UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549











FORM
10-Q





(Mark
One)


x
            QUARTERLY REPORT PURSUANT TO
      SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934.





For the quarterly period ended
            SEPTEMBER
      30, 2009





OR





o
            TRANSITION REPORT PURSUANT TO
      SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934.





For the
transition period from ___________________________ to
___________________________





Commission
file number 000-23873





IMAGIN
MOLECULAR CORPORATION





(Exact
Name of Registrant as specified in its charter)





Delaware
            13-4099008(State
      or Other Jurisdiction of Incorporation or
      Organization)
            (IRS
      Employer Identification No.)





3
      Grant Square, #315
              Hinsdale,
      Illinois
            60521(Address
      of Principal Executive Offices)
            (Zip
      Code)





Issuer’s
Telephone Number, Including Area Code:  (630) 230-8734





Check
whether the issuer (1) filed all reports required to be filed by Section 13 or
15(d) of the 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 x     No
 ̈





Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).


Yes oNo  ̈





Indicate
by check mark whether the registrant is a larger accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check
one)





Large
      accelerated
      filer             ̈
            Accelerated
      filer  ̈Non-accelerated
      filer              ̈
            Smaller
      reporting company Q





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).





Yes  ̈            
No Q





The
numbers of shares outstanding of each of the issuer's classes of common equity,
as of November 16, 2009, are as follows:





Class
      of Securities
            
            Shares
      OutstandingCommon
      Stock, $0.001 par value
            
            74,443,284







1





FORM
      10-Q
            SEPTEMBER
      30, 2009





IMAGIN MOLECULAR CORPORATION


FOR
THE QUARTER ENDED SEPTEMBER 30, 2009


TABLE
OF CONTENTS




INDEX
            PagePART
      I  - FINANCIAL INFORMATIONITEM 1 - FINANCIAL STATEMENTS
            3Consolidated Balance Sheet at September 30, 2009 (unaudited)
      and December 31, 2008
            3Consolidated Statements of Operations for the three and nine
      months ended September 30, 2009 and 2008 (unaudited)
            4Consolidated Statements of Cash Flows for the nine months ended
      September 30, 2009 and 2008 (unaudited)
            5Notes to Consolidated Financial Statements
      (unaudited)
            7ITEM 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
      CONDITION AND RESULTS OF OPERATIONS
            12ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
      MARKET RISK
            14ITEM 4 - CONTROLS AND PROCEDURES
            14PART
      II-OTHER INFORMATIONITEM 1 - LEGAL PROCEEDINGS
            15ITEM 2 - UNREGISTERED SALES OF EQUITY SECURITIES AND
      USE OF PROCEEDS
            15ITEM 3 - DEFAULTS UPON SENIOR
    SECURITIES
            15ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY
      HOLDERS
            15ITEM 5 - OTHER INFORMATION
            15ITEM 6 – EXHIBITS
            15




2
 Table of Contents





FORM
      10-Q
            SEPTEMBER
      30, 2009





PART
1 – FINANCIAL INFORMATION





ITEM 1.  Financial Statements





IMAGIN MOLECULAR CORPORATION AND SUBSIDIARIES


CONSOLIDATED BALANCE
SHEETS





ASSETS
            
            September
      30,
              2009
              (unaudited)
            
            
            December
      31,
              2008Current
      assets:Cash
            
            $
            137
            
            
            $
            942Due
      from affiliate
            
            
            21,140
            
            
            
            --Machine
      held for sale
            
            
            179,983
            
            
            
            --Total
      current assets
            
            
            201,260
            
            
            
            942Property
      and equipment, net
            
            
            --
            
            
            
            183,153Other
      assets:Investment
      in securities of Positron Corporation
            
            
            317,717
            
            
            
            376,167Total
      assets
            
            $
            518,977
            
            
            $
            560,262LIABILITIES
      AND STOCKHOLDERS' DEFICITCurrent
      liabilities:Accounts
      payable
            
            $
            51,337
            
            
            $
            64,046Advances
      from shareholder
            
            
            5,200
            
            
            
            5,200Accrued
      expenses
            
            
            571,053
            
            
            
            280,152Current
      portion of promissory note
            
            
            182,710
            
            
            
            182,710Due
      to affiliate
            
            
            50,364
            
            
            
            3,860Total
      current liabilities
            
            
            860,664
            
            
            
            535,968Majority
      interest in consolidated subsidiary
            
            
            230,058
            
            
            
            230,058Total
      liabilities
            
            
            1,090,722
            
            
            
            766,026Stockholders’
      deficit:Preferred
      Stock, $0.001 par value; 5,000,000 shares authorized
            
            
            --
            
            
            
            --Common
      stock, $0.001 par value; 95,000,000 shares authorized, 74,443,284 and
      93,663,284 shares outstanding
            
            
            74,443
            
            
            
            93,663Additional
      paid-in capital
            
            
            4,106,714
            
            
            
            3,628,794Accumulated
      deficit
            
            
            (4,752,902
            )
            
            
            (3,547,921
            )
      )Treasury
      stock
            
            
            --
            
            
            
            (380,300
            )Total
      stockholders’ deficit
            
            
            (571,745
            )
            
            
            (205,764
            )Total
      liabilities and stockholders’ deficit
            
            $
            518,977
            
            
            $
            560,262





See
accompanying notes to the financial statements.





