FY2007
            IMAGIN
      MOLECULAR CORPORATION
            FORM
      10-KSB








UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
DC 20549





FORM
10-KSB/A








SAnnual Report under Section 13
      or 15 (d) of the Securities Exchange Act
  1934:


For
      the year ended December 31, 2007





TRANSITION
      REPORT UNDER SECTION 13 OR 15 (d) OF THE EXCHANGE ACT OF
    1934


For
      the transition period from _____ to
_____





Commission  file
number 0-23873








IMAGIN
MOLECULAR CORPORATION


(Exact
Name of Registrant in its Charter)





Delaware
            
            13-4099008(State
      or other jurisdiction of incorporation or organization)
            
            (IRS
      Employer Identification No.)





104
W. Chestnut Street, #315, Hinsdale, IL 60521


(Address of principal executive offices (Zip
Code)





(630)
371-5583


(Registrant's
telephone number, including area code)





Securities
registered under Section 12(b) of the Exchange Act: None





Securities
registered under Section 12(g) of the Exchange Act:





Common
Stock, $.001 par value per share





Check
whether Registrant (1) filed all reports required to be filed by Section 13 or
15 (d) of the Securities Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days: Yes S No £





Check if
there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment thereto. o




o


Registrant's
revenues for its most recent fiscal year: $259,985.





Market
value of Common stock held by non-affiliates at April 11,
2008:  $3,517,016.





Shares of
Common Stock outstanding at April 11, 2008: 93,663,284 shares





Documents
incorporated by reference: None





Transitional
Small Business Disclosure Format (check one): Yes S No £









FY2007
            IMAGIN MOLECULAR CORPORATION
            FORM
      10-KSB





TABLE
OF CONTENTS




PagePART
      IItem
      1.
            
            Description of Business
            1Item
      2.
            
            Description of Properties
            9Item
      3.
            
            Legal Proceedings
            9Item
      4.
            
            Submission of Matters to a Vote of Security
      Holders
            9PART
      IIItem
      5.
            
            Market for Common Equity and Related Stockholder
      Matters
            10Item
      6.
            
            Management’s Discussion and Analysis of Financial
      Condition and Results of Operations
            11Item
      7.
            
            Financial Statements
            15Item
      8.
            
            Changes in and Disagreements with Accountants on Accounting
      and Financial Disclosure
            15Item 8A(T).
            
            Controls and Procedures
            15Item
      8B.
            
            Other Information
            16PART
      IIIItem
      9.
            
            Directors, Executive Officers, Promoters and Control Persons;
      Compliance with Section 16(a) of the Exchange Act
            16Item
      10.
            
            Executive Compensation
            18Item
      11.
            
            Security Ownership of Certain Beneficial Owners and
      Management and Related Stockholder Matters
            19Item 12.
            
            Certain Relationships and Related
      Transactions
            21Item
      13.
            
            Exhibits
            21Item
      14.
            
            Principal Accountant Fees and Services
            22Report of Independent Registered Public Accounting
      Firm
            24Consolidated Financial Statements
            28Signatures
            39Certifications
            41


Table of Contents




FY2007
            IMAGIN
      MOLECULAR CORPORATION
            FORM
      10-KSB








PART
I





ITEM
1. DESCRIPTION OF BUSINESS








Special
Cautionary Notice Regarding Forward-Looking Statements





This
Report contains statements that constitute forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and the Securities
Exchange Act of 1934. Various matters discussed in this document and in
documents incorporated by reference herein, including matters discussed under
the caption “Management’s Discussion and Analysis of Financial Condition and
Results of Operations,” may constitute forward-looking statements for purposes
of the Securities Act and the Securities Exchange Act. These statements are
based on many assumptions and estimates and are not guarantees of future
performance and may involve known and unknown risks, uncertainties and other
factors which may cause the actual results, performance or achievements of
Imagin Molecular Corporation (the “Company” or “Imagin”) to be materially
different from future results, performance or achievements expressed or implied
by such forward-looking statements. The words “expect,” “anticipate,” “intend,”
“plan,” “believe,” “seek,” “estimate,” and similar expressions are intended to
identify such forward-looking statements. The Company’s actual results may
differ materially from the results anticipated in these forward-looking
statements due to a variety of factors, including, without
limitation:




The
effects of future economic conditions;





•
            The
      risks of changes in interest rates on the level and composition of
      deposits, loan demand, and the values of loan collateral, securities and
      interest-rate protection agreements, as well as interest-rate
      risks;




•
            The
      effects of competition from other financial institutions and financial
      service providers operating in the Company’s market area and elsewhere,
      including institutions operating locally, regionally, nationally and
      internationally, together with such competitors offering banking products
      and services by mail, telephone, and computer and the Internet;
      and





•
            The
      failure of assumptions underlying the establishment of reserves for
      possible loan losses and estimations of values of collateral and various
      financial assets and liabilities.




All
written or oral forward-looking statements attributable to the Company are
expressly qualified in their entirety by these cautionary
statements.





Imagin
Molecular Corporation, a Delaware corporation (“Imagin”, the “Registrant” or the
“Company”), refocused its business strategy in April 2005 to concentrate on
business opportunities in positron emission tomography (PET) through holdings in
strategically related divisions based in the manufacturing of PET devices
ownership of PET imaging centers and the diagnosis and treatment of cancer,
heart and neurological diseases. PET is an advanced medical diagnostic imaging
procedure used by physicians in the detection of certain cancers, coronary
disease and neurological disorders including Alzheimer's disease. Through its
wholly owned subsidiary, Imagin Nuclear Partners, a New York Corporation (“INP”)
the Registrant intends to acquire, operate and administer out-patient medical
diagnostic imaging centers that utilize PET and PET/CT scanning equipment. INP
specializes in using evidence based bioinformatics specifically positioned in
the market to provide the maximal cost effective benefit to their joint venture
partner and the community. The Registrant is also the parent of Positron
Acquisition Corporation, a Nevada corporation (“PAC”) which is the holder of
8,026,000 shares of common stock and 722,358 shares of Series B Convertible
Preferred Stock of Positron Corporation, a publicly owned Texas Corporation
(“Positron”), and manufacturers of certain of the PET scanners Imagin uses in
its operations. Imagin Molecular Corporation is also the parent of Cipher
Multimedia, Inc. (“Cipher”) formed in August 2002 as a new media marketing and
distribution solution company that provides distribution solutions for
publishers of digital content. As the Registrant focuses its business to
concentrate on opportunities in positron emission tomography, the operations of
Cipher have for the most part been discontinued.


1
 Table of Contents




FY2007
            IMAGIN
      MOLECULAR CORPORATION
            FORM
      10-KSB








CORPORATE
ORGANIZATION





Imagin
Molecular Corporation was incorporated under the laws of the State of Colorado
on September 19, 1997 as Buffalo Capital VIII, Ltd. (“Buffalo”). The Company
commenced its operations upon incorporation. On June 21, 2000, the shareholders
of Buffalo approved the merger of Buffalo with and into the Registrant. The
merger was effected on July 14, 2000. As a result, the corporate domicile and
name of Buffalo were changed to Delaware and Momentum Holdings Corporation
(“Momentum”), respectively.





On
September 15, 2003, Cipher Multimedia, Inc., an Illinois corporation (“Cipher”)
and Momentum executed a Share Exchange Agreement whereby Momentum exchanged
14,052,800 newly issued shares of common stock for all of the issued and
outstanding shares of capital stock of Cipher. As a result of the purchase and
exchange of shares, Cipher acquired voting control of Momentum on August 19,
2003 and became Momentum's majority shareholder. The total number of issued and
outstanding shares of Momentum after the Exchange increased to
16,452,811.





On
November 24, 2003, the Company amended its Articles of Incorporation to change
the name of the Company to Cipher Holding Corporation and to increase its
authorized capital stock to 100,000,000 shares, of which 95,000,000 are common
and 5,000,000 are "blank check" preferred stock authorizing the Company's Board
of Directors to set the rights and preferences of the preferred stock without
further stockholder action.





On April
19, 2005, Imagin formed Positron Acquisition Corp. (“PAC”) a wholly owned
subsidiary organized under the laws of the State of Nevada. PAC was created to
acquire promissory notes made by Positron Corporation, a publicly owned Texas
corporation (“Positron”)





On
November 18, 2005 the Company formed a wholly owned subsidiary, Imagin Nuclear
Partners Corporation, a New York corporation (“INP”), to provide Positron
Emission Tomography myocardial perfusion imaging technology (“PET” or “PET
imaging technology”) and related technical and educational services to diagnose
and treat patients with coronary artery disease and patients who are at risk of
developing coronary heart disease. Imagin Nuclear Partners Corporation is
headquartered in Niagara, New York.





On March
13, 2007, the Registrant redomiciled Cipher as a Nevada corporation through a
merger with and into Cipher Multimedia, Inc., a Nevada corporation. In
accordance with the Plan of Merger, each ten shares of Cipher were exchanged for
one share of Cipher-NV common stock.








BUSINESS
DEVELOPMENT





Through
its wholly-owned subsidiary, Imagin Nuclear Partners Corporation, the Company
utilizes Positron Emission Tomography myocardial perfusion imaging technology
(“PET” or “PET imaging technology”) and related technical and educational
services to lease their system to aid in the diagnosis and treatment of patients
with coronary artery disease as well as those who are at risk of developing
coronary heart disease. The Company will attempt to establish heart health
centers to provide imaging technology for the diagnosis and non-invasive
management of coronary artery disease. The Company plans to use PET perfusion
imaging and vigorous risk factor modification programs to diagnose and guide the
management of patients with coronary artery disease. This program is aimed at
the regression of coronary atherosclerosis and stabilization of plaque to
prevent the clinical events of myocardial infarction, sudden death and unstable
coronary syndromes requiring invasive intervention (PTCA or bypass
surgery).





The
Company’s methodology differs than that of traditional invasive coronary
procedures by health care providers that has not resulted in significant
improvement in clinical outcomes for coronary patients, primarily due to what
the Company perceives as limitations of the imaging technology currently
employed by health care providers and the failure to focus on lifestyle
modification programs for coronary patients. The Company believes that the
current barriers to entry of Positron Emission Tomography Myocardial Perfusion
Imaging (PET MPI) have prevented widespread utilization.


2
 Table of Contents




FY2007
            IMAGIN
      MOLECULAR CORPORATION
            FORM
      10-KSB





Studies
have shown that the utilization of PET imaging technology is a cost-effective
approach to the diagnosis of coronary artery disease when compared to the cost
of utilizing traditional imaging technology and invasive procedures. The current
approximate cost of a PET scanner, in excess of $1,500,000 continues to prevent
wide spread acceptance of the technology. The Company believes that if the
technology could be offered at prices equivalent to the less accurate, less
expensive, routinely used, diagnostic exam of Single Photon Emission Computed
Tomography (SPECT) that the barriers to entry may be significantly reduced
leading to an increased utilization.





The
Company intends to establish regional heart health centers throughout North
America as freestanding outpatient facilities that will provide the most
advanced imaging technology for the diagnosis and non-invasive management of
coronary artery disease. An outstanding physician, nursing and technical staff
will deliver this unsurpassed level of care. The Company’s key strengths are
operational expertise in state-of the art cardiovascular PET imaging technology,
effective clinical algorithms for coronary artery disease regression and an
experienced management team.





The
Company’s operational expertise is based on the pioneering work of renowned
cardiologist Dr. K. Lance Gould and Dr. Michael E. Merhige on coronary artery
disease reversal and prevention through aggressive noninvasive medical
management guided objectively in each individual patient by PET. When PET guided
results were compared to conventional management using Single Photon Emission
Computed Tomography (SPECT), the experience resulted in a 50% reduction in the
utilization of angiography and bypass surgery with an associated 25% reduction
in treatment costs. Patient outcome analysis demonstrated a 50% reduction in
cardiac mortality and a 50% reduction in myocardial infarction or heart
attack.(4) This represents a “win-win-win”, for patients, practitioners and
health care payers, through decreased utilization of the invasive management of
coronary artery disease (CABG and angiography).








PRODUCTS
AND SERVICES





The
Company intends to market its cardiovascular PET and noninvasive coronary artery
disease reversal program to General/Family/Internal Medicine physicians in
metropolitan areas within the United States. These physicians are the primary
gatekeepers for patients suspected of having coronary artery disease and are
responsible 40% of all referrals for nuclear imaging. This referral patterned
has steadily increased more than 15% per year over the last 5 years, because of
the advent of lipid management programs.





The
Company anticipates its initial target states are New York, New Jersey,
Pennsylvania, Maryland, Florida and Texas, where cardiac patient demographics
and cardiovascular PET reimbursement are well established.





Cardiovascular
PET Perfusion Imaging





The
Company believes the therapeutic paradigm is now shifting away from expensive,
anatomically driven treatment (e.g., coronary angiography followed by
revascularization), toward identification of the vulnerable plaque, with
subsequent biological stabilization of the atherosclerotic process, using
aggressive lipid lowering medical management. A fundamental question for
General/Family/Internal Medicine physicians which manage patients with coronary
artery disease is which patients will require invasive intervention and which
only require noninvasive but aggressive medical management. In addition those
patients on noninvasive therapy we need to know how hard should we push lipid
reduction to achieve coronary disease reversal in the individual
patient?





PET
myocardial perfusion imaging (MPI) can now assist in answering these critical
questions for patients, insurers and referring doctors, because of the unique
physical advantages of positron imaging power of positron emission tomography.
PET's advantages over single photon emission computed tomography (SPECT) nuclear
imaging results in an improvement in diagnostic accuracy results that rivals
that of the angiogram itself.




Coronary
Disease Reversal Program





The
Company intends to educate referring physicians about the program and the
intensive patient / primary physician relationship necessary for
success.


3
 Table of Contents




FY2007
            IMAGIN
      MOLECULAR CORPORATION
            FORM
      10-KSB






Smoking
Cessation - Stopping smoking is an essential step in the reversal program. There
are many programs from insurance companies to help the patient
quit.





Diet
Modification - The diet that we currently recommend is no more than 10% of
calories as fat. This includes unrestricted vegetables and protein in the form
of skinless chicken, turkey, buffalo meat, venison, fish and all shellfish. Beef
and pork are once a month items. Fruit is appropriate for desert. For over
weight patients, carbohydrates sources such as bread, potatoes, rice, pasta,
pastry and sweets have to be portion controlled to achieve lean body mass. Once
lean mean body mass is achieved, we add back enough of carbohydrates to stay at
a static weight.





Exercise
Program - The three essential criteria for a successful program of physical
activity are (1) to determine individual preferences for the type of exercise,
(2) activity for at least thirty to sixty minutes per day for five to six days
per week, (3) do something each day even if the required minimum can not be
met.





Cholesterol
Management - Total cholesterol, through medical management, is controlled down
to 110 to 140 achieving levels similar to limiting those populations that simply
don’t have coronary disease such as found in Central China and in Central
Africa. Our goal is to drive LDL below 90, HDL’s above 45 and triglycerides
below 90. Statin drugs are used to accomplish acceptable values. The physician
needs to check liver enzymes and the cholesterol profile each month for three
months. Dose modifications are necessary to achieve regression due to the
individual variability factor. Often combination therapy with two or more lipid
agents is necessary.








