UNITED
STATES


SECURITIES AND
EXCHANGE COMMISSION


Washington, D.C.
20549








FORM
10-Q/A





(Mark
One)


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





For the quarterly period ended
            JUNE 30,
2008





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 000-29449





IMAGIN MOLECULAR
CORPORATION





(Exact
Name of Registrant as specified in its charter)





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





104
      W. Chestnut, #315
              Hinsdale,
      Illinois
            60521(Address
      of Principal Executive Offices)
            (Zip
      Code)





Issuer’s
Telephone Number, Including Area Code:  (630) 371-5583





N/A


(Former
Name, Former Address and Former Fiscal Year, if Changed Since Last
Report)




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 Q            
No  ̈




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 August 19, 2008, are as follows:




Class
      of Securities
            
            Shares
      OutstandingCommon
      Stock, $0.001 par value
            
            93,663,284




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




EXPLANATORY
NOTE
 
 The
Registrant has revised its financial statements for the period covered in this
report to apply the equity method of accounting to its investments in Positron
Corporation (“Positron”) and to change the classification of advances made to
Positron from a financing activity to an investing activity.





1




FORM
      10-Q
            JUNE
      30, 2008





IMAGIN MOLECULAR CORPORATION


FOR
THE QUARTER ENDED JUNE 30, 2008


TABLE
OF CONTENTS








INDEX
            PagePART
      I  - FINANCIAL INFORMATIONITEM 1 - FINANCIAL STATEMENTS
            3Consolidated Balance Sheet at June 30, 2008 (unaudited) and
      December 31, 2007
            3Consolidated Statements of Operations for the three and six
      months ended June 30, 2008 and 2007 (unaudited)
            4Consolidated Statement of Cash Flows for the six months
      ended June 30, 2008 and 2007 (unaudited)
            5Notes to Unaudited Financial Statements
            6ITEM 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
      CONDITION AND RESULTS OF OPERATIONS
            14ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
      MARKET RISK
            19ITEM 4 - CONTROLS AND PROCEDURES
            19PART
      II-OTHER INFORMATIONITEM 1 - LEGAL PROCEEDINGS
            20ITEM 2 - UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
      PROCEEDS
            20ITEM 3 - DEFAULTS UPON SENIOR SECURITIES
            20ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY
      HOLDERS
            20ITEM 5 - OTHER INFORMATION
            20ITEM 6 – EXHIBITS
            20




2
 Table of Contents




FORM
      10-Q
            JUNE
      30, 2008




PART
1 – FINANCIAL INFORMATION




ITEM 1.  Financial Statements




The
unaudited balance sheet of the Registrant as of June 30, 2008, the balance sheet
at December 31, 2007, the unaudited statements of operations for the three and
six months ended June 30, 2008 and 2007, and the unaudited statements of cash
flows for the six months ended June 30, 2008 and 2007 follow.  The
unaudited financial statements reflect all adjustments that are, in the opinion
of management, necessary to a fair statement of the results for the interim
periods presented.




IMAGIN MOLECULAR CORPORATION AND SUBSIDIARIES




CONSOLIDATED
BALANCE SHEETS






June 30, 2008
              (Unaudited)
            
            
            December 31, 2007ASSETSCurrent
      assets:Cash
      and cash equivalents
            
            $
            4,219
            
            
            $
            24,120Accounts
      receivable
            
            
            104,675
            
            
            
            120,422Total
      current assets
            
            
            108,894
            
            
            
            144,542Property
      and equipment, net
            
            
            196,031
            
            
            
            208,909Other
      assets:Due
      from related party
            
            
            2,204,896
            
            
            
            1,346,000Investment
      in securities of Positron Corp.
            
