Daxor Corp Q4 FY2022 Earnings Call

Ladies and gentlemen, thank you for standing by. Good morning and welcome to the Daxor Corp. Fiscal Year 2022 Financial Results and Corporate Update Conference call. At this time, all participants are in a listen-only mode. A webcast replay of the call will be available approximately one hour after the end of the call at Daxor.com. I would now like to turn the call over to Scott Gordon, President of Core IR, the company's Investor Relations firm. Please go ahead, sir.

Thank you, Shelby. Good afternoon, and thank you for participating in today's conference call. Joining me from Daxor's leadership team are Michael Feldschuh, Chief Executive Officer; and Robert Michel, Chief Financial Officer. During this call, management will be making forward-looking statements, including statements that address Daxor's expectations for future performance or operational results. Forward-looking statements involve risks and other factors that may cause actual results to differ materially from those statements. For more information about these risks, please refer to the risk factors described in Daxor's most recently filed annual report on Form N-CSR and subsequent periodic reports filed with the SEC, and Daxor's press release that accompanies this call, particularly precautionary statements in it. The content of this call contains time sensitive information that is accurate only as of today, March 2nd, 2023. Except as required by law, Daxor disclaims any obligation to publicly update or revise any information to reflect events or circumstances that occur after this call. It is now my pleasure to turn the call over to CEO, Michael Feldschuh. Michael, please go ahead.

Thank you very much, Scott. Good morning, everybody. To begin the call, I would like to invite Bob Michel, our Chief Financial Officer, to give a presentation on the financial results that we just reported. Bob, good morning.

Good morning. Thanks, Michael. Good morning, everyone. Here's a summary of our fiscal year 2022 financial results. For the year ended December 31, 2022, Daxor's net assets increased 37% to $28,969,469 or $6.75 per share as compared to $21,152,719 or $5.24 per share at end of December 31, 2022. The value of the operating division increased $9.5 million to $26 million at December 31, 2022, from $16,500,000 at December 31, 2021. The increase during 2022 is based on the annual valuation performed for the year ended December 31, 2022, utilizing a hybrid of methods, of the income approach using the discounted cash flow method and a market approach utilizing a recent arm's length transaction. In November 2022, approximately 221,000 Daxor treasury shares were sold at a price of $9.50. This recent arm's length transaction was weighted more heavily in the valuation than in the past, as this transaction was completed just prior to the measurement reporting date at December 31, 2022. Discount cash flow used a 40% weighting, and the income approach utilized 60% of the weighting for the year. At the end of December 31, 2022, Daxor had net dividend income of $223,916 and net realized gains on investment activity of $2,736,375. There was a net decrease in the unrealized depreciation of investment option securities borrowed of $2,763,895 as we sold portions during the year 2022 and the prior period; significant unrealized gains unwound into realized gains for the period. Included in the net increase in net assets resulting from operations of $5,178,133 is non-cash stock-based compensation expense of $786,642. In efforts to provide incentives to employees, officers, agents, and consultants of the company, we utilize stock-based compensation incentive awards. There's a net realized loss of $3,264,419 from the operating division relating to investments in research and development sales overhead as the company continues to invest judiciously in research and development for our 2022-2023 product launch, ramping commercial sales teams, as well as production facilities for our next generation of blood volume analyzers. And with that, I'd like to turn the call back over to Michael for any other comments.