3
 Table of Contents




FORM
      10-Q
            SEPTEMBER
      30, 2009





IMAGIN MOLECULAR CORPORATION


CONSOLIDATED
STATEMENTS OF OPERATIONS


(Unaudited)





Three
      Months Ended
            
            
            Nine
      Months EndedSeptember
              30,
      2009
            
            
            September
              30,
      2008
            
            
            September
              30,
      2009
            
            
            September
              30,
      2008Revenues:
            
            $
            --
            
            
            $
            154,045
            
            
            $
            --
            
            
            $
            460,045Costs
      of revenues:
            
            
            --
            
            
            
            90,315
            
            
            
            90,315
            
            
            
            270,945Gross
      profit (loss)
            
            
            --
            
            
            
            63,730
            
            
            
            (90,315
            )
            
            
            189,100Operating
      expenses:Marketing,
      general and administrative
            
            
            746,281
            
            
            
            17,232
            
            
            
            1,052,548
            
            
            
            95,517Total
      operating expenses
            
            
            746,281
            
            
            
            17,232
            
            
            
            1,052,548
            
            
            
            95,517Income
      (loss) from operations
            
            
            (746,281
            )
            
            
            46,498
            
            
            
            (1,142,863
            )
            
            
            93,583Miscellaneous
      or other income
            
            
            14,399
            
            
            
            43,979
            
            
            
            11,474
            
            
            
            67,875Interest
      expense
            
            
            (1,621
            )
            
            
            (5,201
            )
            
            
            (15,142
            )
            
            
            (18,069
            )Equity
      in losses of Positron Corporation
            
            
            (20,931
            )
            
            
            (6,345
            )
            
            
            (58,450
            )
            
            
            (117,156
            )Total
      other income (expense)
            
            
            (8,153
            )
            
            
            32,433
            
            
            
            (62,118
            )
            
            
            (67,350
            )Income
      (loss) from continuing operations  before income
      taxes
            
            
            (754,434
            )
            
            
            78,931
            
            
            
            (1,204,981
            )
            
            
            26,233Income
      taxes
            
            
            --
            
            
            
            --
            
            
            
            --
            
            
            
            --Income
      (loss) from continuing operations
            
            
            (754,434
            )
            
            
            78,931
            
            
            
            (1,204,981
            )
            
            
            26,233Income
      (loss) from discontinued operations
            
            
            --
            
            
            
            (188
            )
            
            
            --
            
            
            
            4,590Net
      income (loss)
            
            $
            (754,434
            )
            
            $
            78,743
            
            
            $
            (1,204,981
            )
            
            $
            30,823Earnings
      (Loss) Per Share:Basic:From
      continuing operations
            
            $
            (0.0101
            )
            
            $
            0.0008
            
            
            $
            (0.0163
            )
            
            $
            0.0003From
      discontinued operations
            
            $
            0.0000
            
            
            $
            0.0000
            
            
            $
            0.0000
            
            
            $
            0.0000Net
      income (loss)
            
            $
            (0.0101
            )
            
            $
            0.0008
            
            
            $
            (0.0163
            )
            
            $
            0.0003Diluted:From
      continuing operations
            
            $
            (0.0101
            )
            
            $
            0.0004
            
            
            $
            (0.0163
            )
            
            $
            0.0002From
      discontinued operations
            
            $
            0.0000
            
            
            $
            0.0000
            
            
            $
            0.0000
            
            
            $
            0.0000Net
      income (loss)
            
            $
            (0.0101
            )
            
            $
            0.0004
            
            
            $
            (0.0163
            )
            
            $
            0.0002Weighted
      Average Common Shares:Basic:
            
            
            74,443,284
            
            
            
            93,663,284
            
            
            
            74,017,570
            
            
            
            93,663,284Diluted:
            
            
            74,443,284
            
            
            
            181,413,284
            
            
            
            74,017,570
            
            
            
            171,603,065




See
accompanying notes to the financial statement





4
 Table of Contents





FORM
      10-Q
            SEPTEMBER
      30, 2009





IMAGIN MOLECULAR CORPORATION AND SUBSIDIARIES


CONSOLIDATED
STATEMENTS OF CASH FLOWS


(Unaudited)




Nine
      months endedSeptember
              30, 2009
            
            
            September
              30, 2008Cash
      flows from operating activities:Income
      (loss) from continuing operations
            
            $
            (1,204,981
            )
            
            $
            26,233Income
      from discontinued operations
            
            
            --
            
            
            
            4,590Net
      income (loss)
            