MARKET
ENVIRONMENT





Coronary
artery disease (CAD), remains the major cause of death in the U.S., claiming
over 650,000 lives annually, which constitutes more than 25% of all deaths in
adults over 35 years of age. Moreover, nearly twice this number of acute
myocardial infarctions occur each year. 60% of acute myocardial infarction and
sudden death occur unexpectedly, in previously apparently healthy people, with
no antecedent symptoms.





The
Company believes that excessive, invasive, cardiological procedures do not
result in improved clinical outcomes for patients. The frequency of utilization
of coronary arteriography (CATH), coronary artery bypass surgery (CABG) and
percutaneous transluminal coronary intervention (PTCI) procedures in the United
States has increased annually 50 - 150% with no subsequent improvement in the
hard endpoints of coronary death and recurrent MI at one year.





We have
learned, while utilization of invasive coronary procedures in the US has
exploded over the past few years with no improvement of outcomes, from a large
number of well conducted lipid lowering trials, which employed quantitative
coronary arteriography, that aggressive noninvasive management of CAD with a
very low fat diet and lipid lowering drugs, can reduce acute MI and coronary
death by up to 85% or more. Interestingly this remarkable clinical benefit
occurs despite only minimal angiographic improvement in coronary lumen diameter.
This is because it is the young, mild, plaque which is actively inflamed that is
structurally vulnerable, and therefore prone to rupture suddenly, leading to
death or an acute coronary syndrome, rather than the older, more severe,
structurally stable stenosis, which is typically responsible for chronic stable
angina. It is this stable lesion that is usually the stenosis targeted for
mechanical intervention.





The
management of CAD in the new millennium is undergoing critical reappraisal
driven by the need for health care cost containment. The Company’s business plan
is to provide a basis for the shift away from expensive, anatomically driven
treatment (e.g., coronary angiography followed by revascularization), toward
identification of the vulnerable plaque, with subsequent biological
stabilization of the atherosclerotic process, using aggressive lipid lowering
medical management. Which patients will require invasive vs. aggressive
noninvasive management? How hard should we push lipid reduction to achieve
coronary disease reversal in the individual patient?








CUSTOMERS





The
Company’s primary customers are General/Family/Internal Medicine physicians in
Metropolitan areas. A metropolitan population can be defined as having multiple
General/Family/Internal Medicine physician offices and a referral population of
at least 500,000 patients.


4
 Table of Contents




FY2007
            IMAGIN
      MOLECULAR CORPORATION
            FORM
      10-KSB





IMAGIN
NUCLEAR PARTNERS CORPORATION





On
November 18, 2005 the Company formed a wholly owned subsidiary, Imagin Nuclear
Partners Corporation, a New York corporation (“INP”), the Company utilizes
Positron Emission Tomography myocardial perfusion imaging technology (“PET” or
“PET imaging technology”) and related technical and educational services to
lease their system to aid in the diagnosis and treatment of patients with
coronary artery disease as well as those who are at risk of developing coronary
heart disease. Imagin Nuclear Partners Corporation is headquartered in Niagara
Falls, New York.





Relationship
with Beth Israel Hospital





In
February 2006, Imagin Nuclear Partners purchased a Positron HZL-R Imaging Camera
from Positron Corporation. The Company currently leases the PET camera along
with Rb-82 pharmaceutical to Beth Israel Medical Center (“BIMC”).





Sales
and Marketing





To
fulfill its business plan Imagin Nuclear Partners will approach physicians who
primarily see Medicaid patients to solicit referrals. Medicaid physicians are
not routinely solicited for referrals due to the traditional low fees
associated. Imagin Nuclear Partners believes that the Medicaid population will
result in a significant portion of their monthly volume.  Imagin
Nuclear Partners hopes to solicit large self insured companies and present the
GM report with real patient data to justify the increased use of PET along with
Coronary Disease Reversal.





Government
Regulation





The
Company’s operations which assess medical imaging and physician referral will be
required to adhere to a wide variety of other regulations governing the
operation of its business. For example, federal regulations commonly known as
the “Stark Laws” impose civil penalties and exclusion from participation in the
Medicare program of reimbursement for referrals by physicians for “designated
health services” to certain entities with which the referring physician has a
financial relationship, if those referrals do not fall within an exception
created by law or regulation. “Designated health services” include PET services.
Implementing regulations have been issued regarding referrals for clinical
laboratory services, but no final implementing regulations have been issued
regarding PET services. It is possible that these proposed rules will be found
to apply to PET scanners, thereby restricting physician referrals for PET
services by an investor-physician or a physician who has a compensation
arrangement with Imagin Nuclear Partners.




In
addition, several states in which Imagin Nuclear Partners intends to operate
have enacted or are considering legislation that restricts physician referral
arrangements in a manner similar to the Stark Laws and requires physicians to
disclose any financial interest they have with a health care provider to their
patients to whom they recommend that provider. Possible sanctions for violating
these provisions include loss of medical licensure and civil and criminal
sanctions. These state laws vary from state to state and seldom have been
interpreted by the courts or regulatory agencies. Nonetheless, Imagin Nuclear
Partners expects that these laws will be strictly enforced.




The
Company will also be required to comply with other state and federal laws
prohibiting the payment or receipt of bribes, kickbacks, rebates and any other
direct or indirect remuneration in return for or to induce the referral of an
individual to a person for the furnishing, directing or arranging of services,
items or equipment, commonly referred to as anti-kickback laws. Violation of the
anti-kickback laws may result in civil and criminal penalties, loss of medical
licensure and exclusion from the Medicare and other federal health care programs
to the extent such federal reimbursement program beneficiaries are
involved.





Customers





Customers
for our imaging operations will be patients of the medical centers with whom we
intend to conduct our business either through joint ventures or equity
ownership.


5
 Table of Contents




FY2007
            IMAGIN
      MOLECULAR CORPORATION
            FORM
      10-KSB






Patents





We do not
have any patents or patents pending and rely on the intellectual property rights
of Positron Corporation and other third-party suppliers.








CIPHER
MULTIMEDIA, INC.





Cipher
Multimedia, Inc., a Nevada Corporation (“Cipher”) was formed in August 2002.
Cipher is a digital distribution solution and marketing company which secures
and allows access to digital content through proprietary encoding, encryption
and authorization technology. Cipher’s technology and services allow publishers
and distributors to distribute digital content in a secure format to mass
markets. Secured video and software content is distributed through new and
existing commercial product offerings and distribution channels.





Cipher’s
Digital Rights Management (“DRM”) technology protects or controls access to
digital content. Cipher’s technology allows publishers and distributors to
distribute full-feature video and/or software in a secure format. Secureddigital content is
delivered in the form of CD/DVDs, diskettes and Internet download format. The
consumer has the ability to view a sample of the video or demonstration of the
software before purchasing of the product by unlocking the full product for
immediate use on their personal computer. The purchase and delivery transactions
are immediate and are facilitated though Cipher’s transaction processing
service. Cipher’s technology protects publisher’s content from copyright
infringement by restricting access only to authorized purchasers.





On March
13, 2007, the Registrant reorganized Cipher as a Nevada corporation via merger
with Cipher Multimedia, Inc., a Nevada corporation (“Cipher-NV”).  In
accordance with the Plan of Merger, each ten shares of Cipher were exchanged for
one share of Cipher-NV common stock.  Also on March 13, 2007, the
Registrant entered into employment agreements with Julia Rzeppa as President and
Chairman, Corey Conn as Treasurer and Director and Domenic Hanzely as Vice
President of Product Development and Chief Technology officer.  On
March 14, 2007, Cipher settled obligations with its two largest creditors by
retiring $148,973.46 in obligations to Patrick Rooney, the Registrant’s former
chairman and Chief Executive officer and Cipher’s founder, for 7,448,673 shares
of Cipher’s common stock, and retiring $35,750 in exchange for the issuance of
1,787,500 shares of Cipher’s common stock.  On March 20, 2007,
realizing that Cipher’s software encryption business no longer fit the
Registrant’s business model of medical imaging services, the Registrant’s Board
of Directors resolved to spin off the 3,513,200 shares of Cipher common stock
held by the Registrant as a special dividend to its Shareholders of record as of
March 26, 2007.  The operations of Cipher Multimedia, Inc. are limited
and have been discontinued from an
accounting perspective.






POSITRON
ACQUISITION CORP.





On April
19, 2005, Imagin formed Positron Acquisition Corp. (“PAC”) a wholly-owned
subsidiary organized under the laws of the State of Nevada. PAC was created to
acquire Positron Corporation, a publicly owned Texas corporation
(“Positron”).





On May
23, 2005, as an initial step, we acquired two convertible notes receivable
issued by Positron (the “Positron Notes”) in favor of IDC. The Positron Notes
are convertible into shares of Positron’s Series C and Series D Preferred Stock
that are in turn convertible, under certain circumstances, into 64,000,000
shares of Positron’s common stock, par value $.01 per share. Imagin acquired the
Positron Notes in exchange for 30,000,000 newly issued shares of Imagin’s common
stock.  On September 30, 2006, Imagin exchanged the Positron Notes for
a total of 762,358 of Positron’s Series B Collectible Preferred Stock, par value
$1.00 per share (the “Series B”).  The Series B are convertible into
shares of Positron’s common stock, par value $0.001 per share, at the rate of
100 shares of Common stock for each Series B.  On September 7, 2006,
PAC converted 40,000 shares of Series B into 4,000,000 shares of common
stock





Positron
designs, manufactures and markets medical imaging devices utilizing Positron
Emission Tomography (“PET”) technology. PET technology permits the measurement
of the biological processes of organs and tissues and produces anatomical and
structural images. PET systems are used by physicians in the diagnosis and
management of heart disease and certain other neurological and oncological
illnesses.





Following
the acquisition of the Positron Notes, the Company changed its principal
operations from multimedia encryption technology to positron emission tomography
and medical imaging and related services.


6
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FY2007
            IMAGIN
      MOLECULAR CORPORATION
            FORM
      10-KSB






EMPLOYEES





On March
31, 2008, the Company had two full-time and one part-time
employees.








ITEM
1A - RISK FACTORS





We also
caution you that this Annual Report contains forward-looking statements. The
words "believes," "should be," "anticipates," "plans," "expects," "intends," and
"estimates," and similar expressions identify these forward-looking statements.
These forward-looking statements are contained principally under the headings
"Summary," "Risk Factors," "Financial Statements," "Management's Discussion and
Analysis of Operations," "Business," and "Management." Although we believe that
our expectations reflected in these forward-looking statements are based on
reasonable assumptions, our expectations may not prove to be correct. Because
these forward-looking statements are also subject to risks and uncertainties,
actual results may differ materially from the expectations expressed by these
forward-looking statements. Important factors that could cause actual results to
differ materially from the expectations reflected in our forward-looking
statements include the following risk factors:




It Is Difficult to Evaluate
the Company’s Business and Prospects Because it Does Not Have Any Operating
History





The
Company has yet to generate significant revenue from operations. The Company’s
lack of working capital, make it difficult to evaluate the Company’s current
business prospects or to accurately predict its future revenue or results of
operations. The Company’s revenue and income potential continue to be unproven,
and its business model is evolving. Because of the rapidly changing nature of
medical imaging and medical reimbursement, the Company may need to modify its
business model to adapt to these changes. Accordingly, the Company is subject to
all of the risks, uncertainties, expenses and difficulties frequently
encountered by companies seeking to break into a difficult-to-penetrate and
rapidly changing industry segment.





The Penny Stock Rules May
Have an Adverse Effect Upon Liquidity of the Company’s
Shares





If the
shares of the Company’s common stock are listed on The Nasdaq Stock Market or
certain other national securities exchanges and the price thereof is below
$5.00, then subsequent purchases of such securities will be subject to the
requirements of the penny stock rules absent the availability of another
exemption. The SEC has adopted rules that regulate broker-dealer practices in
connection with transactions in "penny stocks." Penny stocks generally are
equity securities with a price of less than $5.00 (other than securities
registered on certain national securities exchanges or quoted on The Nasdaq
Stock Market). The penny stock rules require a broker-dealer to deliver a
standardized risk disclosure document required by the SEC, to provide the
customer with current bid and offer quotations for the penny stock, the
compensation of the broker-dealer and its salesperson in the transaction,
monthly account statements showing the market value of each penny stock held in
the customer's account, to make a special written determination that the penny
stock is a suitable investment for the purchaser and receive the purchaser's
written agreement to the transaction. These disclosure requirements may have the
effect of reducing the level of trading activity in the secondary market for a
stock that becomes subject to the penny stock rules.





Lack of
Profitability





The
Company currently operates at a loss. No assurance can be given that the Company
will achieve sufficient revenues for profitability. We believe that we will
continue to incur operating and net losses for at least the foreseeable future.
The rate at which we will incur losses is expected to increase from current
levels for a period when we intend to increase our costs and expenses. Even if
the Company attains profitability, there is no assurance that it can sustain or
increase profitability on a quarterly or annual basis in the future. If revenues
grow slower than anticipated, or if operating expenses exceed expectations or
cannot be adjusted accordingly, the Company’s business, results of operations
and financial condition will be materially and adversely
affected.


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FY2007
            IMAGIN
      MOLECULAR CORPORATION
            FORM
      10-KSB






Dependence on Executive
Officers and Directors





The
Company’s success is dependent on the efforts and abilities of its officers and
directors. The Company currently does not have employment agreements with its
executive officers. The loss of the services of any of these individuals could
materially and adversely affect the development of the Company’s business
plan.





The
Company’s ability to attract and retain qualified marketing and management
personnel is critical to its operations. While management believes it will be
able to attract and retain sufficient professional employees to meet its needs,
there can be no assurance that management is correct. If the Company is unable
to employ the qualified employees needed, then its business would be materially
and adversely affected.





Dependence Upon Third Party
Relationships





The
Company will be dependent on various third parties for their technologies,
equipment and related services and even for providing customers to the Company.
As a result, the Company's ability to generate revenues may be adversely
affected by the failure of these third parties to provide equipment and related
services to the Company. In addition, there can be no assurance that the Company
will be successful in establishing and maintaining such relationships with those
entities on favorable terms.





Dependence Upon Positron
Corporation





The
Company has made a significant investment into the Securities of Positron
Corporation a publicly owned Texas Corporation and affiliate of the Company
(“Positron”).  As of December 31, 2007, the Company held 8,026,000
shares of Positron’s common stock and 722,358 shares of Positron’s Series B
Convertible Preferred stock for an aggregate of 12.1% of the outstanding common
stock of Positron on a non-fully-diluted basis. In addition, as of December 31,
2007, the Company had advanced an additional $1,346,000 to Positron which on
April 10, 2008 were memorialized in the form of a promissory note for the full
amount of the advances, due and payable on December 31, 2008 with interest at
the rate of eight percent (8%) per annum (the “Positron Note”). The
viability of our wholly-owed subsidiary Positron Acquisition Corporation, and
the repayment of the Positron Note are dependent upon the relative
success of Positron.  Investors are encouraged to review the filings
of Positron with the Securities and Exchange Commission, which may be found at
www.sec.gov.