Thank you, Bob, and good morning, everyone. I’m pleased to share our progress as a company. If you've reviewed our filings and the attached shareholder letter, you know this is a crucial time for Daxor. We are preparing to launch our next-generation analyzer, our most important product in two decades. Before delving into that, I want to discuss our overall business strategy. To succeed, we need to focus on three key areas simultaneously. First, we must effectively commercialize our current product line to grow our business. We've emphasized this, and I’ll elaborate shortly. Secondly, we need to enhance the clinical evidence supporting our innovative diagnostic. This is vital because, unlike companies that offer slight improvements to existing diagnostics, which face stiff competition, we are leading a significant change in fluid management through precise quantification of patient fluid levels. Current methods are often invasive, costly, and inaccurate compared to our solution. Building clinical evidence around our superior measurement and its implications for patient outcomes and healthcare costs is essential for gaining market attention and recognition. The third focus area is innovation in our next generation of analyzers. Previous analyzers have been slow and cumbersome. Daxor pioneered a single-dose preloaded syringe for blood volume assessment, reducing analysis time from over 8 hours to results available in 60 to 90 minutes at the bedside. We are now innovating our next-generation systems. Years ago, we began collaborating with the Department of Defense and the National Institutes of Health, receiving funding to create a portable, rapid peptide analyzer that is accurate and does not require a complex clearance license. In 2022, we completed our contract with the Army to develop a working prototype for FDA submission and validation. Currently, we are focused on completing the validation process so we can submit our analyzer for FDA approval. We aim to submit a dual 510(k) CLIA waiver application within the next 90 days, targeting mid-year approval for our next-generation systems. I want to touch on our commercialization efforts led by our Senior Vice President of Commercialization, Jean Oertel. We have strengthened our sales team and added clinical support. As noted, we've seen significant increases in both revenue and kit sales; kit sales have risen by 59.5% from 2022 to 2021, contributing to over a 20% total revenue increase. This growth does not imply margin compression, as our revenue mix includes U.S. military contracts alongside our analyzer business. We completed our Army contract in mid-2022, making us eligible for further funding and contracts from the Army and Air Force. To enhance commercialization, we are expanding our sales and clinical support teams and partnering with larger organizations to promote acceptance of our systems. We've formed partnerships with the Heart Failure Society of America and the Society for Nuclear Medicine to improve the recognition of our technology. Additionally, we partnered with MedAxiom Group, a subsidiary of the American College of Cardiology, which introduces our technology to leading hospital systems. Our participation in the Heart Failure Society’s annual meeting highlighted our FDA-approved technology for directly quantifying patient volume status. At that session, leading experts emphasized the clinical relevance of volume measurements over pressure metrics, validating the merit of our technology to hundreds of key opinion leaders and physicians. We’ve seen a notable increase in independent research publications supporting our technology, with over a dozen last year. Research presented at the meeting showed that our diagnostic can reduce the length of stay for hospitalized heart failure patients by 2.5 days, which translates to significant cost savings for healthcare systems and promotes adoption of our technology. Last year, we opened 18 new hospital accounts, demonstrating the growing acceptance of our technology, which not only improves patient outcomes but also health economics. We are excited about our next-generation analyzers, which promise to be significantly faster and allow broader usage by healthcare providers. Our strategy integrates improved clinical outcomes with health economic benefits, making our diagnostics part of standard care pathways. We also seek recognition and guideline recommendations to drive adoption. Daxor, like other companies, faces challenges from inflationary pressures, but we have raised prices successfully to mitigate these effects. Our injection kit price increased from $225 in 2020 to $355 last year, with plans to raise it to $385 at the end of Q1, which has been well-received by customers. Before opening for questions, I want to note our ongoing important randomized controlled trials funded by the NIH, including studies at VA centers and Geisinger Medical Center, and a multi-center COVID trial. The potential for our diagnostic extends beyond heart failure to critical care, addressing the needs of millions of patients in costly treatment situations. In conclusion, Daxor’s innovative, non-invasive diagnostics are set to become faster and more cost-effective, helping healthcare systems manage patient fluid levels while reducing costs and improving outcomes. We have strong reimbursement support and growing recognition from clinicians. Our goal is to assist our clinical partners in lowering admissions, mortality, complications, and overall care costs, driving a transformative adoption of our technology. I’ll now open the floor for questions.

And we'll take our first question from Anthony Vendetti with Maxim Group.

I wanted to discuss the timeline for the new BVA fund shareholder letter. I expected it to be a lot smaller than the original, but I didn't anticipate it would be just one-tenth the size. Great job reducing it to a portable device that hopefully can significantly boost adoption. I initially thought the 510(k) application might be submitted by the end of 2022. Could you clarify if the supply chain issues you mentioned played a role in the timeline? Is it taking longer to prepare the submission? What is the current timeline before the 90-day clock starts for the FDA? Is commercialization now expected in the second half of 2023? If so, is it likely to be in the third or fourth quarter? Any information you can share would be appreciated, Michael.