            
            (1,204,981
            )
            
            
            30,823Adjustment
      to reconcile net income (loss) to net cash provided by (used) in
      operating activitiesDepreciation
      expense
            
            
            245
            
            
            
            19,317Stock
      based compensation
            
            
            839,000
            
            
            
            --Equity
      in losses of Positron Corporation
            
            
            58,450
            
            
            
            117,156Loss
      on disposal of assets
            
            
            2,925
            
            
            
            --Majority
      interest in income of subsidiary
            
            
            
            
            
            
            14,025Changes
      in operating assets and liabilities:Accounts
      receivable
            
            
            --
            
            
            
            69,422Interest
      receivable
            
            
            --
            
            
            
            (67,875
            )Accounts
      payable and accrued liabilities
            
            
            278,192
            
            
            
            (33,838
            )Net
      cash provided by (used in) operating activities
            
            
            (26,169
            )
            
            
            149,030Cash
      flows from investing activities:Note
      receivable to related party
            
            
            --
            
            
            
            (835,000
            )Net
      cash used in investing activities
            
            
            --
            
            
            
            (835,000
            )Cash
      flows from financing activities:Advance
      from affiliate
            
            
            25,364
            
            
            
            --Payments
      to affiliates
            
            
            --
            
            
            
            (191,890
            )Payments
      of note payable
            
            
            --
            
            
            
            (62,051
            )Deposits
      for equity investment
            
            
            --
            
            
            
            200,000Preferred
      stock issued
            
            
            --
            
            
            
            770,000Net
      cash provided by financing activities
            
            
            25,364
            
            
            
            716,059Net
      increase (decrease) in cash
            
            
            (805
            )
            
            
            30,089Cash
      at beginning of period
            
            
            942
            
            
            
            24,120Cash
      at end of period
            
            $
            137
            
            
            $
            54,209Supplemental
      cash flow information:Interest
      paid
            
            $
            --
            
            
            $
            15,942Income
      taxes paid
            
            
            --
            
            
            
            --





See
accompanying notes to the financial statements.





5
 Table of Contents




FORM
      10-Q
            SEPTEMBER
      30, 2009





IMAGIN
MOLECULAR CORPORATION AND SUBSIDIARIES


CONSOLIDATED
STATEMENTS OF CASH FLOWS


(CONTINUED)





Supplementary Schedule of
Noncash Transactions


2009








6
 Table of Contents




IMAGIN MOLECULAR CORPORATION AND SUBSIDIARIES


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)








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”) operated 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. Operations began in the second quarter of 2006 and the
Company no longer operated in the development stage. 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. Solely from an accounting perspective,
the results of Cipher are presented as discontinued operations in the Company’s
consolidated statements of operations and cash flows.  See Positron
Acquisition Corp. and Imagin Nuclear Partners discussions
below.





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.





The
Company holds 722,358 shares of Positron Corporation Series B Preferred Stock
and  4,000,000 shares of the Positron Common Stock.





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.





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.





On
December 31, 2008, INP advised BIMC that it had breached the Agreement for
failure to make certain payments under the Agreement.  In addition,
INP advised BIMC that it was seeking payment for certain inpatient scans that
BIMC had requested it perform on behalf of BIMC patients and had failed to
reimburse INP.





INP also
asserted other claims in the aggregate amount of $318,144 and subsequently
ceased supplying rubidium to BIMC thereafter.  Also in the first
quarter 2009, BIMC asserted that INP had breached the Agreement and demanded
that INP remove the scanner located therein.  In August 2009, BIMC
made payment for scans and services rendered in December 2008 in the amount of
$51,000.  In November 2009, INP sold the scanner to Positron
Corporation which sold it to an unrelated third party –see note
5





7
 Table of Contents





NOTE
2.  BASIS OF PRESENTATION




The
accompanying unaudited interim financial statements of the Company have been
prepared in accordance with accounting principles generally accepted in the
United States for interim financial information and with the instructions to
Form 10-Q and Rule 10-01 of Regulation S-X of the Securities and Exchange
Commission for Interim Reporting. Accordingly, they do not include all of the
information and footnotes required by accounting principles generally accepted
in the United States of America for complete financial statements.





In the
opinion of Management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation for the interim periods have been
included. Operating results for the nine month period ended September 30,
2009, are not necessarily indicative of the results that may be expected for the
year ending December 31, 2009. The accompanying financial statements and the
information included under the heading “Management’s Discussion and Analysis of
Financial Position and Results of Operations” should be read in conjunction with
our company’s audited financial statements and related notes included in our
company’s Form 10-K for the year ended December 31, 2008.












NOTE
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





For a
summary of significant accounting policies (which have not changed from December
31, 2008), see the Company’s Annual Report on Form 10-K for the year ended
December 31, 2008.