            
            1,257,775
            
            
            
            1,368,586Total
      assets
            
            $
            3,767,596
            
            
            $
            3,068,037LIABILITIES
      AND STOCKHOLDERS’ DEFICITCurrent
      liabilities:Accounts
      payable
            
            $
            71,859
            
            
            $
            104,951Advance
      from shareholders
            
            
            5,100
            
            
            
            5,100Accrued
      expenses
            
            
            179,218
            
            
            
            182,373Current
      portion of promissory note payable
            
            
            136,491
            
            
            
            128,580Accrued
      interest
            
            
            3,930
            
            
            
            4,994Due
      to related party
            
            
            149,860
            
            
            
            296,750Total
      current liabilities
            
            
            546,458
            
            
            
            722,748Promissory
      note payable – less current portion
            
            
            64,573
            
            
            
            125,404Deposits
      for equity investment
            
            
            200,000
            
            
            
            --Majority
      interest in consolidated subsidiary
            
            
            230,845
            
            
            
            216,245Total
      liabilities
            
            
            1,041,876
            
            
            
            1,064,397Stockholders’
      Equity:Preferred
      Stock, 5,000,000 shares Authorized, 4,387,500 and 2,362,500
      shares  issued and outstanding
            
            
            4,388
            
            
            
            2,362Common
      Stock, $0.001 par value; 95,000,000 shares authorized,
      93,663,284  shares issued and outstanding
            
            
            93,663
            
            
            
            93,663Additional
      paid-in capital
            
            
            5,292,981
            
            
            
            4,525,007Accumulated
      deficit
            
            
            (2,665,312
            )
            
            
            (2,617,392
            )Total
      stockholders’ equity
            
            
            2,725,720
            
            
            
            2,003,640Total
      liabilities and stockholders’ equity
            
            $
            3,767,596
            
            
            $
            3,068,037




See
accompanying notes





3
 Table of Contents




FORM
      10-Q
            JUNE
      30, 2008





IMAGIN MOLECULAR CORPORATION


CONSOLIDATED
STATEMENTS OF OPERATIONS


(Unaudited)







Three
      Months Ended
                                
                                
                                Six
      Months EndedJune
      30, 2008
                                
                                
                                June
      30, 2007
                                
                                
                                June
      30, 2008
                                
                                
                                June
      30, 2007Revenues:
                                
                                $
                                153,000
                                
                                
                                $
                                12,581
                                
                                
                                $
                                306,000
                                
                                
                                $
                                48,209Costs
      of revenues:
                                
                                
                                90,315
                                
                                
                                
                                29,030
                                
                                
                                
                                180,630
                                
                                
                                
                                97,928Gross
      profit (loss)
                                
                                
                                62,685
                                
                                
                                
                                (16,449
                                )
                                
                                
                                125,370
                                
                                
                                
                                (49,719
                                )Operating
      expenses:Professional
      fees
                                
                                
                                28,164
                                
                                
                                
                                92,694
                                
                                
                                
                                57,140
                                
                                
                                
                                99,358Marketing,
      general and administrative
                                
                                
                                10,492
                                
                                
                                
                                131,556
                                
                                
                                
                                21,145
                                
                                
                                
                                152,996Total
      operating expenses
                                
                                
                                38,656
                                
                                
                                
                                224,250
                                
                                
                                
                                78,285
                                
                                
                                
                                252,354Income
      (loss) from operations
                                
                                
                                24,029
                                
                                
                                
                                (240,699
                                )
                                
                                
                                47,085
                                
                                
                                
                                (302,073
                                )Interest
      income
                                
                                
                                23,896
                                
                                
                                
                                --
                                
                                
                                
                                23,896
                                
                                
                                
                                --Interest
      expense
                                
                                
                                (6,031
                                )
                                
                                
                                (7,718
                                )
                                
                                
                                (12,868
                                )
                                
                                
                                (15,985
                                )Equity
      in losses of Positron Corporation
                                
                                
                                (69,513
                                )
                                
                                
                                --
                                
                                
                                
                                (110,811
                                )
                                
                                
                                --Total
      other expense
                                
                                
                                (51,648
                                )
                                
                                
                                (7,718
                                )
                                
                                
                                (99,783
                                )
                                