Yeah, absolutely. So, just to clear up a few things, we met with the FDA in the third quarter of 2022 for our so-called pre-submission meeting. You don't really know what you're going to get from the FDA until you have those sorts of meetings, after which the reviewers make it clear what they want to see in the package. This application is not just a 510(k) application; it's actually a 510(k) slash clear determination application. Our current device is a moderate complexity device. What that means is that you have to have a clear license in order to perform our test. The test, while it's administered at the bedside, the blood samples are then taken back to the clear certified lab for analysis. Now, when we spoke to the FDA, you can submit your application in two ways. One way that you can do it is, you can submit your 510(k) application, which has a 90-day window, and then you can ask for a clear determination afterwards. So that's technically quicker, but it's slower because until you have your clear determination, they just assume that you have essentially a moderate to extremely complex device; therefore, it's not allowed to be utilized at the bedside unless you're a trained operator for strategic purposes. After speaking to the FDA, we decided that, at their recommendation, it would be best to do a dual 510(k) clear determination study that entails slightly more complexity for us, but in fact it's faster because the aim of this sort of pathway is that they both approve our next generation analyzer and give us a waiver for the performance of the test. We hoped to complete the 510(k) application package by the end of the year; however, we're still doing the validation process. In terms of the commercialization timeline, it's looking like the second half of 2023. We're hoping that to achieve this in Q3; we have working prototypes of this when we completed our Army contract in 2022. Part of that was showing the army the equivalence between our new prototype device and our past device. We know from our existing contract work that we have something that meets the specifications of the Army. It’s worth remembering this small portable ruggedized device is not just for civilian use; it was something that was determined to be of military importance as well for combat casualty care and trauma care critical care use. Our device is designed actually to be sold both into a military channel and then also into a civilian channel. We are doing the work carefully and as quickly as possible in order to get that application completed. From there, the FDA has a 90-day clock to review it. For us to be able to hit that Q3 launch means that we would hope to get our package submitted to the FDA within approximately the next 45 to 60 days and give them a 90-day review period to determine whether we've satisfied all of their requirements. It's always challenging to accept specific timeline goals, because we don’t control what the FDA does, et cetera. But we are really trying very hard to get it right the first time and that’s why we participated in a thorough pre-submission process with them. I hope that answers your question. Anthony, is there anything that needs clarification?

No, that's great. And then just moving to some stats for the quarter, do you have the number of accounts currently using the BVA, and out of those accounts or some of the new accounts you are speaking to, what has been the reception for the new portable device?

Great question. So I don't have the current active account number in front of me. I can't give you more clarity. We reported that we have 18 new accounts opened in 2022 with five more pending or in process this quarter or this year. Those accounts are a mixture of some accounts, which have analyzers on-site and some of which are using our so-called reference lab service. Our reference lab service works in that we ship them our test kit; they collect the patient blood samples and then FedEx sends us, and at our own CLIA-certified labs, we give them the results generally within 24 hours. There are stable ambulatory patients working with 24-hour test turnaround time and it’s not a problem. Many medical tests obviously involve drawing blood; the doctor calls the next day with the results. So there is a certain number of accounts that are starting with that so-called reference lab and then switching over to, hopefully in the future, having analyzers on-site and to be able to do that quicker. I know that was one part of your question, but there's a second part; I'm sorry that I...

Yeah. That's right. Okay. And then have you had conversations with some of these clients about the new portable device and what has that perception been so far?

Thank you for the question. Due to the FDA's restrictions, we cannot discuss our next generation analyzer with clients, as it would be deemed marketing an unapproved device. While our current analyzer is approved and we can talk about it, we can't tell potential clients that we have a new, significantly easier and quicker device on the way. However, some clients who follow our company and read our press releases are aware of the next generation analyzer, and the academic researchers we've worked with on grant applications are very aware and excited about it. The idea of transforming a test that currently takes an hour and a half, which involves moving samples from the bedside to the lab, into a process where a nurse can simply use our inject tape and know a patient's blood volume metrics in just 15 minutes is very appealing to healthcare teams. Workflow is extremely important. I would love the opportunity to present this to our current and potential clients, but we are currently unable to do so.

Understood. And then on the usage between the new accounts, your established base plus the ones that you'll send the kits to, and then they'll send it into your CLIA-certified labs. What kind of metrics or usage trends can you provide?