Principles of Consolidation
and Nature of Operations





For the
periods ended September 30, 2009 and 2008, the financial statements include the
accounts and transactions of Imagin Molecular Corporation and its subsidiaries
Cipher Multimedia, Inc. (a discontinued operation from an accounting
perspective), Positron Acquisition Corp. and Imagin Nuclear Partners
Corporation. All Intercompany transactions and balances have been
eliminated.


Subsequent
Events





The
Company has evaluated subsequent events through November 16, 2009, the date
it filed this quarterly report on Form 10-Q.





Recently Issued Accounting
Pronouncements





In June
2009, the FASB issued new accounting guidance related to accounting standards
codification and the hierarchy of GAAP. FASB Accounting Standards Codification
(“Codification”) is to become the single official source of authoritative U.S.
generally accepted accounting principles (“GAAP”) to be applied by
nongovernmental entities, superseding existing FASB, American Institute of
Certified Public Accountants (“AICPA”), Emerging Issues Task Force (“EITF”), and
related accounting literature. Rules and interpretive releases of the Securities
and Exchange Commission (“SEC”) under authority of federal securities laws are
also sources of authoritative U.S. GAAP for SEC registrants.  The
Guidance reorganizes the previously issued GAAP pronouncements into accounting
topics and displays them using a consistent structure. The subsequent issuances
of new standards will be in the form of Accounting Standards Updates that will
be included in the Codification. The guidance is effective for the Company as of
the interim period ended September 30, 2009. As the Codification was not
intended to change or alter existing GAAP, it did not have an impact on the
Company’s consolidated financial statements. The only impact will be that any
future references to authoritative accounting literature will be in accordance
with the new numbering system prescribed by the Codification.




In April
2008, the FASB issued new accounting guidance on determining the useful life of
intangible assets. This guidance amends the factors an entity should consider in
developing renewal or extension assumptions used in determining the useful life
of recognized intangible assets and adds certain disclosures for an entity’s
accounting policy regarding treatment of the costs, period of extension, and
total costs incurred.  This guidance was applied prospectively to
intangible assets acquired after January 1, 2009 and has not had a material
impact on the financial results of the Company.





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.





8
 Table of Contents





NOTE
4.  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 $4,752,902 and total stockholders’
deficit of $571,745 as of September 30, 2009.  The Company will need to
raise additional capital to continue operations.





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 September 30, 2009, the Company held 4,000,000
shares of Positron’s common stock and 722,358 shares of Positron’s Series B
Convertible Preferred stock.





While the
Company is expending its best efforts to achieve its 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 advanced to
Positron Corporation will ever be realized.





NOTE
5.  SALE OF EQUIPMENT





On
December 31, 2008, INP advised Beth Israel Medical Center that it had breached
the Equipment Lease Agreement (the “Agreement”) for certain positron emission
tomography (“PET”) scanning cameras and related radiologic equipment (the
“Equipment”), for failure to make certain payments under the Agreement (See Note
9). INP also asserted other claims in the aggregate amount of $318,144 and
ceased supplying rubidium to BIMC thereafter.  Additionally, BIMC
asserted that INP had breached the Agreement and demanded that INP remove the
scanner located therein.


On May 1,
2009, INP and Positron Corporation (“Positron”) executed a Bailment Agreement
(the “Bailment”) whereby,


INP shall
provide the Equipment to Positron for the purpose of remanufacturing,
reconditioning, remarketing and reselling.  Positron will take the
Equipment subject to the perfected security interest of Cherry Creek
Asset-Backed Income Fund II, LP (“Cherry Creek”) (See note 8). Pursuant to the
terms of the Bailment, Positron is obligated to instruct any buyer of the
Equipment to remit any payment to the Company’s legal counsel for disbursement
to pay off the note due Cherry Creek pursuant to a letter agreement dated May, 1
2009 between INP and Cherry Creek.





The
Equipment, which was previously reported as property and equipment, net of
accumulated depreciation has been reclassified to a current asset as an asset
being held for sale. The Company did not record depreciation related to the
Equipment during the nine months ended September 30, 2009. At September 30,
2009, the net book value of the Equipment was $179,983. In November 2009, the
Company sold the machine to Positron and satisfied its obligation to Cherry
Creek. Positron subsequently sold the machine to an unrelated third
party.





NOTE
6.  PROPERTY AND EQUIPMENT





Property
and equipment at September 30, 2009 and December 31, 2008 consisted of the
following:





September
      30,2009
            
            
            December
      31,2008Machinery
      and equipment
            
            $
            --
            
            
            $
            234,760Computers
      and software
            
            
            2,941
            
            
            
            9,442Subtotal
            
            
            2,941
            
            
            
            244,202Less:
      accumulated depreciation
            
            
            (2,941)
            
            
            