                                
                                (15,985
                                )Income
      (loss) from continuing operations  before income
      taxes
                                
                                
                                (27,619
                                )
                                
                                
                                (248,417
                                )
                                
                                
                                (52,698
                                )
                                
                                
                                (318,058
                                )Income
      taxes
                                
                                
                                --
                                
                                
                                
                                --
                                
                                
                                
                                --
                                
                                
                                
                                --Loss from
      continuing operations
                                
                                
                                (27,619
                                )
                                
                                
                                (248,417
                                )
                                
                                
                                (52,698
                                )
                                
                                
                                (318,058
                                )Loss from
      discontinued operations
                                
                                
                                (167
                                )
                                
                                
                                18,885
                                
                                
                                
                                4,778
                                
                                
                                
                                (1,599
                                )Net
      loss
                                
                                $
                                (27,786
                                )
                                
                                $
                                (229,532
                                )
                                
                                $
                                (47,920
                                )
                                
                                $
                                (319,657
                                )Loss
      Per Share:Basic
      and diluted:From
      continuing operations
                                
                                $
                                (0.0003
                                )
                                
                                $
                                (0.0035
                                )
                                
                                $
                                (0.0006
                                )
                                
                                $
                                (0.0046
                                )From
      discontinued operations
                                
                                $
                                0.0000
                                
                                
                                $
                                0.0003
                                
                                
                                $
                                0.0001
                                
                                
                                $
                                (0.0000
                                )Net
      loss
                                
                                $
                                (0.0003
                                )
                                
                                $
                                (0.0032
                                )
                                
                                $
                                (0.0005
                                )
                                
                                $
                                (0.0046
                                )Weighted
      average common shares
                                
                                
                                93,663,284
                                
                                
                                
                                71,190,757
                                
                                
                                
                                93,663,284
                                
                                
                                
                                69,587,778





See
accompanying notes





4
 Table of Contents




FORM
      10-Q
            JUNE
      30, 2008




IMAGIN MOLECULAR CORPORATION AND SUBSIDIARIES


CONSOLIDATED
STATEMENTS OF CASH FLOWS


(Unaudited)








Six Months EndedJune 30, 2008
                
                
                June 30, 2007Cash
      flows from operating activities:Loss
      from continuing operations
                
                $
                (52,698
                )
                
                $
                (318,058
                )Loss  from
      discontinued operations
                
                
                4,778
                
                
                
                (1,599
                )Net
      loss
                
                
                (47,920
                )
                
                
                (319,657
                )Adjustment
      to reconcile net income (loss) to net cash used in operating
      activitiesCommon
      stock issued for services
                
                
                --
                
                
                
                230,000Depreciation
      expense
                
                
                12,878
                
                
                
                12,878Equity
      in losses of Positron Corporation
                
                
                110,811
                
                
                
                --Majority
      interest in income (loss) of subsidiary
                
                
                14,600
                
                
                
                (8,115
                )Changes
      in operating assets and liabilities:Accounts
      receivable
                
                
                15,747
                
                
                
                (24,849
                )Interest
      receivable
                
                
                (23,896
                )
                
                
                --Accounts
      payable and accrued liabilities
                
                
                (37,311
                )
                
                
                25,525Net
      cash provided by (used in) operating activities
                
                
                44,909
                
                
                
                (84,218
                )Cash
      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 shareholder
                
                
                --
                
                
                
                5,100Advance
      from affiliate
                
                
                --
                
                
                
                68,898Payments
      to affiliates
                
                
                (146,890
                )
                
                
                --Payments
      of note payable
                
                
                (52,920
                )
                
                
                --Deposit
      for equity investment
                
                
                200,000
                
                
                
                200,000Proceeds
      from issue of preferred stock
                
                
                770,000
                
                
                
                --Net
      cash provided by financing activities
                
                
                770,190
                
                
                
                273,998Net
      increase (decrease) in cash
                
                
                (19,901
                )
                
                
                189,780Cash
      at beginning of period
                
                
                24,120
                
                
                
                3,138Cash
      at end of period
                
                $
                4,219
                
                
                $
                192,918Supplemental
      cash flow information:Interest
      paid
                
                $
                13,931
                
                
                $
                5,559Income
      taxes paid
                
                
                --
                
                
                
                --




See
accompanying notes





5
 Table of Contents




FORM
      10-Q
            JUNE
      30, 2008





IMAGIN MOLECULAR CORPORATION AND SUBSIDIARIES


CONSOLIDATED
STATEMENT OF CASH FLOWS


(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.