Risks Associated with
Technological Change





The
market in which the Company competes is characterized by rapidly changing
technology; evolving industry standards, frequent new product and service
announcements, introductions and enhancements, and changing customer demands.
These market characteristics are heightened by the emerging nature of medical
imaging and health care industries...  Accordingly, the Company’s
future success will depend on its ability to adapt to rapidly changing
technologies, its ability to adapt its services to meet evolving industry
standards. The Company’s failure to successfully adapt to such changes in a
timely manner could have a material adverse effect on the Company’s business,
results of operations and financial condition.





Government
Regulation





Laws and
regulations directly applicable to the reimbursement by government and private
insurance companies will have a material impact on our expected operations. Our
ability to obtain payment for services which we extend to patients is directly
related to governmental regulation, as well as, the manner in which we are able
to obtain business. A change in these regulations may occur in which we are
unable to adjust quickly enough in order to obtain payment to fund our
operations or materially modify our plan of operations.





Need for Future
Funding





The
Company may need to raise additional funds through public or private debt or
sale of equity to achieve our current business strategy. The financing we need
may not be available when needed. Even if this financing is available, it may be
on terms that we deem unacceptable or are materially adverse to your interests
with respect to dilution of book value, dividend preferences, liquidation
preferences, or other terms and may involve a substantial dilution to our
shareholders. Our inability to obtain financing will inhibit our ability to
implement our development strategy, and as a result, could require us to
diminish or suspend our development strategy and possibly cease our
operations.


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FY2007
            IMAGIN
      MOLECULAR CORPORATION
            FORM
      10-KSB





If we are
unable to obtain additional financing on reasonable terms, we could be forced to
delay, scale back or eliminate certain product and service development programs.
In addition, such inability to obtain additional financing on reasonable terms
could have a negative effect on our business, operating results, or financial
condition to such extent that we are forced to restructure, file for bankruptcy,
sell assets or cease operations, any of which could put your investment dollars
at significant risk.





Potential Decrease in Market
Price





Sales of
substantial amounts of our common stock in the public market could decrease the
prevailing market price of our common stock. If this is the case, investors in
our shares of common stock may be forced to sell such shares at prices below the
price they paid for their shares, or in the case of the investors in the May
2006 financing, prices below the price they converted their notes and warrants
into shares. In addition, a decreased market price may result in potential
future investors losing confidence in us and failing to provide needed funding.
This will have a negative effect on our ability to raise equity capital in the
future.





GeneralCondition of theHealthcareMarket





The
Company’s business is subject to global economic conditions, and in particular,
market conditions in the healthcare industry. The Company’s operations may be
adversely affected by the continued declines in employee benefit spending by
large corporations and small to medium sized businesses. If global economic
conditions worsen, or a prolonged slowdown in providing such benefits exists,
then the Company may experience adverse operating results.








ITEM
2. DESCRIPTION OF PROPERTY





The
Registrant leases its current office space in Oak Brook, Illinois on a month to
month basis.








ITEM
3. LEGAL PROCEEDINGS





As of the
date of this Report, no legal proceedings have been threatened against or
settled by the Registrant.






ITEM
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS





None.


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FY2007
            IMAGIN
      MOLECULAR CORPORATION
            FORM
      10-KSB





PART
II





ITEM
5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS





(a)
Market Information.





Since
approximately November 1996, the Company’s common stock, its only class of
trading equity securities, has been traded on the NASD OTC Bulletin Board
(“OTCBB”) under the symbol "IMGM.OB". The following table sets forth the range
of high and low bid price information for the common stock for each fiscal
quarter for the past two fiscal years as reported by the OTCBB.  High
and low bid quotations represent prices between dealers without adjustment for
retail mark-ups, markdowns or commissions and may not necessarily represent
actual transactions.








Year
      Ended December 31, 2006
            
            High
      Bid
            
            
            Low
      BidFourth
      Quarter
            
            
            .08
            
            
            
            .04Third
      Quarter
            
            
            .19
            
            
            
            .07Second
      Quarter
            
            
            .39
            
            
            
            .12First
      Quarter
            
            
            1.08
            
            
            
            .04Year
      Ended December 31, 2007
            
            High
      Bid
            
            
            Low
      BidFourth
      Quarter
            
            
            .09
            
            
            
            .04Third
      Quarter
            
            
            .09
            
            
            
            .05Second
      Quarter
            
            
            .08
            
            
            
            .04First
      Quarter
            
            
            .08
            
            
            
            .04






(b)
Holders





As of
December 31, 2007, we had 93,663,284 shares of Common Stock outstanding, held by
approximately 1,186 holders or record:





(b)Recent Unregistered Sales of
Securities





Om May
31, 2007, the Company sold 20,000,000 shares of its common stock to Solaris
Opportunity Fund, L.P., a Delaware Limited partnership (“Solaris”) for a
purchase price of $400,000, Solaris Managing Member’s Patrick G. Rooney, our
former Chairman, Chief Executive Officer and principal shareholder and founder
of the Company’s wholly owned subsidiary Cipher Multimedia, Inc. Mr. Rooney also
serves as the Chairman of Positron Corporation, a publicly owned Texas
Corporation and affiliate of the Company, of which Solaris is also a principal
shareholder.








Series A
Preferred





On July
24, 2007, the Company consummated a Securities Purchase and Subscription
Agreement with Solaris. Under the agreements the Company issued a total of
500,000 shares of Series A Convertible Preferred Stock for
$200,000.  Each share of Series A Preferred Stock is convertible into
20 shares of the Registrant’s Common Stock, votes as twenty shares of common
stock or all matters which holders of common stock are entitled to vote or and
is senior to the common stock upon liquidation..





On August
28, 2007 the Company consummated a Securities Purchase and Subscription
Agreements with Solaris. Under the Agreement Solaris acquired 500,000 shares of
the Registrant's Series A Convertible Preferred Stock for
$200,000.  The preferred shares are convertible into a total of
10,000,000 shares of Imagin common stock.


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FY2007
            IMAGIN
      MOLECULAR CORPORATION
            FORM
      10-KSB






On
October 5, 2007 the Company consummated a Securities Purchase and Subscription
Agreements with Solaris. Under the Agreement Solaris acquired 500,000 shares of
the Registrant's Series A Convertible Preferred Stock for
$200,000.  The preferred shares are convertible into a total of
10,000,000 shares of Imagin common stock.





On
November 4, 2007 the Company consummated a Securities Purchase and Subscription
Agreements with Solaris. Under the Agreement Solaris acquired 500,000 shares of
the Registrant's Series A Convertible Preferred Stock for
$200,000.  The preferred shares are convertible into a total of
10,000,000 shares of Imagin common stock.





On
November 30, 2007 the Company consummated a Securities Purchase and Subscription
Agreements with Solaris. Under the Agreement Solaris acquired 187,500 shares of
the Registrant's Series A Convertible Preferred Stock for
$97,000.  The preferred shares are convertible into a total of
3,750,000 shares of Imagin common stock.





On
December 14, 2007 the Company consummated a Securities Purchase and Subscription
Agreements with Solaris. Under the Agreement Solaris acquired 175,500 shares of
the Registrant's Series A Convertible Preferred Stock for
$100,000.  The preferred shares are convertible into a total of
3,500,000 shares of Imagin common stock.





All of
the securities set forth above were issued by the Company pursuant to Section
4(2) of the Securities Act of 1933, as amended, or the provisions of Rule 504 of
Regulation D promulgated under the Securities Act. All such shares issued
contained a restrictive legend and the holders confirmed that they were
acquiring the shares for investment and without intent to distribute the shares.
All of the purchasers were friends or business associates of the Company’s
management and all were experienced in making speculative investments,
understood the risks associated with investments, and could afford a loss of the
entire investment. The Company has never utilized an underwriter for an offering
of its securities.





(c)
Dividends.





The
Registrant has paid no dividends during the fiscal years ended December 31, 2007
and 2006. There are no restrictions on the Registrant's present or future
ability to pay dividends.





The
payment by the Registrant of dividends, if any, in the future rests within the
discretion of its Board of Directors and will depend, among other things, upon
the Registrant's earnings, its capital requirements, and its financial
conditions, as well as other relevant factors.





(d)  Securities
authorized for issuance under equity compensation plans.





The
Company’s equity plan information required by this item is set forth under Item
10 of Part III below.








ITEM
6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS





Overview





Imagin
Molecular Corporation refocused its business strategy in April 2005 to
concentrate on business opportunities in positron emission tomography (PET)
through holdings in strategically related divisions based in the manufacturing
of PET devices ownership of PET imaging center and the diagnosis and treatment
of cancer, heart and neurological diseases. PET is an advanced medical
diagnostic imaging procedure used by physicians in the detection of certain
cancers, coronary disease and neurological disorders including Alzheimer's
disease.





On
November 18, 2005 the Company formed a wholly owned subsidiary, Imagin Nuclear
Partners Corporation, a New York corporation (“INP”), to provide Positron
Emission Tomography myocardial perfusion imaging technology (“PET” or “PET
imaging technology”) and related technical and educational services to diagnose
and treat patients with coronary artery disease and patients who are at risk of
developing coronary heart disease. Imagin Nuclear Partners Corporation is
headquartered in Niagara, New York.


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FY2007
            IMAGIN
      MOLECULAR CORPORATION
            FORM
      10-KSB





Relationship
with Beth Israel Hospital





In
February 2006, Imagin Nuclear Partners purchased a Positron HZL-R Imaging Camera
from Positron as well as a CTI Infusion Cart from Bracco Diagnostics, Inc. Also,
in February 2006, the Company commenced operations of a PET center under the
name Imagin Nuclear Partners at the cardiac center located within Beth Israel
Medical Center (“BIMC”) in New York. The Company’s intention is to leverage its
existing relationship with the New York State Department of Health Cardiac
Advisory Committee to secure a “pilot program” aimed at demonstrating the cost
efficacy of cardiac PET in selected markets on predetermined procedure
indications. Under the initial contract with BIMC, the Company reimbursed BIMC
on a fixed monthly basis for various operating expenses associated with
performing scans, including physician’s fees, technologist fees, rents and other
administrative expenses.  In February 2007, the Company and BIMC
temporarily suspended operations at the facility pending re-negotiation of the
original contract.  The parties executed a new agreement, the terms of
which are discussed in detail below.




In May
2007, INP and Beth Israel Medical Center executed an
Equipment Lease Agreement (the “Agreement”) for certain positron emission
tomography (“PET”) scanning cameras and related radiologic equipment (the
“Equipment”).  Under the terms of the Agreement, BIMC will lease the
equipment for use in its on site PET Lab where it performs PET scans on its
patients.  The initial lease term is three (3) years commencing on
June 4, 2007 (the “Effective Date”).




In
accordance with the Agreement, BIMC shall pay INP rent for the lease of the
equipment as follows:




-
            The
      actual aggregate technical component reimbursement received by BIMC from
      all payer sources for all PET scans performed during the three (3) month
      period commencing on the Effective Date of the Agreement (the “Initial
      Period”).


-
            $850
      per scan for scans 1-60 performed in a given calendar month after the
      Initial Period.


-
            $650
      per scan for scans 61-120 performed in a given calendar month after the
      Initial Period.


-
            $450
      per scan for scans in excess of 120 performed in a given calendar month
      after the Initial Period.


-
            A
      minimum monthly lease payment of $51,000 is due in the event less than 61
      scans are performed by BIMC during any calendar month after the Initial
      Period.




Cipher
Multimedia Reorganization




On March
13, 2007, the Registrant reorganized Cipher as a Nevada corporation via merger
with Cipher Multimedia, Inc., a Nevada corporation (“Cipher-NV”).  In
accordance with the Plan of Merger, each ten shares of Cipher were exchanged for
one share of Cipher-NV common stock.  Also on March 13, 2007, the
Registrant entered into employment agreements with Julia Rzeppa as President and
Chairman, Corey Conn as Treasurer and Director and Domenic Hanzely as Vice
President of Product Development and Chief Technology officer.  On
March 14, 2007, Cipher settled obligations with its two largest creditors by
retiring $148,973.46 in obligations to Patrick Rooney, the Registrant’s former
chairman and Chief Executive officer and Cipher’s founder, for 7,448,673 shares
of Cipher’s common stock, and retiring $35,750 in exchange for the issuance of
1,787,500 shares of Cipher’s common stock.  On March 20, 2007,
realizing that Cipher’s software encryption business no longer fit the
Registrant’s business model of medical imaging services, the Registrant’s Board
of Directors resolved to spin off the 3,513,200 shares of Cipher common stock
held by the Registrant as a special dividend to its Shareholders of record as of
March 26, 2007.  The operations of Cipher Multimedia, Inc. are limited
and have been discontinued from an
accounting perspective.




2007
Transactions




On May
31, 2007, the Company consummated a Securities Purchase and Subscription
Agreement with Solaris Opportunity Fund, L.P., a Delaware limited partnership
("Solaris").  Solaris acquired 20,000,000 shares of the Registrant's
common stock, par value $0.001 per share for a purchase price of
$400,000.  Solaris' Managing Member, Patrick G. Rooney, is the former
Chief Executive Officer, Chairman and principal shareholder of the Company and
founder of its subsidiary Cipher–NV.  Mr. Rooney is also the
Chairman of Positron Corporation, a publicly owned Texas corporation and an
affiliate of the Company.


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FY2007
            IMAGIN
      MOLECULAR CORPORATION
            FORM
      10-KSB





On
July 24, 2007, the Company consummated separate Securities Purchase and
Subscription Agreements with Solaris. Under each of the agreements Solaris
acquired 500,000 shares of the Registrant's Series A Convertible Preferred Stock
for $200,000.  The preferred shares are convertible into a total of
20,000,000 shares of Imagin common stock.





On August
28, 2007 the Company consummated a Securities Purchase and Subscription
Agreements with Solaris. Under the Agreement Solaris acquired 500,000 shares of
the Registrant's Series A Convertible Preferred Stock for
$200,000.  The preferred shares are convertible into a total of
10,000,000 shares of Imagin common stock.





On
October 5, 2007 the Company consummated a Securities Purchase and Subscription
Agreements with Solaris. Under the Agreement Solaris acquired 500,000 shares of
the Registrant's Series A Convertible Preferred Stock for
$200,000.  The preferred shares are convertible into a total of
10,000,000 shares of Imagin common stock.





On
November 4, 2007 the Company consummated a Securities Purchase and Subscription
Agreements with Solaris. Under the Agreement Solaris acquired 500,000 shares of
the Registrant's Series A Convertible Preferred Stock for
$200,000.  The preferred shares are convertible into a total of
10,000,000 shares of Imagin common stock.





On
November 30, 2007 the Company consummated a Securities Purchase and Subscription
Agreements with Solaris. Under the Agreement Solaris acquired 187,500 shares of
the Registrant's Series A Convertible Preferred Stock for
$97,000.  The preferred shares are convertible into a total of
3,750,000 shares of Imagin common stock.