            (61,049)Total
            
            $
            --
            
            
            $
            183,153





NOTE
7.  INVESTMENT IN SECURITIES OF POSITRON CORPORATION





At
September 30, 2009, the Company owned 4,000,000 shares of Positron Corporation’s
common stock, representing 2.34% of the outstanding common stock, and 722,358 of
Positron’s Series B Preferred Shares or approximately 11% of the class. The
Company accounts for its investment in the securities of Positron Corporation
under the equity method of accounting. Based on its percentage of ownership of
Positron common stock, for the three months ended September 30, 2009 and 2008,
the Company recorded equity in the losses of Positron of $20,931 and $6,345,
respectively.  For the nine months ended September 30, 2009 and 2008,
the Company recorded equity in the losses of Positron of $58,450 and $117,156,
respectively, reducing the carrying value of the Positron securities to $317,717
at September 30, 2009.  At September 30, 2009, the Company’s 4,000,000
shares of Positron’s common stock had an aggregate market value of
$280,000.  Management believes that the combined fair value of the
common and the preferred exceeds the carrying value at September 30, 2009 and
therefore the investment has not been impaired.





9
 Table of Contents





Summarized
financial information for Positron for the nine months ended September 30, 2009
and 2008 follows:





Nine
      Months
              Ended
      September
              30,
      2009
            
            
            Nine
      Months
              Ended
      September
              30,
      2008Revenues
            
            $
            889,000
            
            
            $
            1,577,000Loss
      from operations
            
            
            (2,368,000
            )
            
            
            (3,124,000
            )Net
      loss
            
            
            (2,664,000
            )
            
            
            (3,381,000
            )Loss
      per share
            
            $
            (0.014
            )
            
            $
            (0.030
            )Weighted
      average shares outstanding
            
            
            198,935,000
            
            
            
            126,357,,000





September
      30, 2009Current
      assets
            
            $
            1,290,000Total
      assets
            
            
            1,323,000Current
      liabilities
            
            
            7,212,000Total
      liabilities
            
            
            7,651,000Stockholders’
      deficit
            
            
            (6,328,000
            )Common
      shares outstanding
            
            
            250,623,684







The
underlying common shares related to anti-dilutive securities not included in
Positron’s net loss per share calculation as of September 30, 2009 were as
follows:





Convertible
      Series A Preferred Stock
            
            
            457,000Convertible
      Series B Preferred Stock
            
            
            716,822,000Convertible
      Series G Preferred Stock
            
            
            6,939,000Convertible
      Series S Preferred Stock
            
            
            1,000,000,000Stock
      Warrants
            
            
            149,338,000Stock
      Options
            
            
            24,675,0001,898,231,000








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
("Positron"), for which the Company has granted Cherry Creek a security
interest. As of September 30, 2009 the principal balance of the promissory note
is $182,710, all of which is included in current liabilities. Accrued interest
on the outstanding balance was $23,068 at September 30, 2009.





The
Company defaulted on the terms of the promissory note. On March 16, 2009, Cherry
Creek issued a Notice of Right To Cure and Demand for Payment of all past due
amounts.  On May 1, 2009, the Company and Cherry Creek executed a
letter agreement (the “Agreement”) whereby, Cherry Creek acknowledged that
Positron Corporation, in its capacity as remarketing agent (see Note 5), has
taken possession of the equipment, defined in Note 9, that collateralizes the
note.  Pursuant to the terms of the Agreement, Positron shall instruct
any buyer of the equipment to remit all payments to the Company’s legal counsel
for disbursement to Cherry Creek for full payment of the note and all accrued
interest. In November 2009, the Company sold the machine to Positron and
satisfied its obligation to Cherry Creek. Positron subsequently sold the machine
to an unrelated third party.




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 leased the
equipment for use in its on site PET Lab where it performs PET scans on its
patients.  The initial lease term was three (3) years commencing on
June 4, 2007 (the “Effective Date”).


10
 Table of Contents





On
December 31, 2008, INP advised BIMC that it had breached the Agreement for
failure to make certain payments under the Agreement.  In addition,
INP advised BIMC that it was seeking payment of $188,700 for 102 inpatient scans
that BIMC had requested it perform on behalf of BIMC patients and had failed to
reimburse INP for.  Due to the uncertainty surrounding the
reimbursement of the scans, the Company had either reserved against revenue
amounts previously recorded or did not record these scans as
revenue.





INP also
asserted other claims in the aggregate amount of $318,144 and ceased supplying
rubidium to BIMC thereafter.  BIMC asserted that INP had breached the
Agreement and demanded that INP remove the scanner located therein. On May 1,
2009,   INP executed a bailment agreement with Positron
Corporation, the terms of which provide Positron with possession of the
Equipment for the purpose of remanufacturing, reconditioning, remarketing and
reselling. In November 2009, the Company sold the machine to Positron and
satisfied its obligation to Cherry Creek. Positron subsequently sold the machine
to an unrelated third party.