See
accompanying notes.





6
 Table of Contents




FORM
      10-Q
            JUNE
      30, 2008





IMAGIN
MOLECULAR CORPORATION AND SUBSIDIARIES


SELECTED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS








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.





7
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FORM
      10-Q
            JUNE
      30, 2008





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
10) 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.  BASIS OF PRESENTATION





The
interim financial statements included herein are presented in accordance with
United States generally accepted accounting principles and have been prepared by
us, without audit, pursuant to the rules and regulations of the Securities and
Exchange Commission (the “SEC”).  Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations, although the Company believes that the
disclosures are adequate to make the information presented not
misleading.





These
statements reflect all adjustments, consisting of normal recurring adjustments,
which, in the opinion of management are necessary for fair presentation of the
information contained therein.  It is suggested that these interim
financial statements be read in conjunction with the Company’s audited financial
statements and notes thereto included in its Form 10-KSB for the fiscal year
ended December 31, 2007.  Results of operations for the interim
periods are not indicative of annual results.








NOTE
3.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 $2,665,312 as of June 30,
2008.  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 June 30, 2008, 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 10.5% of the outstanding common stock of
Positron on a fully-diluted basis. In addition, as of June 30, 2008, the Company
had advanced an additional $2,181,000 to Positron. The viability of our
wholly-owned 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 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.





8
 Table of Contents





FORM
      10-Q
            JUNE
      30, 2008





NOTE
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





Principles
of Consolidation and Nature of Operations





For the
periods ended June 30, 2008 and 2007, the financial statements include the
accounts and transactions of Imagin Molecular Corporation and its subsidiaries
Cipher Multimedia, Inc., Positron Acquisition Corp. and Imagin Nuclear Partners
Corporation. 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.





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. Under
its lease agreement with BIMC, the Company is due minimum monthly lease payments
regardless of the number of scans performed.  The Company records the
gross amount of the minimum payment as revenue in the month that it is
due.






Income
(Loss) Per Share





Income
(loss) per share is computed based on the weighted average number of shares of
common stock outstanding.  For the three and six month period ended
June 30, 2008, dilutive securities includedin the computation of the weighted
average number of shares outstanding for diluted net income per common share in
the Statement of Operations, were:





9
 Table of Contents




FORM
      10-Q
            JUNE
      30, 2008




Six
      Months Ended June 30, 2008
            
            
            Three
      Months Ended June 30, 2008Convertible
      Series A Preferred Stock
            
            
            87,750,000
            
            
            
            87,750,000








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.





Recent
Accounting Pronouncements





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.





In March
2008, the FASB issued FASB Statement No. 161“Disclosures about Derivative
Instruments and Hedging Activities an amendment of FASB Statement No.
133” (“SFAS No. 161”), which changes the disclosure requirements for
derivative instruments and hedging activities.  Pursuant to SFAS
No.161, Entities are required to provide enhanced disclosures about (a) how and
why an entity uses derivative instruments, (b) how derivative instruments and
related hedged items are accounted for under Statement 133 and its related
interpretations, and (c) how derivative instruments and related hedged items
affect an entity’s financial position, financial performance, and cash
flows.  SFAS No. 161 is effective for financial statements issued for
fiscal years and interim periods beginning after November 15, 2008 with early
application encouraged. SFAS No. 161 encourages but does not require disclosures
for earlier periods presented for comparative purposes at initial
adoption.  In years after initial adoption, this Statement requires
comparative disclosures only for periods subsequent to initial
adoption.  The Company does not expect the adoption of SFAS No. 161 to
have 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







NOTE
5. CIPHER MULTIMEDIA INC. REORGANIZATION





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.