On
December 14, 2007 the Company consummated a Securities Purchase and Subscription
Agreements with Solaris. Under the Agreement Solaris acquired 175,500 shares of
the Registrant's Series A Convertible Preferred Stock for
$100,000.  The preferred shares are convertible into a total of
3,500,000 shares of Imagin common stock.




During
the year ended December 31, 2007, the Company advanced the sum of $1,346,000 to
Positron Corporation and its wholly-owned subsidiary Imaging Pet Technologies
(collectively “Positron”). As of the date
hereof  Imagin’s  Chief Executive Officer and Director,
Joseph Oliverio and its Chief Financial Officer and Director, Corey Conn are
both officers and directors of Positron Corporation.   Patrick G.
Rooney, the Managing Member of Solaris, is the Chairman of Positron
Corporation




Results
of Operations





For the
years ended December 31, 2007 and 2006, the Company had net losses $439,189 and
$972,817, respectively.   The current year net loss includes an
operating loss of $385,947.  The significantly higher loss during the
year ended December 31, 2006 is attributed primarily to approximately $764,000
of professional fees, the majority of which was issued in common stock to
consultants.





Revenues–
Revenue was generated exclusively from PET scans at Beth Israel Medical Center
(“BIMC”) and totaled $259,985 and $183,198 for the years ended December 31, 2007
and December 31, 2006, respectively. Contractual adjustments arise due to the
terms of reimbursement of Medicaid, Medicare, and managed care providers and
represent the difference between charges at established rates and estimated
recoverable amounts.  Adjustments are recognized as a reduction of
revenue in the period the services are rendered.  Based on the limited
history of reimbursement rates, management has reduced gross revenues by 40% to
reflect potential contractual adjustments, an amount it believes to be
conservative. Gross revenues from patient scans have been adjusted to reflect
management’s estimate of reimbursable amounts.  For the year ended
December 31, 2006, scans commenced in late February with March being the first
full month of scan revenue. During the year ended December 31, 2007, PET scans
at BIMC were temporarily suspended from February to May pending the
re-negotiation of the contract between the Company and Beth Israel
Hospital.   Costs of revenues, which consist primarily of monthly
fixed costs associated with performing the scans, operating the imaging camera
and CTI infusion were $317,801 in 2007 and $343,254 in 2006.  The
current year decrease reflects the temporary suspension of scans at BMIC
discussed above.  During this period the Company did not purchase
rubidium necessary to operate the PET imaging camera, a cost approximating
$30,000 per month.


13
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FY2007
            IMAGIN
      MOLECULAR CORPORATION
            FORM
      10-KSB





Operating
Expenses – Marketing and general and administrative expenses for the year
ended December 31, 2007 were $221,573 compared to $52,556 for the year ended
December 31, 2006.  The increase over last year is attributed
primarily to $174,000 in compensation expense during the current year including
$150,000 of stock-based compensation to employees. The Company did not record
any compensation expense for the year ended December 31,
2006.  Professional fees were $106,558 and $829,493 for the years
ended December 31, 2007 and 2006, respectively. During 2007, the Company issued
shares of its common stock valued at $80,000 to a consultant for services
performed. Similarly during 2006, the Company issued common stock valued at
nearly $764,000 for consulting services performed. Other professional fees
include legal and accounting expenses.





Other Income
(Expense)- Interest income of $145,218 in the prior year represents
accrued interest on the notes receivable from Positron Corporation, including
amortization of discount, through the date of conversion to Positron Series B
Preferred Stock in September 2006.





Interest
expense for the years ended December 31, 2007 and 2006, was $33,256 and $24,717,
respectively.  Current year interest expense represents for a note
payable to Cherry Creek Capital Partners, an unrelated party to whom the Company
issued a 12% secured promissory note on September 11, 2006 in the amount of
$300,000. Interest expense on the Cherry Creek note for 2006 was approximately
$8,000. In addition, 2006 interest expense includes approximately $13,000 of
interest on a related party note payable that was settled in January
2007.





Discontinued Operations of
Cipher Multimedia (“Cipher”)





Losses
from discontinued operations for the year ended December 31, 2007 and 2006 were
$18,463 and 51,213, respectively.  No revenue was recorded by Cipher
in either period. The loss for the year ended December 31, 2007 is attributable
in large part to $30,000 of compensation expense in the form of Cipher common
stock.  Expenses were offset in part by reversals of previously
accrued interest and professional fees.  The loss l for the year ended
December 31, 2006 includes a settlement payment of $25,000 to a former officer
of Cipher.





After the
reorganization of Cipher Multimedia, Inc. in March 2007, the Company owns
approximately 25% of the reorganized subsidiary, Cipher-NV.  As a
result the Company has recorded majority interest in the losses of Cipher of
$1,523 for the year ended December 31, 2007.




Liquidity
and capital resources





At
December 31, 2007, the Company had current assets of $ 144,542 and current
liabilities of $722,748 compared December 31, 2006 when the Company had current
assets and current liabilities of $166,677 and $848,240,
respectively.  Cash and cash equivalents at December 31, 2007 were
$24,120 and accounts receivable from scan revenue was $120,422.  The
Company also had $1,346,000 due from Positron Corporation, a related party, at
December 31, 2007.





Current
liabilities at December 31, 2007 include accounts payable and accrued
liabilities including accrued interest of $292,318 and the current portion of
the Cherry Creek note payable of $128,850.





The
Company used net cash from operating activities of $112,924 for the year ended
December 31, 2007 compared to $299,679 for the year ended December 31,
2006.  The increase in cash flow from operations is due in large part
to third party reimbursements for scan revenue generated by INP at the Beth
Israel Medical Center.





For
the year ended December 31, 2007, net cash used in investing activities was
$1,346,000, all of which were for advances to Positron Corporation, a
related party and manufacturer of PET Imaging Systems. In the prior year
the Company used $241,105 to purchase capital assets for INP, most notably the
PET Imaging System used to perform scans at BIMC.





Net
cash provided by financing activities was $1,479,906 and $542,546 for the years
ended December 31, 2007 and 2006, respectively.  During 2007 the
Company raised $1,397,000 by issuing 20,000,000 shares of common stock and
2,362,500 shares of its Series A Preferred stock to the Solaris Opportunity
Fund, a related party.




14
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FY2007
            IMAGIN
      MOLECULAR CORPORATION
            FORM
      10-KSB






On
December 31, 2007 the Company had an accumulated deficit of $2,397,912 and total
equity of $2,223,120.  The Company is dependent upon the success of
INP and PET scanning under the lease agreement with BIMC, the repayment of
amounts advanced to Positron Corporation and/or raising additional debt or
equity financings to resolve the Company’s liquidity issues and allow it to
continue to operate as a going concern.








ITEM
7. FINANCIAL STATEMENTS





The
required Financial Statements and notes thereto are contained in a separate
section of this report beginning with the page following the signature
page.








ITEM
8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE




None.






Item
8A. CONTROL AND PROCEDURES
  Disclosure
Controls and Procedures
  In
accordance with Rule 13a-15(b) of the Securities Exchange Act of 1934 as amended
(the “Exchange Act”), as of the end of the period covered by this Annual Report on Form 10-KSB,
the Company’s management evaluated, with the participation of the Company’s
principal executive and financial officer, the effectiveness of the design and
operation of the Company’s disclosure controls and procedures (as defined in
Rule 13a-15(e) or Rule 15d-15(e) under the Exchange Act). Disclosure controls
and procedures are defined as those controls and other procedures of an issuer
that are designed to ensure that the information required to be disclosed by the
issuer in the reports it files or submits under the Act is recorded, processed,
summarized and reported, within the time periods specified in the Commission’s
rules and forms. Disclosure controls and procedures include, without limitation,
controls and procedures designed to ensure that information required to be
disclosed by an issuer in the reports that it files or submits under the Act is
accumulated and communicated to the issuer’s management, including its principal
executive officer and principal financial officer, or persons performing similar
functions, as appropriate to allow timely decisions regarding required
disclosure. Based on their evaluation of these disclosure controls and
procedures, the Company’s chairman of the board and chief executive and
financial officer has concluded that the disclosure controls and procedures were
effective as of the date of such evaluation to ensure that material information
relating to the Company, including its consolidated subsidiaries, was made known
to them by others within those entities, particularly during the period in which
this Annual Report on Form
10-KSB was being prepared.
 
 Item
8A(T) CONTROL AND
PROCEDURES
 
 Internal
Control Over Financial Reporting
 
 Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f)
under the Exchange Act). Our management assessed the effectiveness of our
internal control over financial reporting as of December 31, 2007. In making
this assessment, our management used the criteria set forth by the Committee of
Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal
Control-Integrated Framework. Based on its evaluation, our management concluded
that there is a there is a significant deficiency in our internal control over
financial reporting.
  The
significant deficiency relates to a lack of segregation of duties due to the
small number of employees involvement with general administrative and financial
matters. However, management believes that compensating controls are in place to
mitigate the risks associated with the lack of segregation of duties.
Compensating controls include outsourcing certain financial functions to an
independent contractor. Management concluded that internal controls over
financial reporting were effective as of December 31,
2007.


15
 Table of Contents




FY2007
            IMAGIN
      MOLECULAR CORPORATION
            FORM
      10-KSB




This
annual report does not include an attestation report of the Company’s registered
public accounting firm regarding internal control over financial reporting.
Management’s report was not subject to attestation by the Company’s registered
public accounting firm pursuant to temporary rules of the Securities and
Exchange Commission that permit the Company to provide only management’s report
in this annual report.


ITEM
8B.  OTHER INFORMATION.





On
October 5, 2007, November 4, 2007, November 30, 2007 and December 14, 2007 the
Company consummated sales of its Series A Convertible Preferred Stock (the
“Series A”) with Solaris Opportunity Fund, L.P.., a Delaware limited partnership
("Solaris").  Solaris acquired 500,000, 500,000, 187,500 and 175,000
shares, respectively, of the Series A for respective purchase prices of
$200,000, $200,000, $97,000 and $100,000.  Solaris' Managing
Member, Patrick G. Rooney, is the former Chief Executive Officer, Chairman and
principal shareholder of the Registrant and founder of its wholly-owned
subsidiary Cipher Multimedia, Inc.  Mr. Rooney is also the
Chairman of Positron Corporation, a publicly owned Texas corporation and an
affiliate of the Registrant.




On April
10, 2008, the Company formalized the advances in the amount of $1,346,000 it had
made to its affiliate Positron Corporation (“Positron”).  Positron
executed a promissory note for the full amount of the advances, with interest at
the rate of eight percent (8%) per annum, due on December 31, 2008 (the
“Positron Note”).  The Positron Note is secured by a pledge of
100,000,000 shares of Positron’s common stock, par value $0.001 per share (the
“Pledged Shares”) in accordance with a Stock Pledge Agreement (the
“Pledge”).  Upon a default of the Note or the Pledge, the Company may
sell the Pledged Shares to repay any and all amounts due under the Positron
Note.


PART
III








ITEM
9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH
SECTION 16(a) OF THE EXCHANGE ACT





(a)
Identify Directors and Executive Officers.





The
following table sets forth: (1) names and ages of all persons who presently are
and who have been selected as directors of the Registrant; (2) all positions and
offices with the Registrant held by each such person; (3) the term or office of
each person named as a director; and (4) any period during which he or she has
served a such:


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            IMAGIN
      MOLECULAR CORPORATION
            FORM
      10-KSB







SUMMARY
COMPENSATION TABLE




Name
            Duration
      and Date of Expiration of Present Term
            Position
      and Office with Registrant
            Age
      and Director sinceJoseph
      G. Oliverio
            One
      year
              December
      31, 2008
            Chief
      Executive Officer,
              Director
            38
              August
      18, 2006Corey
      Conn
            One
      year
              December
      31, 2008
            Chief
      Financial Officer,
              Director
            46
              August
      19, 2003Neil
      Sy
            One
      year
              December
      31, 2008
            Chairman
              Director
            38
              August
      19, 2005








There is
no understanding or arrangement between any directors or any other person or
persons pursuant to which such individual, was or is to be, selected as a
director or nominee of the Registrant.





Business
Experience





Joseph G.
Oliverio – Age 38, Mr. Oliverio commenced service as the Company’s Chief
Executive Officer and was also appointed to serve on the Company’s Board of
Directors. Mr. Oliverio also serves as the President of Positron Corporation, a
publicly-owned Texas corporation, and affiliate of the Registrant. Mr. Oliverio
was the former Chief Operating Officer of Michael E. Merhige, M.D., LLC, a well
known coronary disease reversal and prevention center in Niagara, New York. Mr.
Oliverio earned an MBA from the University of Phoenix and a BS in Nuclear
Medicine Technology from State University of New York at Buffalo. Mr. Oliverio
is a certified nuclear medicine technologist.





Corey
Conn - Age 46, Chief Executive Officer, Director: Mr. Conn is a co-founder of
Cipher Multimedia, Inc. Mr. Conn also serves as the Chief Financial Officer of
Positron Corporation, a publicly-owned Texas corporation, and affiliate of the
Registrant. Since September, 1999. Mr. Conn has served as Managing Director of
Virtual Partnerships, LLC, a business development and business strategy
consulting firm. Previously, Mr. Conn was Vice President of Business Development
at iLX, an e-business and e-transformation services provider from June 1996 to
September 1999. Mr. Conn served as a member of the Board of Directors of Uniloc,
Inc., from April 2000 to July 2002.





Neil Sy -
Age 38, Chairman, Director: Mr. Sy is currently engaged in capital raising
ventures including consumer medicine and real estate properties in Chicago,
Illinois and Las Vegas, Nevada. Prior thereto and from 1997 to 2003, Mr. Sy was
a member of the Chicago Board Options Exchange as a market maker. Prior thereto,
and from 1992 to 1997, Mr. Sy worked on the Chicago Board Options Exchange as a
trade manager. Mr. Sy received a Bachelor’s Degree in Business Administration
from Southern Illinois University.





Directorship





Except as
disclosed in this Item, each director of the Registrant has indicated to the
Registrant that he is not presently a director in any other Registrant with a
class of securities registered pursuant to Section 12 of the 34 Act or subject
to the requirements of Section 15(d) of such act or any investment company
registered under the Investment Company Act of 1940.





(b)
Identification of Certain Significant Employees





The
Registrant does not presently employ any person as a significant employee who is
not an executive officer but who makes or is expected to make a significant
contribution to the business of the Registrant.





(c)
Family Relationships





No family
relationship exists between any director or executive officer of the
Registrant.


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            IMAGIN
      MOLECULAR CORPORATION
            FORM
      10-KSB






(d)
Involvement in Certain Legal Proceedings





No event
listed in Sub-paragraphs (1) through (4) of Subparagraph (d) of Item 401 of
Regulation S-B, has occurred with respect to any present executive officer or
director of the Registrant or any nominee for director during the past five
years which is material to an evaluation of the ability or integrity of such
director or officer.