The usage trend that I can point to is that we had this 59.5% year-over-year increase in the single-use test kits. That's a good marker for utilization. We're really focused on two things: not only opening up new accounts, but actually driving increased utilization at our existing accounts. We're in the process; I'm actually in Oak Ridge right now, where we're headquartered for our national sales meeting, and I've made it a clear priority that we want to increase the utilization rate at our existing accounts. We think that there's a lot of headway that we can make without even opening further accounts, but going to hospitals where they're not necessarily at capacity in terms of their utilization and driving further adoption of the technology within different departments within the hospital. What I can say is that we feel that our utilization rate at some accounts is that the capacity of the lab to keep up with the orders, but certainly not at all of them. We think there's substantial utilization opportunity by increasing the use at our existing accounts, as well as opening new accounts. Of course, that utilization rate should go up substantially with a new system that allows them to cut down on the tech time required to do the test. For example, with our new system, we think we could do three blood volumes in the time that it currently takes to do one. So at some of these hospitals, they'll say, well, look, we only have enough time to do two tests a day. We just can't tie up our tests for more time than that. That means that those hospitals that are capacity limited by their nuclear medicine department could go from 2 to 6 or even more, especially if non-MedTech professionals can perform the test. It has potentially substantial implications for the utilization of our technology at some of our hospital accounts.

Yes. Good. So not only is it one-tenth the size, but it could do three tests versus what it would take to do one with your system?

Correct. And but also importantly, the operators who could do it, if we receive our clear waiver as we're submitting, it means that you wouldn't have to wait for a tech to come from the lab to perform the test. A trained nurse or physician could perform the test at the bedside and get the results immediately. That opens it up to, let's say, a critical care ward, where they might want to run a test in the middle of the night or on the weekends, times when the lab is generally not necessarily available. This really means that there are certain departments at hospitals where they'll say, well, we just need the test to be more available or more rapid for us to adopt it. We think the new analyzer is going to open up a world of possibilities in that way. Of course, hospitals will be incentivized to order multiple units instead of having one unit or two units in the lab; they could order units for the heart failure clinic, the emergency department, the critical care area, et cetera. When you start to think about the implications for our business model, you understand why I wrote that this is the single most important product launch that our company has had in over 20 years.

The last question is about when you expect to start reporting as an operating company instead of as a 34 ACT financial company, as you do currently. What needs to happen for this to occur? Is it only possible at the end of the year audit, and what criteria is the SEC using? Does the operating company need to comprise more than 50% of the assets, or are there other metrics involved in this determination? I'll return after this.

Yeah, of course. So I'll just say strategically, we reported as a 34 ACT company until 2011. We've always considered ourselves an operating company, not a financial company. The SEC for its own purposes changed that determination in 2011. We have been trying to get them to change since. I want to actually turn the answer to that question around the specifics over to Bob Michel, our CFO, because Bob has been interacting heavily with our SEC attorney on this question, and we have been getting closer to that mark. Bob, would you like to address Mr. Vendetti's question around the transition from 34 to 35 status to your knowledge?

Yes. It is a percentage of the assets; it's not a specific number. There is a general guideline that's used in the 20% to 30% range of the assets. Now, since this year-end, our operating division has been valued substantially higher than in the past. We see that it is probably a good time to address this situation with the SEC now that the audit's over and the statements are filed. We can address that and get a much better feel for the timeline of moving back to a 34 ACT company.

And just to clarify, now that the audit is finished, you can begin discussions with the SEC. Does that mean you have to wait another year, or can you address it sooner? How does that process work?

I don’t believe there’s any requirement to wait for the next annual reporting period. I can discuss this with my securities counsel. I don’t anticipate any barriers to addressing this within the year. If we determine by the end of a quarter that we can transition to the 34 ACT, we would complete the necessary paperwork and file a 10-Q for that quarter. However, this would involve significant changes once we receive approval from the SEC. We have a considerable amount of work to do on both the audit and accounting sides to implement this change, based on our previous experience when we were required to switch in 2011. Unfortunately, we are among several companies that have faced similar situations with the SEC historically. There isn’t much precedent we can rely on for clear guidance on the process of moving between the two acts. I want to emphasize that the SEC has been frustratingly slow in responding to our inquiries at times. They may be dealing with other regulatory issues, but when it comes to specific questions regarding the transition from 34 to 40 act, those often get delayed in their queue. They do respond eventually, but not as quickly as we would hope, which adds to our frustration. In 2011, we took legal action against the SEC to prevent them from classifying us as a financial company, incurring over $1 million in legal fees in the process. Ultimately, we learned that regulators will act according to their own decisions. We are trying to navigate this change, but there isn’t clear statutory guidance on the procedure. Therefore, there remains a level of uncertainty surrounding it.

Our next question will come from Leo Carpio.