10
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FORM
      10-Q
            JUNE
      30, 2008





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 three months ended June 30, 2008
and 2007 continue to be consolidated in the Registrant’s financial statements
and are reflected as discontinued operations from an accounting
perspective.




Summarized
financial information for discontinued operations for the six months ended June
30, 2008 and 2007 were as follows:





Six
      Months EndedJune
      30, 2008
            
            
            June
      30, 2007Operating
      expenses:
            
            $
            (2,604
            )
            
            $
            (20,920
            )Other
      income:
            
            
            21,982
            
            
            
            11,206Income
      (loss) before majority interest
            
            
            19,378
            
            
            
            (9,714
            )Majority
      interest in (income) loss
            
            
            (14,600
            )
            
            
            8,115Net
      income (loss)
            
            $
            4,778
            
            
            $
            (1,599
            )








NOTE
6. 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..  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 (the “Security”). During
the six months ended June 30, 2008, the Company advanced Positron additional
funds in the amount of $835,000.  On August 18, 2008, those advances
were formalized into a promissory note, with interest at 8%, due on December 31,
2008. The August 18, 2008 note is also secured by the
Security.  Accrued interest due to the Company for the note was
$23,896 at June 30, 2008.




Due to
the uncertainty surrounding Positron’s ability to pay the notes on the due date
of December 31, 2008, the notes and the accrued interest are recorded as a
non-current asset at June 30, 2008.








NOTE
7. IMAGIN DIAGNOSTIC CENTRES INC. CONVERTIBLE NOTES RECEIVABLE AND
RESTATEMENT





On
September 29, 2005, through its wholly-owned subsidiary Positron Acquisition
Corporation, (“PAC”), the Company 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 September 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 June 30, 2007, on which date the notes were converted
to Positron Series B Convertible Preferred Stock.





11
 Table of Contents




FORM
      10-Q
            JUNE
      30, 2008





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 June 30, 2007. 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 September 30,
2005, principal of $1,208,500 has been advanced related to these notes. On
September 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 Preferred Stock 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
Positron common stock, par value $0.01.  Each share of Series B is
convertible into 100 shares of Positron 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 were initially valued at the previous carrying value of the note
receivable and accrued interest at the date of conversion and carried at
that value through June 30, 2007.  However, in considering the
guidance of paragraph 17 of APB 18 with respect to the investment in Positron,
and events and transactions occurring during the current quarter (see discussion
below) as well as the current relationship between the Company and
Positron, during the third quarter of 2007  the Company adopted the
equity method of accounting with respect to the Positron
securities.
 
 At
June 30, 2008, the Company owned 3.45% of Positron’s outstanding common stock
and 722,358 Series B Preferred Shares or approximately 11% of the
class.  Despite holdings of less than 20% of the voting stock of
Positron, management believes that events and transactions occurring during the
second half of 2007 and continuing into the first quarter of 2008 has given the
Company the ability to exercise an increasing degree of influence over certain
operating and financial policies.  The events and transactions include
advances of funds in the form of notes receivable by the Company to Positron
beginning in July 2007 and totaling $2,204,896 including accrued interest at
June 30, 2008. The notes receivable are collateralized by Positron common
stock.  In addition to the financing, on January 2, 2008 Corey Conn,
who serves as Chief Financial Officer for both companies, was elected to the
Positron Board of Directors. The two companies share one other common director;
however Positron has four directors that are not on the Company’s
Board.
 