NOTE 10. STOCK OPTIONS




For all
of the Company’s stock-based compensation plans, the fair value of each grant
was estimated at the date of grant using the Black-Scholes option-pricing model.
Black-Scholes utilizes assumptions related to volatility, the risk-free interest
rate, the dividend yield (which is assumed to be zero, as the Company has not
paid cash dividends to date and does not currently expect to pay cash dividends)
and the expected term of the option. Expected volatilities utilized in the model
are based mainly on the historical volatility of the Company’s stock price over
a period commensurate with the expected life of the share option as well as
other factors. The risk-free interest rate is derived from the zero-coupon U.S.
government issues with a remaining term equal to the expected life at the time
of grant. Fair market value using the Black-Scholes option-pricing model for the
nine months ended September 30, 2009 was determined using the following
assumptions:




Expected
      life (years)
              
              
              5Risk
      free rate of return
              
              
              2.375
              %Dividend
      yield
              
              
              0Expected
      volatility
              
              
              547
              %




On August
14, 2009, the Company granted 20,000,000 stock options to employees and board
members at an exercise price of $0.015 per share. For the three and nine months
ended September 30, 2009 the Company recorded compensation expense of $800,000
related to stock option grants.


NOTE
11. INCOME TAXES





The
Company has incurred losses since its inception and, therefore, has not been
subject to federal income taxes.  As of September 30, 2009, the
Company had net operating loss (“NOL”) carryforwards for income tax purposes of
approximately $4,200,000, which expire in 2022 through 2028.  Under
the provisions of Section 382 of the Internal Revenue Code the greater than 50%
ownership change of the Company’s common stock limits 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
long-term interest rate established monthly by the Internal Revenue
Service





Deferred
income taxes consist of the following as of September 30, 2009 and December 31,
2008:





September
              30,
      2009
            
            
            December
              31,
      2008Deferred
      tax assetsNet
      operating loss carryforwards
            
            $
            1,417,000
            
            
            $
            1,282,000Accounts
      receivable allowance
            
            
            --
            
            
            
            17,000Stock
      option compensation
            
            
            272,000
            
            
            
            --Unrealized
      loss on investment impairment and equity in losses of Positron
      Corporation
            
            
            432,000
            
            
            
            412,0002,121,000
            
            
            
            1,711,000Valuation
      allowance
            
            
            (2,121,000)
            
            
            
            (1,711,000)$
            -
            
            
            $
            -





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





11
 Table of Contents





ITEM2.  Management's Discussion And Analysis
Of Financial Condition And Results Of Operation








Relationship
with Beth Israel Hospital





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 leased the
equipment for use in its on site PET Lab where it performs PET scans on its
patients.  The initial lease term was three (3) years commencing on
June 4, 2007 (the “Effective Date”).
 
 On
December 31, 2008, INP advised BIMC that it had breached the Agreement for
failure to make certain payments under the Agreement.  In addition,
INP advised BIMC that it was seeking payment of $188,700 for 102 inpatient scans
that BIMC had requested it perform on behalf of BIMC patients and had failed to
reimburse INP for.  Due to the uncertainty surrounding the
reimbursement of the scans, the Company had either reserved against revenue
amounts previously recorded or did not record these scans as
revenue.  In August 2009, BIMC made payment for scans and services
rendered in December 2008 in the amount of $51,000 which had been previously
reserved. In November 2009, the Company sold the machine to Positron
Corporation. Positron Corporation subsequently sold the machine to an unrelated
third party.




Comparison of the Results of
Operations for the Three Months ended September 30, 2009 and
2008





During
the three months ended September 30, 2009 the Company had a net loss of $754,434
compared to net income of $78,743 for the three months ended September 30,
2008.





The
Company did not record any revenues for the three months ended September 30,
2009.  The Company has subsequently removed and sold the scanner.
Revenues for the three months ended September 30, 2008 were $154,045. The
decrease in revenue was due to the termination of the Company’s relationship
with Beth Israel Medical Center.
  In March
2009, the Company terminated the rubidium supply agreement. Under the terms of
its agreement with its rubidium supplier, the Company was required give a 90 day
notice prior to terminating the agreement. During the 90 day termination period
the Company was required to continue its purchase of rubidium. The 90 day period
expired in June 2009 and therefore no additional was recorded for the three
months ended September 30, 2009.  For the three months ended September
30, 2008, costs of revenues were $90,315, which represents its supply of
rubidium.
 
 Operating
expenses were $746,281 and $17,232 for the three months ended September 30, 2009
and 2008, respectively. For the three months ended September 30, 2009, operating
expenses include approximately $800,000 of compensation expense related to the
issuance of 20,000,000 stock options to certain employees and directors.
Operating expenses also include a $51,000 recovery of bad debts as well as the
reversal of over accrual amounts for previously recorded general and
administrative expenses.
 
 Interest
expense on notes payable was $1,621 and $5,201 for the three months ended
September 30, 2009 and 2008, respectively.   The interest is on the
principal balance of the Cherry Creek loan. The Company also recorded
miscellaneous income of $14,400  for certain debt forgiveness on the
Cherry Creek note.


For the
three months ended September 30, 2009 and 2008, the Company recorded equity in
the losses of Positron of $20,931 and $6345, respectively.