Hi, good morning gentlemen. I have actually three questions. The first question is regarding the post-pandemic hospital spending environment. Is that being helpful or favorable for sales activity for your product? And then the second question with that is, where does BVA fall? Is it in hospital cap spending or operating spending priorities? Is it at the top of the list or something to be considered? Or is it in the middle with other devices? And then the last question, is your current sales force sufficient to support the sales plan or do you need to add or build? Can you add more members to your team? Thanks.

Great. So I'll start at the first question. You might have to refresh me of the subsequent questions after I answer. What I’ll say is that the overall environment right now for healthcare spending in the post-pandemic world is favorable for us. The reason for that is that there is tremendous focus on value and value-based care. Starting several years back, Medicare CMS started the so-called HRRP program, the Hospitalization Readmission Reduction Program. A tremendous amount of focus has been brought to bear on the health economic metrics and the impacts of different interventions in terms of the cost of care. Our diagnostic allows care teams to quickly and accurately assess what the problem is with the patient. Heart failure management overwhelmingly has a lot of post-surgical care and ICU care, overwhelmingly informed by the question of optimizing the patients fluid data and their blood volume. The reason for that is very simple. Blood carries oxygen to the tissues and is vital for immunity and nutritional needs of the patient, et cetera. Ensuring that the patient has optimal blood volume is crucial. If they rely on a set of proxy measures or inaccurate or invasive tools right now, which they are, it leads to a greater length of stay for the patient. Every day they spend in the ICU or in the heart failure ward is very, very costly. When we go to the value analysis committees at the various hospitals and they discuss about bringing in the technology, we start by saying, what is your priority? The priority is less about whether a specific capital equipment piece is needed; the number one thing they ask us is essentially, what will be the financial impact of this on our operations? The answer to that really comes in the form of a few different features: First of all, our diagnostic. One of the first questions I'll ask you is, does your product have reimbursement? Number one, because if you don't have reimbursement for a drug or a device, you're really not getting very far in the healthcare world today because the bottom line is paramount. Fortunately, Daxor has actually excellent reimbursement for our diagnostic for outpatient use within the hospital setting. It also has reimbursement in the ambulatory surgical setting as well as physician offices. So we have strong reimbursement. For hospitals, there is a very good cash flow positive model for using this test to treat outpatient heart failure patients. This has a twofold benefit; not only is there a revenue side to it, but patients with heart failure on an outpatient basis that are treated with our diagnostic are much less likely to become readmissions, which are costly for that same hospital system. We're working with heart failure outpatient clinics at our existing heart failure hospitals to ensure that the metric is used on an outpatient basis. On the inpatient side, I pointed out earlier that research published last year showed that the utilization of our diagnostic at the beginning of the care pathway lowers length of stay by 55% for heart failure patients. If you can save two and a half days from a patient's hospitalization, each one of those days in the hospital costs the hospital several thousand dollars; they receive a single bundled payment under the DRG system for treating that patient. They will receive $15,000 for that patient whether they save two and a half days, five days, or eight days. Hospitals are very concerned about making sure they get these patients treated and out of the hospital as quickly as possible. Because of the pressures from COVID, they are now willing to spend capital to bring our systems in or to lease or rent them. The answer is yes, because we have a very strong pro forma model that we present to them at the value analysis committee level. So to bring a system in, you need to get clinical buy-in. Clinicians have to be excited about it, but ultimately the administrators will be the ones that will finalize whether we gain adoption into their system. Leo, does that answer your question, and what follow-up do you have?

Yes, it does. The follow-up was about the types of technologies we often compete against in discussions with hospitals and committees. What other technologies are we advocating for and trying to sell compared to what they are considering at that time?

What’s exciting is that we're the only game in town when it comes to direct volume measurement. We are considered the gold standard. We have the greatest amount of clinical evidence, over 140 published peer-reviewed papers and presentations on our technology from leading academic medical centers and a long history of relationships with these hospitals. When they're looking at us, they’re really saying, why should we shift from the standard of care currently used, which could be pressure measures or a clinical exam? What evidence do you have that if we bring this technology in and put it into our care pathway that we will see specific benefits? That's when we talk about things like lowered readmissions, shorter length of stay, and then on the patient side, reduced mortality combined with a higher quality of life. Peer-reviewed published studies have shown, for example, a 56% reduction in 30-day readmissions, a 55% shorter length of stay, an 82% reduction in mortality on a 30-day basis, and an 86% reduction in 365-day mortality. When we go to them with our technology, we demonstrate how we can enhance their existing treatments, by allowing them to make the most informed treatment decisions tailored to individual patients.

