014                332,349

Gross Profit (Loss)          $           341,931   $              (35,682 )  $           306,249

Gross Profit (Loss)
Percentage                                  60.6 %                  (48.0 )%                47.9 %




                                                     Equipment Sales and
   Equipment Sales and       Kit Sales Six Months   Other Six Months Ended     Total Six Months
    Related Services:        Ended June 30, 2008        June 30, 2008        Ended June 30, 2008

Revenue                      $            541,197   $              250,581   $            791,778
Cost of Goods Sold                        237,027                   65,763                302,790

Gross Profit                 $            304,170   $              184,818   $            488,988

Gross Profit Percentage                      56.2 %                   73.7 %                 61.8 %

The additional revenues for Equipment Sales and Other during the current and previous six month periods consist almost entirely of shipping charges and service contract revenue.

The Company had a gross loss of ($35,682) on Equipment Sales and Other for the six months ended June 30, 2009 versus a gross profit for the six months ended June 30, 2008 of $184,818. The reason for the difference is that three Blood Volume Analyzers were sold during the six months ended June 30, 2008 for a total of $195,000 versus no machines sold during the current six month period. The Company still incurs costs for items such as convenience kit production and related supplies even when Blood Volume Analyzers are not sold.

Research & Development expenses for Equipment Sales and Related Services were $1,171,651 for the six months ended June 30, 2009 versus $1,174,288 for the six months ended June 30, 2008. 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 $175,859 in 2009 from $185,722 in 2008, for a decrease of $9,863 or 5.31%. The main reason for this was a decrease in Semen Bank Storage fees and related items of $6,972 for the six months ended June 30, 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 $458,363 for the six months ended June 30, 2009 versus $395,212 for the same period in 2008, for an increase of $63,151 or 15.98%. The main reasons for this were increases of $35,876 in professional fees attributable to the legal action which is discussed in greater detail in Part II and $19,097 in expenses allocated to Cryobanking from Equipment Sales and Related Services. These allocated expenses represent the expenses of Cryobanking paid by Equipment Sales and Related Services. These allocated expense have no effect on our consolidated results.

Consolidated Operating Expenses

The total consolidated operating expenses including cost of sales for the six months ended June 30, 2009 were $3,275,059 versus $3,470,552 in 2008 for a decrease of $195,493 or 5.63% which is mainly attributable to a reduction in payroll and related expenses of $149,532.

INVESTMENT PORTFOLIO

Dividend Income

Dividend income earned on the Company's security portfolio for the six months ended June 30, 2009 was $1,623,509 versus $1,182,501 for the same period in 2008 for an increase of $441,008 or 37.29%. 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 June 30, 2009.

Investment Gains (Losses)

Gains on the sale of investments were $5,514,477 for the six months ended June 30, 2009 versus $8,475,471 for the same period in 2008 for a decrease of $2,960,994 or 34.94%. For the current six months, the Company had a gain from the marking to the market of short positions of stocks and put and call options of $713,894 versus a gain of $2,142,782 for the same period in 2008. Interest expense net of interest income was $127,527 for the six months ended June 30, 2009 versus $45,067 for the six months ended June 30, 2008. Administrative expenses relating to portfolio investments were $63,300 in 2008 versus $ 42,570 for the same period in 2008.

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.

CODE OF ETHICS AND BUSINESS CONDUCT

The Company has a Code of Ethics and Business Conduct which was approved by the Board of Directors in March 2005. The Code of Ethics and Business Conduct applies to all directors, officers, employees and other representatives of the Company including the Chief Executive Officer and Chief Financial Officer. A copy of the Code of Ethics and Business Conduct is available for free at www.daxor.com