Comparison of the Results of
Operations for the Nine Months ended September 30, 2009 and
2008





During
the nine months ended September 30, 2009 the Company had a net loss of
$1,204,981 compared to net income of $30,823 for the nine months ended September
30, 2008.





The
Company did not record any revenues during the nine months ended September 30,
2009.  Revenues for the nine months ended September 30, 2008 were
$460,045. The decrease in revenue was due to the termination of the Company’s
relationship with Beth Israel Medical Center.


12
 Table of Contents





For the
nine months ended September 30, 2009 and 2008, costs of revenues were $90,315
and $270,945.  Despite not performing any scans in 2009, the Company
did incur the cost of the rubidium.  In March 2009, the Company
terminated the rubidium supply agreement. Under the terms of its agreement with
its rubidium supplier, the Company was required give a 90 day notice prior to
terminating the agreement. During the 90 day termination period the Company was
required to continue its purchase of rubidium. The expense incurred subsequent
to termination has been classified as an operating expense.





Operating
expenses were $1,052,548 and $95,517 for the nine months ended September 30,
2009 and 2008, respectively. For the nine months ended September 30, 2009,
operating expenses include approximately $180,000 of costs due pursuant to
termination provisions under the Company’s rubidium supply
agreement.  In prior periods, all rubidium cost were included as cost
of revenues. Additionally, operating expenses include approximately $800,000 of
compensation expense related to the issuance of 20,000,000 stock options to
certain employees and directors. Other operating costs incurred consisted
primarily of professional fees.





Interest
expense on notes payable was $15,142 and $18,069 for the six months ended
September 30, 2009 and 2008, respectively.  The interest accrued is on
the outstanding balance on the note due to Cherry Creek.  The Company
did not make any principal payments during the nine months ended September 30,
2009. The Company also recorded miscellaneous income of $14,400  for
certain debt forgiveness on the Cherry Creek note. The note obligation was
settled in full in November 2009.
 
 For the
nine months ended September 30, 2009 and 2008, the Company recorded equity in
the losses of  $58,450 and $117,156,
respectively.




Liquidity and Capital
Resources





At
September 30, 2009, the Company had current assets of   $201,260
and current liabilities of $860,664 compared to December 31, 2008 when the
Company had current assets and current liabilities of $942 and $535,968,
respectively.  The Company reclassified to a current asset, its PET
scan machine that was being leased by BIMC.  The net book value of the
machine included in current assets was $179,983 at September 30,
2009.  In November 2009, the Company sold the machine to an unrelated
third party for $350,000. The increase in current liabilities is due primarily
to the increase in accrued expenses due under the rubidium supply
agreement.





Current
liabilities at September 30, 2009 included the Cherry Creek note payable of
$182,710. On March 16, 2009 Cherry Creek issued a Notice of Right To Cure and
Demand for Payment of all past due amounts.  On May 1, 2009, the
Company and Cherry Creek executed a letter agreement (the “Agreement”) whereby,
Cherry Creek acknowledged that Positron Corporation, in its capacity as
remarketing agent, has taken possession of the equipment that collateralizes the
note.  Pursuant to the terms of the Agreement, Positron would instruct
any buyer of the equipment to remit all payments to the Company’s legal counsel
for disbursement to Cherry Creek for full payment of the note and all accrued
interest.  In November 2009, the equipment was sold and the note to
Cherry Creek was satisfied in full.


Net cash
used in operating activities during the nine months ended September 30, 2009 was
$26,169 compared to net cash provided by operating activities of $149,030 during
the nine months ended September 30, 2008.   No scans were
performed at BIMC during the nine months ended September 30, 2009 and therefore
no revenue was recorded thus resulting in a decrease in cash
provided.





The
Company did not have any investing activities during the nine months ended
September 30, 2009. During the nine months ended September 30, 2008, the Company
used $835,000 in investing activities related to a related party note
receivable.





Net cash
provided by financing activities was $25,364 and $716,059 for the nine months
ended September 30, 2009 and 2008, respectively.  During the nine
months ended September 30, 2008, the Company issued preferred stock for
$770,000.





On
September 30, 2009 the Company had an accumulated deficit of $4,752,902 and
total stockholders’ deficit of $571,745.  The Company is dependent
upon the sale or lease of its PET machine (subsequently sold in November 2009)
and additional debt or equity financings to resolve the Company’s liquidity
issues and allow it to continue to operate.





Effects
of Inflation





The
Registrant believes that the relatively low rate of inflation over the past few
years has not had a significant impact on the Registrant's financial position or
operating results.