Compliance
with Section 16(a) of the Exchange Act





Section
16(a) of the Exchange Act, as amended, requires the Registrant's executive
officers and directors and persons who own more than 10% of a registered class
of the Registrant's equity securities, to file with the SEC initial statements
of beneficial ownership, reports of changes in ownership and annual reports
concerning their ownership, of Common Stock and other equity securities of the
Registrant on Forms 3, 4, and 5, respectively. Executive officers, directors and
greater than 10% shareholders are required by SEC regulations to furnish the
Registrant with copies of all Section 16(a) reports they file. To the
Registrant's knowledge, all beneficial owners of greater than 10% of
Registrant's Common Stock have complied with all Section 16(a) filing
requirements applicable to them during the Registrant's most recent fiscal
year.





Code
of Ethics





The
Registrant has adopted its Code of Ethics and Business Conducts that applies to
all officers, directors, and employees of the Registrant.





ITEM
10. EXECUTIVE COMPENSATION.




The
following Summary Compensation Table shows certain compensation information for
each of the Named Executive Officers.  Compensation data is shown for
the years ended December 31, 2007 and 2006.  This information
includes the dollar value of base salaries, bonus awards, the number of stock
options granted, and certain other compensation, if any, whether paid or
deferred.


Name
      and Principal Position
            Year
            
            Salary
            
            
            Bonus
            
            
            Stock
      Awards (a)
            
            
            Option
      Awards
            
            
            Nonequity
      incentive plan compensation
            
            
            Non-qualified
      deferred comp
              earnings
            
            
            All
      Other Compensation (b)
            
            
            TotalJoseph
      G. Oliverio
            2007
            
            
            —
            
            
            
            —
            
            
            $
            120,000
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            $
            120,000Chief
      Executive Officer, Director
            2006
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            ——
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —Patrick
      G. Rooney
            2007
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —Former
      Chief Executive Officer
            2006—
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —Corey
      Conn
            2007
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            $
            34,000
            
            
            $
            34,000Chief
      Financial Officer, Director
            2006
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            ——
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —Neil
      Sy
            2007
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —Chairman,
      Director
            2006
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —





(a)           On
May 15, 2007, the Company issued 3,000,000 shares of common stock, par value
$0.001, valued at $0.04 per share, to Joseph G. Oliverio, Chief Executive
Officer for compensation.





(b)           
Includes a lump sum cash payment of $24,000 and on March 14, 2007, the Company
issued a total of 500,000 shares of the Registrant’ subsidiary, Cipher
Multimedia, Inc. common stock, par value $0.001, valued at $0.02 per
share.


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            IMAGIN
      MOLECULAR CORPORATION
            FORM
      10-KSB







Equity
Compensation Plan Information




The
following table summarizes share and exercise information about the Company's
equity compensation plans as of December 31, 2007.




Plan
      Category
            
            Number
      of Securities to be Issued Upon Exercise of Outstanding Options, Warrants
      and Rights
            
            
            Weighted-Average
      Exercise Price of Outstanding Options, Warrants and Rights
            
            
            Number
      of Securities Remaining Available for Future Issuance Under Equity
      Compensation Plans (excluding securities included in 1st
      column)All
      Equity Compensation Plans Approved by Security
Holders
            
            
            —
            
            
            
            —
            
            
            
            5,000,000




2007
Stock Option Plan




Imagin
Molecular Corporation’s Board administers the 2007 Stock Option Plan (the "2007
Plan"), which was adopted by the Board effective May 14, 2007.  The
2007 Plan provides for the grant stock options to directors, officers, employees
and consultants.  The administrator is authorized to determine the
terms of each award granted under the plan, including the number of shares,
exercise price, term and exercisability.   Options may not be
exercised more than five years after the date of grant.  In the case
of an optionee who is a director or officer of the Company, upon termination of
employment for any reason other than death or termination for cause, each option
may be exercised for a period of 90 days; to the extent it is exercisable on the
date of termination. In the case of an optionee who is an employee or consultant
of the Company, upon termination of employment for any reason other than death
or termination for cause, each option may be exercised for a period of 60 days;
to the extent it is exercisable on the date of
termination.    In the case of a termination due to death,
an option will remain exercisable for a period of one year; to the extent it is
exercisable on the date of termination.  . In the case of a
termination due to cause, any unexercised options shall expire
immediately.  A total of 5,000,000 shares of Common Stock have been
authorized for issuance under the 2007 Plan.  As of December 31, 2007,
no shares had been issued to under the 2007 Plan.








ITEM
11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT





(a)
Security Ownership of Certain Beneficial Owners.The information is furnished as of
December 31, 2007, as to the number of shares of the Registrant's Common Stock,
$.001 par value per share, owned beneficially, or known by the Registrant to own
beneficially, more than 5% of any class of such security:


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            IMAGIN
      MOLECULAR CORPORATION
            FORM
      10-KSB








Name
      and Address  of Beneficial Owner
            
            Amount
      and Nature of Beneficial Ownership
            
            Percentage
      of Class(a)(b)Solaris
      Opportunity Fund, LP
            
            67,250,000
      (c)
            
            47.72%Patrick
      G. Rooney (d)
            
            12,407,625
      (d)
            
            8.81%Cipher
      Multimedia, Inc (f)
            
            1,900,000
      (e)
            
            2.03%




(a)
            Based
      on 93,663,284 shares of Common Stock outstanding on March 30,
      2008.




(b)
            The
      percentage of outstanding Common Stock assumes full conversion Convertible
      Series A Preferred Stock into Common Stock and is based on the Company's
      outstanding shares of Common Stock as of March 30,
  2008.




(c)
            Includes
      20,000,000 shares owned directly and shares issuable upon full conversion
      of 2,362,500 shares of Series A Preferred Stock into Common
      Stock.  The address for the Solaris Opportunity Fund is 700
      Commerce Drive Suite 400 Oak Brook,
    Illinois 60523.




(d)
            Patrick
      G. Rooney is also the Managing Member of Solaris Opportunity Fund,
      L.P.




(e)
            Represents
      shares owned directly.  The address for
      Patrick G. Rooney is 3801 N. Washington Street Oak Brook,
      Illinois 60523.




(f)
            Patrick
      G. Rooney is the principal stockholder of Cipher Multimedia, Inc. and
      holds dispositive voting power.




(b) Security Ownership of
Management. The following information is furnished as of December 31,
2007, as to the number of shares of the Registrant's Common Stock, $.001 par
value per share owned beneficially by each executive officer and director of the
Registrant and by all executive officers and directors as a group:




Name
      and AddressOf
      Beneficial Owner
            
            Amount
      and Nature of Beneficial Ownership
            
            Percentage
      of ClassJoseph
      G. Oliverio
            
            3,000,000
            
            3.20%104
      W. Chestnut # 315.Hinsdale,
      IL 60521Corey
      Conn
            
            800,000
            
            .85%104
      W. Chestnut # 315.Hinsdale,
      IL 60521Neil
      Sy
            
            360,000
            
            .38%104
      W. Chestnut # 315Hinsdale,
      IL 60521All
      Officers and Directors
            
            4,160,000
            
            4.43%as
      a Group


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            IMAGIN
      MOLECULAR CORPORATION
            FORM
      10-KSB








ITEM
12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS





During
the period covering this Annual Report on Form 10-KSB, Solaris Opportunity Fund,
L.P., a Delaware limited partnership (“Solaris”) acquired an aggregate of
20,000,000 shares of the Company’s common stock, par value $0.001 per share and
2,362,500 shares of the Company’s Series A Convertible Preferred Stock, par
value $0.001 per share (the “Series A”) for an aggregate purchase price of
$1,397,000.  The Series A is convertible into shares of common stock
at the ratio of 20 shares of common stock for each share of Series A converted.
Holders of the Series A are entitled to vote on all matters holdings of the
Company’s common stock are entitled to vote upon at rate of 20 votes per share.
The Series A is senior to the Company’s common stock in liquidation. As a result
of Solaris has become the Company’s controlling Shareholder.







ITEM
13. EXHIBITS AND REPORTS ON FORM 8-K





(a)
Exhibits:


EXHIBITS







10.1
                Promissory Note by Positron
      Corporation dated April 10,
2008
 
 10.2
              Stock Pledge Agreement by
      Positron Corporation dated April 10,
2008


31.1
            Chairman
      of the Board Certification of Periodic Financial Report Pursuant to
      Section 302 of the Sarbanes-Oxley Act of
2002*





31.2
            Chief
      Financial Officer Certification of Periodic Financial Report Pursuant to
      Section 302 of the Sarbanes-Oxley Act of
2002*





32.1
            Chairman
      of the Board Certification Pursuant to 18 U.S.C. Section 1350, as adopted
      pursuant to section 906 of the Sarbanes-Oxley Act of
  2002#





32.2
            Chief
      Financial Officer Certification Pursuant to 18 U.S.C. Section 1350, as
      adopted pursuant to section 906 of the Sarbanes-Oxley Act of
      2002#






*
            Filed
      herewith


#
            Furnished
      herewith


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            IMAGIN
      MOLECULAR CORPORATION
            FORM
      10-KSB






ITEM
14. PRINCIPAL ACCOUNTANT FEESAND SERVICES





The
following table sets forth the aggregate fees billed to us for fiscal years
ended December 31, 2007 and 2006 by our auditors, Frank L. Sassetti &
Co.





2007
            
            
            2006Audit
      Fees (1)
            
            $
            19,100
            
            
            $
            30,000Non-Audit
      Fees:
            
            
            —
            
            
            
            —Audit
      Related Fees (2)
            
            
            —
            
            
            
            —Tax
      Fees (3)
            
            
            —
            
            
            
            —Total
      Fees paid to auditors
            
            $
            19,100
            
            
            $
            30,000





(1) Audit
fees consist of fees billed for professional services rendered for the audit of
the Registrant's annual financial statements and review of the interim
consolidated financial statements included in quarterly reports and services
that are normally provided in connection with statutory and regulatory filings
or engagements.





(2)
Audit-Related fees consist of fees billed for assurance and related services
that are reasonably related to the performance of the audit or review of
Imagin's consolidated financial statements and are not reported under "Audit
Fees".





(3) Tax
fees consist of fees billed for professional services rendered for tax
compliance, tax advice and tax planning (domestic and international). These
services include assistance regarding federal, state and international tax
compliance, acquisitions and international tax planning.





(4) All
other fees consist of fees for products and services other than the services
reported above.





The Board
of Directors has considered the role of Frank L. Sassetti & Co. in providing
certain tax services to Imagin and has concluded that such services are
compatible with Frank L. Sassetti Co.’s independence as our auditors. In
addition, the Board of Directors has approved providing certain tax services
since the effective date of the SEC rules. The rule states that an auditor is
not independent of an audit client if the services it provides to the client are
not appropriately approved. The Board of Directors will continue to pre-approve
all audit and permissible non-audit services provided by the independent
auditors until an audit committee is formed which will then be responsible for
approving audit fees. We are looking for new board members that would be
qualified to serve on an audit committee. When the audit committee is formed one
of their first assignments will be to propose to the board a code of
ethics.





The Board
of Directors has adopted a policy for the pre-approval of services provided by
the independent auditors, pursuant to which it may pre-approve any service
consistent with applicable law, rules and regulations. Under the policy, the
Board of Directors may also delegate authority to pre-approve certain specified
audit or permissible non-audit services to one or more of its members, including
the Chairman. A member to whom pre-approval authority has been delegated must
report its pre-approval decisions, if any, to the Board of Directors at its next
meeting, and any such pre-approvals must specify clearly in writing the services
and fees approved. Unless the Board of Directors determines otherwise, the term
for any service pre-approved by a member to whom pre-approval authority has been
delegated is twelve months.


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            IMAGIN
      MOLECULAR CORPORATION
            FORM
      10-KSB






SIGNATURES





Pursuant
to the requirements of the Section 13 or 15(d) of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned persons, and in the capacities so indicated on October 22,
2008.





Imagin
      Molecular CorporationBy:
            /s/ Joseph G.
      OliverioJoseph
      G. OliverioChief
      Executive Officer,DirectorBy:
            /s/Corey
      ConnCorey
      ConnChief
      Financial Officer,Director


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            IMAGIN
      MOLECULAR CORPORATION
            FORM
      10-KSB








Frank L.
Sassetti & Co.


Certified
Public Accountants








The Board
of Directors


Imagin
Molecular Corporation








REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM





We have
audited the accompanying consolidated balance sheets of Imagin Molecular
Corporation and Subsidiaries as of December 31, 2007 and 2006, and the related
consolidated statements of operations, stockholders' equity, and cash flows for
the years then ended.  These financial statements are the
responsibility of the Company's management.  Our responsibility is to
express an opinion on these financial statements based on our
audits.





We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States).  Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement.  An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements.  An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation.  We believe that our audits provide a reasonable basis
for our opinion.





In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the financial position of Imagin Molecular Corporation
and Subsidiaries as of December 31, 2007 and 2006, and the results of its
operations and its cash flows for the years then ended, in conformity with
accounting principles generally accepted in the United States of
America.





The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern.  As discussed in Note 1 to the
financial statements, the Company has a significant accumulated deficit which
raises substantial doubt about the Company's ability to continue as a going
concern.  Management's plans in regard to these matters are described
in Note 1.  The financial statements do not include any adjustments
that might result from the outcome of this uncertainly.








/s/ Frank
L. Sassetti & Co.





April 11,
2008


Oak Park,
Illinois








6611 W.
North Avenue * Oak Park, Illinois 60302 * Phone (708) 386-1433 * Fax (708)
386-0139


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            IMAGIN
      MOLECULAR CORPORATION
            FORM
      10-KSB








IMAGIN
MOLECULAR CORPORATION AND SUBSIDIARIES


CONSOLIDATED
BALANCE SHEETS


DECEMBER
31, 2007 AND 2006





ASSETS2007
            
            
            2006Current
      assets:Cash
            
            $
            24,120
            
            
            $
            3,138Accounts
      receivable
            
            
            120,422
            
            
            
            163,539Total
      current assets
            
            
            144,542
            
            
            
            166,677Property
      and equipment, net
            
            
            208,909
            
            
            
            234,666Other
      assets:Due
      from related party
            
            
            1,346,000Investment
      in securities of Positron Corporation
            
            
            1,588,066
            
            
            
            1,588,066Total
      assets
            
            $
            3,287,517
            
            
            $
            1,989,409LIABILITIES
      AND STOCKHOLDERS' (DEFICIT)Current
      liabilities:Accounts
      payable
            
            $
            104,951
            
            
            $
            97,577Advances
      from shareholder
            
            
            5,100
            
            
            
            69,616Accrued
      expenses
            
            
            182,373
            
            
            
            158,246Current
      portion of promissory note
            
            
            128,580
            
            
            
            81,684Notes
      payable
            
            
            —
            
            
            
            130,000Advance
      from related party
            
            
            296,750
            
            
            
            235,385Interest
      Payable
            
            
            4,994
            
            
            
            75,732Total
      current liabilities
            
            
            722,748
            
            
            
            848,240Promissory
      note payable – less current portion
            
            
            125,404
            
            
            
            205,860Majority
      interest in consolidated subsidiary
            
            
            216,245
            
            
            
            —Total
      liabilities
            
            
            1,064,397
            
            
            
            1,054,100Stockholders’
      equity:Preferred
      Stock, $0.001 par value; 5,000,000 shares Authorized, 2,362,500 shares
      issued and outstanding
            
            
            2,362
            
            
            
            —Common
      stock, $0.001 par value; 95,000,000 shares authorized 93,663,284 and
      67,276,617 shares issued and outstanding, on December 31, 2007 and
      2006.
            