And then the last question is if the BVA product development timeline unfolds as you are predicting in 2023, is your current sales force sufficient to support sales activity or do you need to add more salespeople? Are there any particular skills you want to add or broaden?

Well, what we see is that the current sales force; we have focused on judiciously expanding and upgrading their capabilities. Their clinical acumen is very high compared to sales teams in the past. The tools that they have are much better. We have white papers, pro formas, and we have a remote learning management system that we implemented in the second half of last year, which allows clinicians to train with videos online, for example, and take quizzes to gain proficiency with our system. We’ve been leveraging technology in various formats for professional engagement such as zoom calls and grand rounds, conferences, et cetera. All of this has shown that those are the things that enable increased clinician awareness and utilization of our tests. The management’s focus right now has been on increasing the productivity per territory manager. In other words, if a territory manager sells X into their hospital accounts, we want that number to go up by two or three times. We want to deploy the resources we have and implement best practices that we can learn from different accounts to drive utilization and increase revenue productivity. Some companies try to grow revenues just by throwing more people at the problem; for example, we might grow our headcount from X to 3X. The problem with that is that this often leads to widening operating losses. Instead of focusing on individual rep productivity, they focus solely on their top-line revenue numbers. That can be a highly value-destructive process, because hiring people has become quite easy; however, that doesn't mean it’s good for the business model. We are seeing substantial rises in sales without massively increasing our sales force. With our next-generation analyzer driving things forward, I anticipate that productivity per rep and territory will increase significantly, which will indeed set the stage for us to expand our sales force. But right now, while our sales force is large enough to look at our total addressable market, we’re not even close. It’s not even 1% of what it could be to address the total market, because the total addressable market just in the United States represents a market of over 5,000 hospitals that could benefit from having one of our analyzers to help treat patients. There is a massive opportunity here. We are driving the business model forward and increasing productivity, which sets the stage for future sales force expansions, as I mentioned. Does that answer your question?

Yes, it does. Thanks.

And we'll take our next question from John Wendell with JPC Partners.

Yes. Good morning, Michael. As I've said before, you have done a commendable job over the past three years, and your father, whom I admired greatly, did as well, so I commend you for your efforts. I also want to highlight that stockholders invest with the expectation of appreciation, and what you have projected and discussed is impressive. What puzzles me is that if this were a division like Boston Scientific or Medtronic, analysts closely following those firms would emphasize the developments with the BVA and the potential, within all legal boundaries of communication. I struggle to understand why, as a long-time shareholder who is aware of everything you have communicated, the stock continues to reach new lows. We recognize that trading volume is low, which is a challenge for large institutions, yet there are many, including ourselves, that hold a small quantity. Seeing new lows daily leaves me scratching my head, wondering what I might be missing. I recall a time when a fund I managed saw the stock surge from about $6.50 or $7 to $37 in less than two weeks. Was that due to short covering, or genuine enthusiasm from someone who truly believed in the prospects? This was all before anyone else knew. I'm genuinely perplexed by the current situation. As I mentioned, we understand that money is a finite resource for you, but over time, one would expect a sense of frustration and a belief that the stock will rise to a certain level. I agree, but timing is crucial. It makes you want to invest in the stock. You may argue that funds are needed for research, which I understand, but you recently conducted a secondary offering around $9.50. I suspect that was not driven by retail interest, as it didn't lead to a price increase; there are sellers, indicating weak support. I'm just mystified by the stock's behavior. I've experienced similar situations before, including when I managed a fund that saw a stock increase from $6.50 or $7 to $37 in under two weeks.