Forward
Looking Statements





This
report includes "Forward-Looking Statements" within the meaning of Section 27A
of the Securities Act and Section 21E of the Exchange Act. Any statements that
express or involve discussions with respect to predictions, expectations,
beliefs, plans, projections, objectives, assumptions or future events or
performance (often, but not always, using words or phrases such as "expects" or
"does not expect", "is expected", "anticipates" or "does not anticipate",
"plans", "estimates" or "intends", or stating that certain actions, events or
results "may", "could", "would", "might" or "will" be taken, occur or be
achieved) are not statements of historical fact and may be considered "forward
looking statements". Such statements are included, among other places in this
registration statement, in the sections entitled "Management's Discussion and
Analysis or Plan of Operation," "Description of Business" and "Description of
Property." Forward-looking statements are based on expectations, estimates and
projections at the time the statements are made that involve a number of risks
and uncertainties which could cause actual results or events to differ
materially from those presently anticipated. Although the Company believes that
the expectations reflected in such forward-looking statements are reasonable,
the Registrant can give no assurance that such expectations will prove to have
been correct.





13
 Table of Contents




ITEM 3.  Quantitative and Qualitative Disclosures About
Market Risk





The
Company is not exposed to market risk related to interest rates or foreign
currencies.





ITEM 4. Controls And Procedures





Disclosure
Controls and Procedures





Based
upon an evaluation of the effectiveness of disclosure controls and procedures,
our Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO") have
concluded that as of the end of the period covered by this Quarterly Report on
Form 10-Q our disclosure controls and procedures (as defined in Rules 13a-15(e)
or 15d-15(e) under the Exchange Act) were not effective to provide reasonable
assurance that information required to be disclosed in our Exchange Act reports
is recorded, processed, summarized and reported within the time periods
specified by the rules and forms of the SEC and is accumulated and communicated
to management, including the CEO and CFO, as appropriate to allow timely
decisions regarding required disclosure.  As reported in our Annual
Report on Form 10-K for the year ended December 31, 2008, the Company’s chief
executive and financial officer have determined that there are material
weaknesses in our disclosure controls and procedures.





The
material weaknesses in our disclosure control procedures are as
follows:





1.
            Lack of
      formal policies and procedures necessary to adequately review significant
      accounting transactions.The Company
      utilizes a third party independent contractor for the preparation of its
      financial statements. Although the financial statements and footnotes are
      reviewed by our management, we do not have a formal policy to review
      significant accounting transactions and the accounting treatment of such
      transactions. The third party independent contractor is not involved in
      the day to day operations of the Company and may not be provided
      information from management on a timely basis to allow for adequate
      reporting/consideration of certain transactions. In the case of the
      Company’s recent restatement of the investment in Positron securities, a
      periodic review (not less than quarterly) and discussion of significant
      transactions (i.e. increasing advances to a related party) may have led to
      more timely adoption of the proper method of
  accounting.





2.
            Audit
      Committee and Financial Expert. The Company does not have a formal
      audit committee with a financial expert, and thus the Company lacks the
      board oversight role within the financial reporting process.





We intend
to initiate measures to remediate the identified material weaknesses including,
but not necessarily limited to, the following:





·
            Establishing
      a formal review process of significant accounting transactions that
      includes participation of the Chief Executive Officer, the Chief Financial
      Officer and the Company’s corporate legal
  counsel.





·
            Form
      an Audit Committee that will establish policies and procedures that will
      provide the Board of Directors a formal review process that will among
      other things, assure that management controls and procedures are in place
      and being maintained consistently.








Changes
in Internal Control over Financial Reporting





As
reported in our Annual Report on Form 10-K for the year ended December 31, 2008,
management is aware that there is a significant deficiency and a material
weakness in our internal control over financial reporting and therefore has
concluded that the Company’s internal controls over financial reporting were not
effective as of December 31, 2008. 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.  The material weakness
relates to a lack of formal policies and procedures necessary to adequately
review significant accounting transactions.





There
have not been any changes in the Company's internal control over financial
reporting during the quarter ended September 30, 2009 that have materially
affected, or are reasonably likely to materially affect, the Company's internal
control over financial reporting.





14
 Table of Contents





FORM
      10-Q
            SEPTEMBER
      30, 2008





PART
II - OTHER INFORMATION





ITEM 1. Legal Proceedings





None.





ITEM 2. Unregistered Sales of Equity Securities and Use of
Proceeds





None.





ITEM 3. Defaults Upon Senior Securities





None.





ITEM 4. Submission of Matters to Vote of Security
Holders





None.





ITEM 5. Other Information





None.








ITEM 6. Exhibits





(a)  Exhibit
Index








Exhibit
            Description
      of the Exhibit31.1
            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.




15
 Table of Contents





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, thereunto duly authorized, in the City of Hinsdale, State of
Illinois on November 16, 2009.





Imagin
Molecular Corporation





Date:     November
      16, 2009
            /s/ Joseph G. OliverioJoseph
      G. OliverioChief
      Executive Office, Director(principal
      executive officer)Date:    November
      16, 2009
            /s/ Corey N. ConnCorey
      N. ConnChief
      Financial Officer(principal
      accounting officer)








EXHIBIT
INDEX








Exhibit
            Description
      of the Exhibit31.1
            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







16