            
            93,663
            
            
            
            67,277Additional
      paid-in capital
            
            
            4,525,007
            
            
            
            2,826,755Accumulated
      deficit
            
            
            (2,397,912
            )
            
            
            (1,958,723
            )Total
      stockholders’ equity
            
            
            2,223,120
            
            
            
            935,309Total
      liabilities and stockholders’ equity
            
            $
            3,287,517
            
            
            $
            1,989,409





The
accompanying notes are an integral part of the financial
statements.


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FY2007
            IMAGIN
      MOLECULAR CORPORATION
            FORM
      10-KSB








IMAGIN
MOLECULAR CORPORATION AND SUBSIDIARIES


CONSOLIDATED
STATEMENT OF OPERATIONS


FOR THE
YEARS ENDED DECEMBER 31, 2007 AND 2006





2007
            
            
            2006Revenues
            
            $
            259,985
            
            
            $
            183,198Costs
      of revenues
            
            
            317,801
            
            
            
            343,254Gross
      loss
            
            
            (57,816
            )
            
            
            (160,056
            )Operating
      expenses:Professional
      fees
            
            
            106,558
            
            
            
            829,493Marketing,
      general and administrative
            
            
            221,573
            
            
            
            52,556Total
      operating expenses
            
            
            328,131
            
            
            
            882,049Loss
      from operations
            
            
            (385,947
            )
            
            
            (1,042,105
            )Other
      income (expenses):Interest
      income
            
            
            —
            
            
            
            145,218Interest
      expense
            
            
            (33,256
            )
            
            
            (24,717
            )Total
      other income
            
            
            (33,256
            )
            
            
            120,501Loss
      from continuing operations before income taxes  majority
      interest  in consolidated subsidiary
            
            
            (419,203
            )
            
            
            (921,604
            )Majority
      interest in  loss of consolidated subsidiary
            
            
            (1,523
            )
            
            
            —Loss
      from continuing operations before income taxes
            
            
            (420,726
            )
            
            
            (921,604
            )Income
      taxes
            
            
            —
            
            
            
            —Loss
      from continuing operations
            
            
            (420,726
            )
            
            
            (921,604
            )Loss
      from discontinued operations
            
            
            (18,463
            )
            
            
            (51,213
            )Net
      loss
            
            $
            (439,189
            )
            
            $
            (972,817
            )Per
      share amounts:From
      continuing operations
            
            $
            (.0052
            )
            
            $
            (.0140
            )From
      discontinued operations
            
            $
            (.0003
            )
            
            $
            (.0008
            )Net
      loss
            
            $
            (.0055
            )
            
            $
            (.0148
            )Weighted
      average common Shares
            
            
            80,464,197
            
            
            
            65,612,591





The
accompanying notes are an integral part of the financial
statements.


26
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FY2007
            IMAGIN
      MOLECULAR CORPORATION
            FORM
      10-KSB






IMAGIN
MOLECULAR CORPORATION AND SUBSIDIARIES


CONSOLIDATED
STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY


FOR THE
YEARS ENDED DECEMBER 31, 2007 AND 2006





Series
      A Preferred
            
            
            Common
      StockNumber
      of
            
            
            
            
            
            Number
      of
            
            
            
            
            
            Additional
      paidShares
            
            
            Amount
            
            
            Shares
            
            
            Amount
            
            
            in Capital
            
            
            Deficit
            
            
            TotalJanuary
      1, 2006
            
            
            —
            
            
            $
            —
            
            
            
            50,680,311
            
            
            $
            50,680
            
            
            $
            1,812,378
            
            
            $
            (985,906
            )
            
            $
            877,152Common
      shares issued for services
            
            
            —
            
            
            
            —
            
            
            
            9,060,000
            
            
            
            9,060
            
            
            
            754,640
            
            
            
            —
            
            
            
            763,700Common
      shares issued for debt repayment
            
            
            —
            
            
            
            —
            
            
            
            7,536,306
            
            
            
            7,537
            
            
            
            259,737
            
            
            
            —
            
            
            
            267,274Net
      loss
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            (972,817
            )
            
            
            (972,817
            )December
      31, 2006
            
            
            —
            
            
            
            —
            
            
            
            67,276,617
            
            
            
            67,277
            
            
            
            2,826,755
            
            
            
            (1,958,723
            )
            
            
            935,309Common
      shares issued for services
            
            
            —
            
            
            
            —
            
            
            
            5,000,000
            
            
            
            5,000
            
            
            
            195,000
            
            
            
            —
            
            
            
            200,000Common
      shares issued for debt repayment
            
            
            —
            
            
            
            —
            
            
            
            1,386,667
            
            
            
            1,386
            
            
            
            128,614
            
            
            
            —
            
            
            
            130,000Common
      shares issued for cash
            
            
            
            
            
            
            
            
            
            
            20,000,000
            
            
            
            20,000
            
            
            
            380,000
            
            
            
            —
            
            
            
            400,000Preferred
      shares issued for cash
            
            
            2,362,500
            
            
            
            2,362
            
            
            
            —
            
            
            
            —
            
            
            
            994,638
            
            
            
            —
            
            
            
            997,000Net
      loss
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            (439,189
            )
            
            
            (439,189
            )December
      31, 2007
            
            
            2,362,500
            
            
            $
            2,362
            
            
            
            93,663,284
            
            
            $
            93,663
            
            
            $
            4,525,007
            
            
            $
            (2,397,912
            )
            
            $
            2,223,120


27
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FY2007
            IMAGIN
      MOLECULAR CORPORATION
            FORM
      10-KSB





IMAGIN
MOLECULAR CORPORATION AND SUBSIDIARIES


CONSOLIDATED
STATEMENT OF CASH FLOWS


FOR THE
YEARS ENDED DECEMBER 31, 2007 AND 2006






2007
                      
                      
                      2006Cash
      flows from operating activities::Loss
      from continuing operations
                      
                      $
                      (420,726
                      )
                      
                      $
                      (921,604
                      )Loss
      from discontinued operations
                      
                      
                      (18,463
                      )
                      
                      
                      (51,213
                      )Net
      loss
                      
                      
                      (439,189
                      )
                      
                      
                      (972,817
                      )Adjustments
      to reconcile net loss to net cash used in operating
      activitiesDepreciation
      expense
                      
                      
                      25,757
                      
                      
                      
                      9,536Common
      stock issued for services
                      
                      
                      200,000
                      
                      
                      
                      763,700Subsidiary
      common stock issued for services
                      
                      
                      30,000
                      
                      
                      
                      —Majority
      interest in loss of consolidated subsidiary
                      
                      
                      1,523
                      
                      
                      
                      —Amortization
      of discount on notes receivable
                      
                      
                      —
                      
                      
                      
                      (54,378
                      )Changes
      in operating  assets and liabilitiesAccounts
      receivable
                      
                      
                      43,117
                      
                      
                      
                      (163,539
                      )Interest
      receivable
                      
                      
                      —
                      
                      
                      
                      (93,638
                      )Accounts
      payable  and accrued liabilities
                      
                      
                      25,868
                      
                      
                      
                      194,628Interest
      payable
                      
                      
                      —
                      
                      
                      
                      16,829Net
      cash used in operating activities
                      
                      
                      (112,924
                      )
                      
                      
                      (299,679
                      )Cash
      flows from  investing activities:Purchase
      of fixed assets
                      
                      
                      —
                      
                      
                      
                      (241,105
                      )Advances
      to related party
                      
                      
                      (1,346,000
                      )
                      
                      
                      —Net
      cash used in investing activities
                      
                      
                      (1,346,000)
                      
                      
                      
                      (241,105
                      )Cash
      flows from financing activities:Advances
      from shareholders
                      
                      
                      5,100
                      
                      
                      
                      69,616Advance
      from related party
                      
                      
                      111,365
                      
                      
                      
                      185,385Proceeds
      from promissory note
                      
                      
                      —
                      
                      
                      
                      305,111Payment
      of notes payable
                      
                      
                      (33,559
                      )
                      
                      
                      (17,566
                      )Proceeds
      from issue of common stock
                      
                      
                      400,000
                      
                      
                      
                      —Proceeds
      from issue of preferred stock
                      
                      
                      997,000
                      
                      
                      
                      —Net
      cash provided by financing activities
                      
                      
                      1,479,906
                      
                      
                      
                      542,546Net
      increase (decrease) in cash
                      
                      
                      20,982
                      
                      
                      
                      1,762Cash
      at beginning of period
                      
                      
                      3,138
                      
                      
                      
                      1,376Cash
      at end of period
                      
                      $
                      24,120
                      
                      
                      $
                      3,138Supplemental
      cash flow information:Interest
      paid
                      
                      $
                      28,256
                      
                      
                      $
                      2,780Income
      taxes paid
                      
                      
                      —
                      
                      
                      
                      —





The
accompanying notes are an integral part of the financial
statements.


28
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FY2007
            IMAGIN
      MOLECULAR CORPORATION
            FORM
      10-KSB








IMAGIN
MOLECULAR CORPORATION


CONSOLIDATED
STATEMENT OF CASH FLOWS


FOR THE
YEARS ENDED DECEMBER 31, 2007 AND 2006


(CONTINUED)





Supplementary Schedule of
Noncash Transactions





2007





On
January 10, 2007 and March 12, 2007, the Company issued 586,667 and 800,000
shares of common stock, par value $0.001, respectively, to two non-affiliated
shareholders in final satisfaction of a $130,000 note payable made to the
Company. The shares were valued at $0.06 per share.





On March
14, 2007, the Company issued 7,448,673 shares of its subsidiary, Cipher
Multimedia, Inc. common stock, par value $0.001 to an affiliated shareholder in
final satisfaction of $148,973 of advances and other notes payable made to the
Company. The shares were valued at $0.02 per share.





On March
14, 2007, the Company issued 1,787,500 shares of its subsidiary, Cipher
Multimedia, Inc. common stock, par value $0.001 to a non-affiliated shareholder
in final satisfaction of $35,750 of interest payable related to a note payable
made to the Company. The shares were valued at $0.02 per share.





On March
14, 2007, the Company issued a total of 1,500,000 shares of its subsidiary,
Cipher Multimedia, Inc. common stock, par value $0.001 to three employees,
including 500,000 shares to Corey N. Conn, the Registrant’s Chief Financial
Officer, pursuant to their employment agreements. The shares were valued at
$0.02 per share.





On May
14, 2007, the Company issued 2,000,000 shares of common stock, par value $0.001,
to a consultant for services performed. The shares were valued at $0.04 per
share.





On May 15, 2007, the Company issued
3,000,000 shares of common stock, par value $0.001, to Joseph G. Oliverio, Chief
Executive Officer for compensation. The shares were valued at $0.04 per
share.








2006





On
January 4, 2006, the Company issued 481,481 shares of common stock to a
non-affiliated shareholder in final satisfaction of a $13,000 advance made to
the Company. The shares were valued at $0.027 per share.





On
January 4, 2006, the Company issued 7,054,825 shares of common stock to an
affiliated shareholder in final satisfaction of a $253,974 advance made to the
Company. The shares were valued at $0.036 per share.





On April
13, 2006, the Company issued 50,000 shares of common stock to a consultant for
services performed. The shares were valued at $0.26 per share.





On May
26, 2006, the Company issued 3,000,000 shares of common stock to a consultant
for services performed. The shares were valued at $0.17 per share





During
September 2006, the Company converted notes receivable and accrued interest due
from Positron Corporation into 762,358 shares of Positron Corporation Series B
Preferred Stock, par value $1.00.  The Company subsequently converted
40,000 shares of Positron Series B Preferred Stock into 4,000,000 shares of
Positron Corporation common stock.





On
November 29, 2006, the Company issued 10,000 shares of common stock to a
consultant for services performed. The shares were valued at $0.07 per
share.


29
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FY2007
            IMAGIN
      MOLECULAR CORPORATION
            FORM
      10-KSB








IMAGIN
MOLECULAR CORPORATION


NOTES TO
CONSOLIDATED STATEMENTS


FOR THE
YEARS ENDED DECEMBER 31, 2007 AND 2006







NOTE
1. BUSINESS ORGANIZATION





Imagin
Molecular Corporation (“Imagin” or the “Company”) was originally incorporated
under the laws of the State of Delaware.  Imagin commenced operations
upon incorporation and was in the development stage through the first quarter of
2006 and through that period had very little revenue.  Imagin’s
subsidiary Cipher Multimedia, Inc (“Cipher”) operates Imagin’s original
business, a digital distribution solution and marketing company which secures
and allows access to digital content through proprietary encoding, encryption
and authorization technology.





In 2005
Imagin’s Board of Director’s resolved to change the Company’s principal
operations from multimedia encryption technology to positron emission tomography
and medical imaging. On March 20, 2007, the Company’s Board of Directors
authorized the spin-off of Cipher to the Company’s Shareholders of record on
March 26, 2007. Operations began in the second quarter of 2006 and the Company
no longer operates in the development stage. See Positron Acquisition Corp. and
Imagin Nuclear Partners discussions below. The results of Cipher are presented
as discontinued operations in the Company’s consolidated statements of
operations and cash flows.




Positron
Acquisition Corp.





On April
19, 2005, the Company organized a wholly owned subsidiary, under the laws of the
state of Nevada, named Positron Acquisition Corp. (“PAC”).  Imagin’s
original intent to create PAC was to acquire controlling interest in Positron
Corporation (“Positron”), a publicly owned Texas corporation.





On May
23, 2005 the Company’s Board of Directors and shareholders holding approximately
60.1% of the Company’s issued and outstanding and common stock par value $.001
per share (the “Common Stock”), approved a Securities Exchange Agreement (the
“Exchange”) between the Company’s  wholly-owned subsidiary Positron
Acquisition Corp., a Nevada corporation (“PAC”) and Imagin Diagnostic Centres,
Inc., a Canadian corporation (“IDC”).  Pursuant to the terms of the
Exchange, the Company issued 30,000,000 shares (the “Exchange Shares”) of its
common stock, par value $.001 per share (the “Common Stock”) in exchange for
three convertible promissory notes issued by Positron Corporation (“Positron”),
a publicly owned Texas corporation.  The Positron notes are
convertible into shares of Positron’s Series C and Series D Preferred Stock
which convert, under certain circumstances, into 64,000,000 shares of Positron’s
common stock, par value $.01 per share (the “Conversion Shares”).  In
September 2006 the Company converted principal and interest of $818,066
outstanding upon the Series D Secured Convertible Promissory Notes and 770,000
shares of Series C Preferred Stock into 762,358 shares of Positron Corporation
Series B Preferred Stock, and subsequently converted 40,000 shares of Series B
Preferred Stock into 4,000,000 shares of the Positron Common Stock.





In
accordance with the terms of the Exchange, Exchange Shares were distributed to
the equity holders of IDC.