Okay. So you've touched on a few things. Let me start at the top. When it comes to shareholder price, management controls what we do as a company, and Wall Street and buyers and sellers decide what our stock is worth. I can say that our stock has, and you are correct, our stock is very closely held by management. I'm one of the largest shareholders of the company personally. Most of our shareholders know that I take a minimal annual salary from the company, because I believe so strongly in our long-term prospects, and management is hyper-focused on creating shareholder value. Now obviously, the price at which a stock trades at any particular moment is a function of the perception of the value of the company along with the macro environment as well. I don't think it's a secret that as the Fed has tightened and interest rates have gone up, growth and technology companies have struggled with valuations, but also experienced a lot of volatility. So do I personally think about the share price? I don't think about the share price the way that a trader might. I think about the share price as in what do we as a company need to do to create substantial value? I believe from a fundamental standpoint that the share price will reflect the intrinsic value of the stock. I know that sometimes shareholders don’t always have the visibility into the operating companies that we wish they could have because of our reporting status. That being said, our stock has ranged traded, I don't know, between $8.5 and $15 over the last 18 months or something like that, but really the question is, what are we doing as a company that is going to garner substantial value going forward? I think executing on all of the things outlined here is the way for us to create that kind of value. We will, of course, capture those substantial earnings. I take some comfort that I look at Tesla, which Elon Musk increased from 2012 to 2017, and the stock was essentially flat over a five-year time period. While that was ongoing, Tesla was doing substantially important things to create value. They were innovating their battery technology, manufacturing process, design, and navigation systems that put them 10 years ahead of their competitors. However, Wall Street didn't reward the stock for that. Wall Street doesn't always reward companies for important technological breakthroughs; they reward revenues and growth from implementation and adoption of that technology. Management feels very strongly that we are creating the most value for our shareholders by doing the things outlined here. Those include the next-generation analyzers, clinical outcomes, increased commercialization, sharpening our sales force, driving revenue growth, etc. The share price will reflect what it does; if you don't believe in that, then you shouldn't own our stock. If you do believe in that, and if you do believe that our company is valued at a relatively paltry amount compared to our prospects, our technology, our clinical outcomes, our addressable market, a low share price should mean that it’s essentially a buying opportunity for you. It’s a chance to own a company with a stock that has FDA approval around its technology, terrific reimbursement, excellent evidence, clinical outcomes, growing partnerships with the U.S. military with the NIH, and various societies like MedAxiom, ACC, or the Heart Failure Society. I think investors need to look fundamentally at what we're doing and forecast whether we're doing the thing that is going to create that kind of value. As the CEO of the company, I'm not interested in the stock going from $8 to $16, because that only represents an increase in value from $40 million to $80 million or whatever the number is, etc. I think our prospects are orders of magnitude greater than that. I'm focused with the rest of my management team on executing on that and creating value. Now, as far as the second part of your question about the Army, we received contract funding from the Army to create a portable, rapid ruggedized battery-powered analyzer. That's what we have right now that we've successfully completed and are submitting for FDA approval. We also received contract funding from the Air Force to create an innovative non-isotopic marker for use in the Air Force chain, potentially in combat casualty care. We've completed Phase 2 work for the Army; that opens up Phase 3, which is Phase 2 extension of Phase 3. I cannot comment on what the potential army order would be, but that information is not public. I don't believe I've ever commented on the total addressable market size by the Army in the past. We will make the plans of the DOD available to shareholders as soon as they are public information.

Thank you. We will take our next question from Evan Greenberg with Legend Cap Opportunity Fund.

I’m sorry, I’m on speaker, but for some reason, I can't get off speaker. I wanted to inquire about the pricing of the kits. Was that the first price increase in years? It's typically around $325; has it been gradually increasing over the past couple of years? I wanted to know if there is any potential for price elasticity. It’s a very reasonably priced test, so do you have room to raise the price if necessary?

So great question. Yes, our price was at $325 for a number of years. We realized that we were underpricing our products, so we increased our price from $325 to $355 last year. What we found was actually that our kit sales increased substantially over that time period, not because of the price increase, but despite it. That reflects that we didn't lose a single account over that price difference. We didn't hear anything from our customers because prices have generally been rising, and our prices have been extremely cheap for years. We just announced and sent out a letter to our customers informing them that we are increasing the price again this year from $355 to $385. We will have increased the price of our product by $60 over the, which is about 18% over a two-year period. Again, we are not seeing any pushback from our customers, who receive those notifications around the new price level. I think there's substantial value here and room for us to grow our pricing judiciously over time due to the value of the product.

I think anything sub $500 is a no-brainer?

Yes. Our market research certainly bears out that there is a lot of value there. You don't want to give people a price shock; you don't want to double the price of what you have overnight. But there has certainly been good responses to our price increases, and again, that's helping us drive revenue.

And I'm showing we have no more questions in the queue at this time. I will now turn the call over to Michael Feldschuh for any closing remarks.

All right. I will say that I appreciate everyone's participation in this conference call. Daxor will continue to keep shareholders updated. I would refer people to our filing for my investor letter that is attached and contains more details on any of the topics we touched on today. Thank you very much, and that completes our call.