Imagin
Nuclear Partners Corporation





In 2006,
the Company’s wholly-owned subsidiary Imagin Nuclear Partners Corporation
(“INP”) commenced scanning patients using Positron Emission Tomography
myocardial perfusion imaging technology (“PET” or “PET imaging technology”) at a
cardiac imaging center located in Beth Israel Medical Center in New York City
(“BIMC”).  Through BIMC, the Company has performed PET imaging on
several hundred patients and expects volume to increase once marketing efforts
result in increased physician awareness.


30
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FY2007
            IMAGIN
      MOLECULAR CORPORATION
            FORM
      10-KSB






In May
2007, INP and BIMC executed a new lease agreement whereby BIMC leases PET
scanning cameras and other related radiologic equipment from INP for the purpose
of operating a PET Lab at its site.  The initial term of the agreement
is three years. (See NOTE
8) INP intends to joint venture with hospitals or physician groups to own
or operate nuclear medicine imaging centers throughout North America.  The
Company plans to offer a full spectrum of Positron Emission Tomography imaging
services as well as a robust coronary disease reversal and prevention program.
The Company intends to partner with cardiology groups who are less invasively
oriented and desire program differentiation from competition.  The Company
believes that their methodology to detection and management is more cost
effective than traditional methods currently employed.





NOTE
2.  GOING CONCERN





These
financial statements have been prepared in accordance with generally accepted
accounting principles applicable to a going concern, which contemplates the
realization of assets and the satisfaction of liabilities and commitments in the
normal course of business.  The Company has sustained losses since
inception and has accumulated losses of $2,397,912 as of December 31,
2007.  The Company’s ability to continue as a going concern is
dependent in part upon the success of INP and the PET scanning at the Beth
Israel Medical Center, but in large part the success of INP will be its ability
to execute additional lease or similar agreements with other facilities that
perform PET imaging for patients.  In addition the Company will need
to raise additional capital to continue operations. .Management plans to raise
equity capital to finance the operating and capital requirements of the
Company.





The
Company has made a significant investment into the Securities of Positron
Corporation a publicly owned Texas Corporation and affiliate of the Company
(“Positron”).  As of December 31, 2007, the Company held 8,026,000
shares of Positron’s common stock and 722,358 shares of Positron’s Series B
Convertible Preferred stock for an aggregate of 12.1% of the outstanding common
stock of Positron on a non-fully-diluted basis. In addition, as of December 31,
2007, the Company had advanced an additional $1,346,000 to Positron. The
viability of our wholly-owed subsidiary Positron Acquisition Corporation, and
the repayment of the advances, is dependent upon the relative success of
Positron





While the Company is expending its best
efforts to achieve it operating goals, there is no assurance that such activity
will generate sufficient funds to accomplish its business purpose, or that the
Company’s business plan will be successful. Furthermore, there can be no
assurance that amounts invested in and advance to Positron Corporation will ever
be realized.




NOTE
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





Principles
of Consolidation and Nature of Operations





For the
years ended December 31, 2007 and 2006, the financial statements include the
accounts and transactions of Cipher Multimedia, Inc., Positron Acquisition Corp.
and Imagin Nuclear Partners Corporation (subsidiaries). All Intercompany
transactions and balances have been eliminated.


.


Cash
and Cash Equivalents





The
Company considers all highly liquid instruments with original maturities of
three months or less to be cash equivalents.





Income
Taxes





The
Company accounts for income taxes under Statement of Financial Accounting
Standards No. 109, “Accounting for Income Taxes”.  Under Statement No.
109, the asset and liability method is used in accounting for income
taxes.  Deferred taxes are recognized for temporary differences
between the bases of assets and liabilities for financial statement and income
tax purposes.  The temporary differences relate primarily to net
operating loss carryforwards.  A valuation allowance is recorded for
deferred tax assets when it is more likely than not that some or all of the
deferred tax assets will not be realized through future
operations.


31
 Table of Contents




FY2007
            IMAGIN
      MOLECULAR CORPORATION
            FORM
      10-KSB






In
September 2006, the FASB released FASB Interpretation No. 48, "Accounting for
Uncertainty in Income Taxes," an interpretation of FASB Statement No. 109 ("FIN
48"). FIN 48 prescribes a recognition threshold and measurement attribute for
the financial statement recognition and measurement of a tax position taken or
expected to be taken in a tax return. A company must determine whether it is
"more-likely-than-not" that a tax position will be sustained upon examination,
including resolution of any related appeals or litigation procedures, based on
the technical merits of the position.  Once it is determined that a
position meets the more-likely-than-not recognition threshold, the position is
measured to determine the amount of benefit to recognize in the financial
statements. This interpretation is effective for fiscal years beginning after
December 15, 2006.  The provisions of FIN 48 were adopted in the first
quarter of 2007 and did not have a material effect on the Company's financial
statements.




Revenue
recognition





The
Company recognizes revenue from PET scans when the procedure is
performed.  Scan revenue represents the amount charged to patients net
of contractual adjustments.  Contractual adjustments arise due to the
terms of reimbursement of Medicaid, Medicare and managed care
providers.  Such adjustments represent the difference between the
charges at established rates and estimated recoverable amounts and are
recognized as a reduction of revenue in the period services are
rendered.  Any differences between estimated contractual adjustments
and actual final settlements under reimbursement contracts are recognized as
contractual adjustments in the period final settlements are
determined.





Loss
Per Share





Loss per
share is computed based on the weighted average number of shares of common stock
outstanding.  Stock options and warrants are not included in the
computation of the weighted average number of shares outstanding for dilutive
net loss per common share during each of the periods presented in the Statement
of Operations, as the effect would be antidilutive.





Use
of Estimates





The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period.  Actual results could differ from those
estimates.





New
Accounting Pronouncements








In
September 2006, the FASB issued Statement of Financial Accounting Standards No.
157, Fair Value Measurements. SFAS No. 157 provides enhanced guidance for using
fair value to measure assets and liabilities. The standard also requires
expanded disclosures about the extent to which companies measure assets and
liabilities at fair value, the information used to measure fair value and the
effect of fair value measurements on earnings. SFAS No. 157 is effective for
financial statements issued for fiscal years beginning after November 15, 2007,
and interim periods within those fiscal years. The Company does not expect the
adoption of Statement No. 157 to materially impact the Company’s financial
statements.





In
February 2007, the FASB issued SFAS No. 159 "The Fair Value Option for Financial
Assets and Financial Liabilities". SFAS No. 159 permits entities to choose, at
specified election dates, to measure eligible items at fair value (the "fair
value option"). A business entity shall report unrealized gains and losses on
items for which the fair value option has been elected in earnings at each
subsequent reporting date. The objective is to improve financial reporting by
providing entities with the opportunity to mitigate volatility in reported
earnings caused by measuring related assets and liabilities differently without
having to apply complex hedge accounting provisions. SFAS No. 159 is effective
as of the beginning of an entity's first fiscal year that begins after November
15, 2007. Early adoption is permitted as of the beginning of a fiscal year that
begins on or before November 15, 2007, provided the entity also elects to apply
the provisions of SFAS No. 157, "Fair Value Measurements". The Company does not
expect the adoption of Statement No. 159 to materially impact the Company’s
financial statements.


32
 Table of Contents




FY2007
            IMAGIN
      MOLECULAR CORPORATION
            FORM
      10-KSB






In
December 2007, the FASB issued SFAS No. 141(R), 'Business Combinations -
Revised,' that improves the relevance, representational faithfulness, and
comparability of the information that a reporting entity provides in its
financial reports about a business combination and its effects. To accomplish
that, this statement establishes principles and requirements how the acquirer
recognizes and measures in its financial statements the identifiable assets
acquired, the liabilities assumed, and any non-controlling interest in the
acquiree, recognizes and measures the goodwill acquired in the business
combination or a gain from a bargain purchase, and determines what information
to disclose to enable users of the financial statements to evaluate the nature
and financial effects of the business combination. The changes to current
practice resulting from the application of SFAS No. 141(R) are effective for
financial statements issued for fiscal years beginning after December 15, 2008.
The adoption of SFAS No. 141(R) before December 15, 2008 is prohibited. The
Company has not determined the effect, if any, that may result from the adoption
of SFAS No. 141(R) on its financial statements.





Management
does not believe that any other recently issued, but not yet effective
accounting pronouncements, if adopted, would have a material effect on the
accompanying financial statements.





NOTE
4. CIPHER MULTIMEDIA INC. REORGANIZATION / DISCONTINUED OPERATIONS





On March
13, 2007, the Registrant reorganized its wholly-owned subsidiary Cipher
Multimedia, Inc., an Illinois corporation (“Cipher”) as a Nevada corporation via
merger with Cipher Multimedia, Inc., a Nevada corporation
(“Cipher-NV”).  In accordance with the Plan of Merger, each ten shares
of Cipher were exchanged for one share of Cipher-NV common
stock.  Also on March 13, 2007, the Registrant entered into employment
agreements on behalf of Cipher-NV with Julia Rzeppa as President and Chairman,
Corey Conn as Treasurer and Director and Domenic Hanzely as Vice President of
Product Development and Chief Technology officer.  Pursuant to the
terms of the employment agreements, each received 500,000 shares of Cipher
common stock as compensation.  Mr. Conn is also the Registrant’s Chief
Financial Officer.  On March 14, 2007, Cipher settled obligations with
its two largest creditors by retiring $148,973 in obligations to Patrick Rooney,
the Registrant’s former chairman and Chief Executive officer and Cipher’s
founder, for 7,448,673 shares of Cipher-NV common stock, and retiring $35,750 of
interest payable to a third-party in exchange for the issuance of 1,787,500
shares of Cipher’s common stock.  On March 20, 2007, realizing that
Cipher’s software encryption business no longer fit the Registrant’s business
model of medical imaging services, the Registrant’s Board of Directors resolved
to spin off the 3,513,200 shares of Cipher common stock held by the Registrant
as a special dividend to its Shareholders of record as of March 26,
2007.





After the
merger between Cipher and Cipher-NV, the Registrant no longer holds a majority
of the common stock of the reorganized subsidiary,
Cipher-NV.   However, in applying the requirements of Financial
Accounting Standards Board Interpretation No. 46, as revised, (“FIN 46(R)), the
Registrant believes itself to be the primary beneficiary as evidenced by
continued management control over the operations of the subsidiary. This being
the case, the operations of Cipher-NV for the year ended December 31, 2007
continue to be consolidated in the Registrant’s financial statements and are
reflected as discontinued operations.







Summarized
financial information for discontinued operations for the years ended December
31, 2007 and 2006 were as follows:





December 31,
      2007
            
            
            December 31,
      2006Operating
      expenses
            
            $
            29,990
            
            
            $
            28,105Other
      expenses (income)
            
            
            (11,527
            )
            
            
            23,108Loss
      before majority interest
            
            
            (18,463
            )
            
            
            (51,213
            )Majority
      interest in loss
            
            
            (1,523
            )
            
            
            --Net
      loss
            
            $
            (
      19,986
            )
            
            $
            (51,213
            )Total
      assets
            
            $
            846
            
            
            $
            390Total
      liabilities
            
            
            236,603
            
            
            
            156,269Majority
      interest
            
            
            1,523
            
            
            
            --Stockholders’
      deficit
            
            
            (235,757
            )
            
            
            (155,879
            )


33
 Table of Contents




FY2007
            IMAGIN
      MOLECULAR CORPORATION
            FORM
      10-KSB






NOTE
5. DUE FROM RELATED PARTY





During
the year ended December 31, 2007, the Company advanced funds to Positron
Corporation and its wholly-owned subsidiary Imaging Pet Technologies
(collectively “Positron”).  Imagin’s  Chief Executive
Officer and Director, Joseph Oliverio and its Chief Financial Officer and
Director, Corey Conn are both officers and directors of Positron
Corporation.  At December 31, 2007 the outstanding amount due the
Company from Positron is $1,346,000.  On April
10, 2008, the advances were formalized into a promissory note, with interest at
8%, due on December 31, 2008 and secured by a pledge of 100,000,000 shares
of Positron’s common stock.




NOTE
6. IMAGIN DIAGNOSTIC CENTRES INC. CONVERTIBLE NOTES RECEIVABLE





On June
29, 2005, through our wholly-owned subsidiary Positron Acquisition Corporation,
(“PAC”), we purchased notes receivable for 30,000,000 restricted shares valued
at $1,304,000. Below is a brief history of those notes. On May 26, 2004 and June
17, 2004, Positron Corporation (“Positron”)) sold two separate secured
convertible promissory notes under a Note Purchase Agreement dated May 21, 2004,
to IMAGIN Diagnostic Centres, Inc. (“IDC”) in the principal amounts of $400,000
and $300,000, respectively. Interest is charged on the outstanding principal at
the rate of ten percent (10%) per annum and is payable annually to the extent of
positive cash flow of Positron on the anniversary dates of these notes. The
principal and any unpaid interest were originally due on the earlier to occur of
May 21, 2006 or when declared due and payable by IDC upon occurrence of an event
of default. The Company and Positron extended the due date to September 30,
2006, on which date the notes were converted to Positron Series B Convertible
Preferred Stock.





In a
second stage of the financing IDC agreed to purchase additional secured
convertible promissory notes in the aggregate principal amount of $1,300,000.
These notes were to be purchased over a six and a half month period, commencing
July 15, 2004. These notes are due and payable on May 21, 2006, the due date was
subsequently extended to September 30, 2006. These notes are initially
convertible into new shares of Series D Preferred Stock that, in turn is
convertible into an aggregate of 52,000,000 shares of Positron common stock. As
of June 30, 2005, principal of $1,208,500 has been advanced related to these
notes. On June 30, 2005, IDC converted $575,000 of these promissory notes into
shares of Series D Preferred Stock that, in turn were converted into 23,000,000
shares of the Positron common stock. This conversion reduced the principal owed
under these promissory notes from $1,208,500 to $633,500. On October 21, 2005,
$770,000 of unpaid principal and interest was converted into 770,000 shares of
Positron’s Series C Convertible Preferred Stock.





On
September 30, 2006 the Company converted $818,066 of principal and interest
outstanding on the Series D Convertible Promissory Notes and the 770,000 Shares
of Series C into 762,358 shares of Positron’s Series B Convertible Preferred
Stock, par value $1.00 per share (the “Series B”) and subsequently converted
40,000 Series B Preferred Stock into 4,000,000 shares of common stock, par value
$0.01.  Each share of Series B is convertible into 100 shares of
Positron Corporation common stock and has 100 votes on all matters which
Positron shares are entitled to vote.  Due to the restrictions on sale
or transfer of these securities and the significant number of underlying common
shares relative to the issuers’ outstanding common shares, management believes
that any adjustment of its investment to fair value under FAS 115 would result
in an overstatement of the value of the investment. As such the securities are
valued at the previous carrying value of the note receivable and accrued
interest at the date of conversion.





NOTE
7.  PROPERTY AND EQUIPMENT





Property
and equipment at December 31, 2007 and December 31, 2006 consisted of the
following:








Dec. 31,
      2007
            
            
            Dec. 31,
      2006Machinery
      and equipment
            
            $
            234,760
            
            
            $
            234,760Computers
      and software
            
            
            9,442
            
            
            
            9,442Subtotal
            
            
            244,202
            
            
            
            244,202Less:
      accumulated depreciation
            
            
            (35,293
            )
            
            
            (9,536
            )Total
            
            $
            208,909
            
            
            $
            234,666


34
 Table of Contents




FY2007
            IMAGIN
      MOLECULAR CORPORATION
            FORM
      10-KSB






NOTE
8.  NOTES PAYABLE




On
September 11, 2006, the Company issued a 12% secured promissory note to Cherry
Creek Capital Partners (“Cherry Creek”), an unrelated party, in the amount of
$300,000.  Pursuant to the terms of the note, commencing on October 1,
2006, as amended the Company made a payment of $17,566 in November 2006 and is
required to make 30 consecutive monthly installments of $11,142, including
interest, commencing in July 2007.  A final payment of all outstanding
principal and accrued interest is due and payable on March 10,
2010.   The promissory note is secured by certain assets of the
Company including 4,000,000 shares of common stock of Positron Corporation, for
which the Company has granted Cherry Creek a security interest. As of December
31, 2007 the principal balance of the promissory note is $253,984, of which
$128,580 is included in current liabilities.




As a
condition of the promissory note, on September 11, 2006 the Company and Cherry
Creek entered into an Assignment of Economic Interests whereby the Company shall
be obligated to pay Cherry Creek, on a quarterly basis, an amount equal to 5% of
operating income (as defined in the agreement), and upon the occurrence of a
liquidity event, a payment in the amount of 5% of the net proceeds of such
transaction. At December 31, 2007, no amounts had been recorded for these
items.




Convertible
note with related party




On
December 28, 2004, the Company modified and amended a promissory note made by
Imagin in favor of John Rooney, brother of the Registrant’s former Chairman,
President and Chief Executive Officer and current principal shareholder, in the
principal amount of $130,000.  Pursuant to the terms of the amended
note, the Company accepted the obligation for the payment of the note for the
release of the obligation of Imagin to repay principal and
interest.  The due date of the note was extended to December 31, 2007,
with interest at the rate of 10%.  The note was amended to be
convertible into 1,386,667 shares of the Company’s common
stock.  Additional shares may be converted for unpaid interest at
$.09375. As of December 31, 2007 the note and accrued interest of $39,000 was
unpaid This interest was converted into 1,787,500 shares of common stock of
Cipher Multimedia, Inc., the Company’s wholly-owned subsidiary.  On
January 10, 2007 the Company issued of 586,667 shares of common stock to Mr.
Rooney as full and final settlement of the note




Advances
from shareholder




Patrick
G. Rooney, the company’s former Chairman, President and Chief Executive Officer,
advanced funds to finance the Company’s working capital requirements. On
December 31, 2007 and 2006 advances and loans, including accrued interest, made
to the Company by Mr. Rooney totaled $5,100 and $98,973,
respectively.




NOTE
9. EQUIPMENT LEASE AGREEMENT




In May
2007, the Company’s wholly-owned subsidiary, INP and
Beth Israel Medical Center (“BIMC”) executed an Equipment Lease
Agreement (the “Agreement”) for certain positron emission tomography (“PET”)
scanning cameras and related radiologic equipment (the
“Equipment”).  Under the terms of the Agreement, BIMC will lease the
equipment for use in its on site PET Lab where it performs PET scans on its
patients.  The initial lease term is three (3) years commencing on
June 4, 2007 (the “Effective Date”).




35
 Table of Contents




FY2007
            IMAGIN
      MOLECULAR CORPORATION
            FORM
      10-KSB






In
accordance with the Agreement, BIMC shall pay INP rent for the lease of the
equipment as follows:




-
            The
      actual aggregate technical component reimbursement received by BIMC from
      all payer sources for all PET scans performed during the three (3) month
      period commencing on the Effective Date of the Agreement (the “Initial
      Period”).


-
            $850
      per scan for scans 1-60 performed in a given calendar month after the
      Initial Period.


-
            $650
      per scan for scans 61-120 performed in a given calendar month after the
      Initial Period.


-
            $450
      per scan for scans in excess of 120 performed in a given calendar month
      after the Initial Period.


-
            A
      minimum monthly lease payment of $51,000 is due in the event less than 61
      scans are performed by BIMC during any calendar month after the Initial
      Period




NOTE
10. SERIES A PREFERRED STOCK




On July
24, 2007 the Board of Directors authorized a new series of preferred stock
designated Series A Convertible Preferred Stock.  The number of shares
authorized was 5,000,000.  Each share of Series A Preferred Stock
$.001 par value is convertible into 20 shares of the Company’s Common Stock.
Holders of the Series A Preferred Stock are entitled to 20 votes per share on
all matters requiring shareholder vote.  While Series A Preferred
Stock is outstanding no Common Stock dividends may be paid or declared by the
Company.





NOTE
11. INCOME TAXES





The
Company has incurred losses since its inception and, therefore, has not been
subject to federal income taxes.  As of December 31, 2007, the Company
had net operating loss (“NOL”) carryforwards for income tax purposes of
approximately $2,500,000, which expire in 2022 through 2027.  Under
the provisions of Section 382 of the Internal Revenue Code the greater than 50%
ownership changes of the Company’s common stock limited the Company’s ability to
utilize its NOL carryforwards to reduce future taxable income and related tax
liabilities.





Section
382 allows an owner shift any time there is a transfer of stock by a person who
directly, or indirectly, owns more than 5% of the corporation and the percentage
of stock of the corporation owned by one or more five percent shareholders has
increased, in the aggregate, by more than 50 percentage points over the lowest
percentage of stock owned by such shareholders at any time during the "testing
period."  The "testing period" is generally a three-year period ending
on the date of any owner or equity structure shift.





The
amount of post-change income that may be offset by pre-change losses is limited
each year by the "Section 382 Limitation." Generally, the Section 382 Limitation
is an amount equal to the value of the old loss corporation multiplied by a rate
established monthly by the Internal Revenue Service




For the
years ended December 31, 2007 and 2006, the Company applied the Federal
statutory tax rate of 34%.


Deferred
income taxes consist of the following December 31, 2007 and 2006:






2007
            
            
            2006Deferred
      tax assetsNet
      operating loss carryforwards
            
            $
            1,170,000
            
            
            $
            830,000Current
      year provision
            
            
            150,000
            
            
            
            340,0001,320,000
            
            
            
            1,170,000Valuation
      allowance
            
            
            (1,320,000
            )
            
            
            (1,170,000
            )$
            -
            
            
            $
            0





Due to
the uncertainty of future realization of the net deferred tax asset, a valuation
allowance has been placed against this asset.




The
Company adopted FASB Interpretation No. 48, "Accounting for Uncertainty in
Income Taxes" as of January 1,
2007. The Company has reviewed the status of possible tax uncertainties through
2007. The company's review did not result in any uncertain tax positions
requiring disclosure. Should the Company need to record interest and/or
penalties related to uncertain tax positions or other tax authority assessments,
it would classify such expenses as part of the income tax provision. The Company
has not changed any of its tax policies nor adopted any new tax positions during
2007 and believes it has filed appropriate tax returns in all jurisdictions for
which it has nexus. This review included the Company's net deferred income tax
assets and valuation allowance.


36
 Table of Contents




FY2007
            IMAGIN
      MOLECULAR CORPORATION
            FORM
      10-KSB






NOTE
12.  RELATED PARTY TRANSACTIONS





In
September 2006, INP purchased from Positron, a refurbished HZL Positron Emission
Tomography (“PET”) Imaging System.  The machine is being used at the
cardiac imaging center located in Beth Israel Medical Center in New York City.
The total cost of the machine, which includes sales tax and installation was
$234,760. The Company also executed a service and maintenance contract with
Positron for the machine. For the years ended December 31, 2007, Positron billed
the Company $55,000 under the service contract. Imagin’s  Chief
Executive Officer and Director, Joseph Oliverio and its Chief Financial Officer
and Director, Corey Conn are both officers and directors of Positron
Corporation





Advances
from related parties at December 31, 2007 and December 31, 2006 consisted of the
following:





December 31,
      2007
            
            
            December 31,
      2006Positron
      Corporation and Subsidiaries
            
            $
            296,750
            
            
            $
            185,385




On July
24, 2007, the Company consummated a Securities Purchase and Subscription
Agreement with Solaris Opportunity Fund, L.P., a Delaware limited partnership
("Solaris").  Solaris acquired 20,000,000 shares of the Registrant's
common stock, par value $0.001 per share for a purchase price of
$400,000.  Solaris' Managing Member, Patrick G. Rooney, is the
principal shareholder of the Company and its former Chairman and Chief Executive
Officer, and founder of its subsidiary Cipher–NV.  Mr. Rooney is
also the Chairman of Positron Corporation, a publicly owned Texas
corporation and an affiliate of the Company.





On
July 24, 2007 and August 28, 2007, the Company consummated separate Securities
Purchase and Subscription Agreements with Solaris. Under each of the agreements
Solaris acquired 500,000 shares of the Registrant's Series A Convertible
Preferred Stock for $200,000.  The preferred shares are convertible
into a total of 20,000,000 shares of Imagin common stock.





On
October 5, 2007 the Company consummated a Securities Purchase and Subscription
Agreements with Solaris. Under the Agreement Solaris acquired 500,000 shares of
the Registrant's Series A Convertible Preferred Stock for
$200,000.  The preferred shares are convertible into a total of
10,000,000 shares of Imagin common stock.





On
November 4, 2007 the Company consummated a Securities Purchase and Subscription
Agreements with Solaris. Under the Agreement Solaris acquired 500,000 shares of
the Registrant's Series A Convertible Preferred Stock for
$200,000.  The preferred shares are convertible into a total of
10,000,000 shares of Imagin common stock.





On
November 30, 2007 the Company consummated a Securities Purchase and Subscription
Agreements with Solaris. Under the Agreement Solaris acquired 187,500 shares of
the Registrant's Series A Convertible Preferred Stock for
$97,000.  The preferred shares are convertible into a total of
3,750,000 shares of Imagin common stock.





On
December 14, 2007 the Company consummated a Securities Purchase and Subscription
Agreements with Solaris. Under the Agreement Solaris acquired 175,500 shares of
the Registrant's Series A Convertible Preferred Stock for
$100,000.  The preferred shares are convertible into a total of
3,500,000 shares of Imagin common stock.





During
the year ended December 31, 2007, the Company advanced funds to Positron
Corporation. At December 31, 2007 the outstanding amount of these advances
totaled $1,346,000. The advances are non-interest bearing. On April
10, 2008, the advances were formalized into a promissory note, with interest at
8% per annum, due December 31, 2008 and secured by a pledge of 100,000,000
shares of Positron’s common stock.




NOTE
13. STOCKHOLDERS' EQUITY





On
January 10, 2007 and March 12, 2007, the Company issued 586,667 and 800,000
shares of the Registrant’s common stock, par value $ .001 to John Rooney,
brother of the Company’s former Chairman, President and Chief Executive Officer,
and Jaega Corporation, respectively, as final satisfaction of a $130,000 note
payable to John Rooney. Pursuant to the terms of the agreement between the
Company and Mr. Rooney, the note was convertible into 1,386,667 shares of the
Company’s common stock.  In December 2006, Mr. Rooney assigned the
conversion rights for 800,000 of the shares to Jaega
Corporation.


37
 Table of Contents




FY2007
            IMAGIN
      MOLECULAR CORPORATION
            FORM
      10-KSB








On May
14, 2007, the Company issued 2,000,000 shares of the Registrant’s common stock,
par value $0.001, to a consultant for services performed. The shares were valued
at $0.04 per share.





On May
15, 2007, the Company issued 3,000,000 shares of the Registrant’s common stock,
par value $0.001, to Joseph G. Oliverio, Chief Executive Officer as
compensation. The shares were valued at $0.04 per share.





On July
24, 2007, the Company consummated a Securities Purchase and Subscription
Agreement with Solaris Opportunity Fund, L.P., a Delaware limited partnership
("Solaris").  Solaris acquired 20,000,000 shares of the Registrant's
common stock, par value $0.001 per share for a purchase price of
$400,000.





On July
24, 2007, the Company consummated a Securities Purchase and Subscription
Agreement with Solaris. Solaris acquired 500,000 shares of the Registrant's
Series A Convertible Preferred Stock for $200,000.  The preferred
shares are convertible into a total of 10,000,000 shares of Imagin common
stock.





On August
28, 2007, the Company consummated Securities Purchase and Subscription
Agreements with Solaris. Solaris acquired 500,000 shares of the Registrant's
Series A Convertible Preferred Stock for $200,000.  The preferred
shares are convertible into a total of 10,000,000 shares of Imagin common
stock.





On
October 5, 2007 the Company consummated a Securities Purchase and Subscription
Agreements with Solaris. Under the Agreement Solaris acquired 500,000 shares of
the Registrant's Series A Convertible Preferred Stock for
$200,000.  The preferred shares are convertible into a total of
10,000,000 shares of Imagin common stock.





On
November 4, 2007 the Company consummated a Securities Purchase and Subscription
Agreements with Solaris. Under the Agreement Solaris acquired 500,000 shares of
the Registrant's Series A Convertible Preferred Stock for
$200,000.  The preferred shares are convertible into a total of
10,000,000 shares of Imagin common stock.





On
November 30, 2007 the Company consummated a Securities Purchase and Subscription
Agreements with Solaris. Under the Agreement Solaris acquired 187,500 shares of
the Registrant's Series A Convertible Preferred Stock for
$97,000.  The preferred shares are convertible into a total of
3,750,000 shares of Imagin common stock.





On
December 14, 2007 the Company consummated a Securities Purchase and Subscription
Agreements with Solaris. Under the Agreement Solaris acquired 175,500 shares of
the Registrant's Series A Convertible Preferred Stock for
$100,000.  The preferred shares are convertible into a total of
3,500,000 shares of Imagin common stock.





On
January 2, 2006, the Company entered into a settlement agreement with a
non-affiliated shareholder whereby the Company issued 481,481 shares of the
common stock in full and final satisfaction of unpaid and unreimbursed expenses
and advances made on behalf of the Registrant in the aggregate amount of
$13,000.  The obligation was converted at the closing bid price of the
Company’s common stock as of the settlement date ($0.027).





On
January 2, 2006 the Company entered into an additional settlement agreement with
Patrick G.  Rooney, the Registrant’s former Chairman, President and
Chief Executive Officer and affiliate shareholder whereby Mr. Rooney agreed to
accept 7,054,825 of the Company’s common stock in exchange for the full and
final satisfaction of unpaid and unreimbursed expenses in the aggregate amount
of $253,974. The obligation was converted into shares of the Company’s common
stock at the average of the closing bid price five (5) trading days preceding
the conversion ($0.036).





In
2006the Company
issued 9,060,000 shares of common stock in exchange for consulting services and
other professional fees and recorded consulting fees expenses of $763,700 to
reflect the fair market value of the common shares issued.






38