 Adoption
of the equity method of accounting for the Positron securities has resulted in
the restatement of the Company’s financial statements previously filed in its
June 30, 2008 quarterly report on Form 10-Q. Based on its percentage of
ownership of Positron common stock, for the three and six months ended June 30,
2008, the Company recorded equity in the losses of Positron of $69,513 and
$110,811, respectively, reducing the carrying value of the Positron securities
to $1,257,775 at June 30, 2008.  At June 30, 2008, the Company’s
4,000,000 shares of Positron’s common stock had an aggregate market value of
$336,000.
 
 The
following table summarizes the impact of the restatement for the three and six
months ended June 30, 2008:
 
 
 Three
      Months Ended June 30,2008
                          
                          
                          Six
      Months Ended June 30, 2008As
      Reported
                          
                          
                          Adjustment
                          
                          
                          Restated
                          
                          
                          As
      Reported
                          
                          
                          Adjustment
                          
                          
                          RestatedJune
      30, 2008
                          
                          
                          
                          
                          
                          June
      30, 2008
                          
                          
                          June
      30, 2008
                          
                          
                          
                          
                          
                          June
      30, 2008Net  income
      (loss)
                          
                          $
                          41,727
                          
                          
                          $
                          (69,513
                          )
                          
                          $
                          (27,786
                          )
                          
                          $
                          62,891
                          
                          
                          $
                          (110,811
                          )
                          
                          $
                          (47,920
                          )Basic
      earnings (loss) per share
                          
                          $
                          .0004
                          
                          
                          $
                          (0.0007
                          )
                          
                          $
                          (0.0003
                          )
                          
                          $
                          .0007
                          
                          
                          $
                          (0.0012
                          )
                          
                          $
                          (0.0005
                          )Diluted
      earnings (loss) per share
                          
                          $
                          .0002
                          
                          
                          $
                          (0.0005
                          )
                          
                          $
                          (0.0003
                          )
                          
                          $
                          .0004
                          
                          
                          $
                          (0.0009
                          )
                          
                          $
                          (0.0005
                          )Balance
      Sheet As Of June 30, 2008
                          
                          
                          As
      Reported
                          
                          
                          Adjustment
                          
                          
                          RestatedTotal
      Assets
                          
                          
                          $
                          4,097,887
                          
                          
                          $
                          (330,291
                          )
                          
                          $
                          3,767,596Accumulated
      deficit
                          
                          
                          $
                          (2,335,021
                          )
                          
                          $
                          (330,291
                          )
                          
                          $
                          (2,665,312
                          )
  12
  Summarized
financial information for Positron for the three and six months ended June 30,
2008 follows:
   Three
      Months Ended June 30, 2008
                              
                              
                              Six
      Months Ended March 31, 2008Revenues
                              
                              $
                              767,000
                              
                              
                              $
                              1,193,000Loss
      from operations
                              
                              
                              (739,000
                              )
                              
                              
                              (2,225,000
                              )Net
      loss
                              
                              
                              (2,017,000
                              )
                              
                              
                              (3,116,000
                              )Loss
      per share
                              
                              $
                              (0.02
                              )
                              
                              $
                              (0.03
                              )Weighted
      average shares outstanding
                              
                              
                              116,076,000
                              
                              
                              
                              111,251,000
 June
      30, 2008Current
      assets
                      
                      $
                      1,918,000Total
      assets
                      
                      
                      5,347,000Current
      liabilities
                      
                      
                      8,495,000Total
      liabilities
                      
                      
                      12,104,000Stockholders’
      deficit
                      
                      
                      (6,757,000
                      )Common
      shares outstanding
                      
                      
                      116,240,384
 
 
 The
underlying common shares related to anti-dilutive securities not included in
Positron’s net loss per share calculation as of June 30, 2008 were as
follows:
 
 
 Convertible
      Series A Preferred Stock
                      
                      
                      458,000Convertible
      Series B Preferred Stock
                      
                      
                      608,861,000Convertible
      Series G Preferred Stock
                      
                      
                      11,139,000Stock
      Warrants
                      
                      
                      65,749,000Stock
      Options
                      
                      
                      19,425,000705,632,000


NOTE
8.  PROPERTY AND EQUIPMENT





Property
and equipment at June 30, 2008 and December 31, 2007 consisted of the
following:








June.30,
      2008
            
            
            Dec.
      31, 2007Machinery
      and equipment
            
            $
            234,760
            
            
            $
            234,760Computers
      and software
            
            
            9,442
            
            
            
            9,442Subtotal
            
            
            244,202
            
            
            
            244,202Less:
      accumulated depreciation
            
            
            (48,171
            )
            
            
            (35,293
            )Total
            
            $
            196,031
            
            
            $
            208,909








NOTE
9.  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, the Company is required to make 41 consecutive monthly installments of
$8,783, including interest.  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 June 30,
2008 the principal balance of the promissory note is $201,064, of which $136,491
is included in current liabilities.





13
 Table of Contents




FORM
      10-Q
            JUNE
      30, 2008




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 June 30, 2008, no amounts had been recorded for these
items.




NOTE
10. 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”).




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.




For the
six months ended June 30, 2008, the Company recorded the minimum revenue from
the lease of $306,000.




NOTE
11.  DUE TO RELATED PARTY





Due
to  related party at June 30, 2008 and December 31, 2007 consisted of
the following:





June
      30, 2008
            
            
            December
      31, 2007Positron
      Corporation and Subsidiaries
            
            $
            149,860
            
            
            $
            296,750








NOTE
12. STOCKHOLDERS' EQUITY AND RELATED PARTY TRANSACTIONS




On
January 28, 2008, the Company consummated a Securities Purchase and Subscription
Agreement with Solaris Opportunity Fund, L.P., a Delaware limited partnership
("Solaris").  Solaris acquired 175,000 shares of the Registrant's
Series A Convertible Preferred Stock for $70,000.  The preferred
shares are convertible into a total of 3,500,000 shares of Imagin common stock.
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.




14
 Table of Contents




FORM
      10-Q
            JUNE
      30, 2008





On March
10, 2008 the Company consummated a Securities Purchase and Subscription
Agreements with Solaris. Under the Agreement Solaris acquired 1,850,000 shares
of the Registrant's Series A Convertible Preferred Stock for
$700,000.  The preferred shares are convertible into a total of
37,000,000 shares of Imagin common stock.





At June
30, 2008, Solaris had paid the Company $200,000 toward an additional investment
in preferred shares of the Company, the terms of which have yet to be
finalized.  This amount has been recorded as a non-current liability
at June 30, 2008.





On August
18, 2008, the Company obtained written consents from a majority of its
shareholders to increase the number of authorized shares of its common stock,
par value $.001, to 300,000,000 shares and to increase the number of authorized
shares of its preferred stock to 20,000,000 shares.






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







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.








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.





15
 Table of Contents




FORM
      10-Q
            JUNE
      30, 2008




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.







Comparison of the Results of
Operations for the Three Months ended June 30, 2008 and 2007





During
the three months ended June 30, 2008 the Company had a net loss of $27,786
compared to a net loss of $229,532 for the three months ended June 30,
2007.





Revenues
for the three months ended June 30, 2008 were $153,000 compared to $12,581
during the three months ended June 30, 2007.  The increase is due to
the minimum monthly lease payment of $51,000 that is due under the lease
agreement with BIMC that was executed in May of 2007. September 2007 was the
first month in which the minimum payment was recognized. Due to the uncertainty
surrounding reimbursement, for the three months ended June 30, 2007 the Company
used an estimate of 40% for scans billed but not reimbursable and therefore
revenues recognized represented only 60% of scans billed during the
period.  Minimum lease payments are not dependent upon reimbursable
amounts. In addition, scans at BIMC were suspended from late February to May
2007 pending the re-negotiation of the contract between the Company and the
hospital.





16
 Table of Contents




FORM
      10-Q
            JUNE
      30, 2008





The
Company had gross profit of $62,685 and a gross loss of $16,449 for the three
months ended June 30, 2008 and 2007, respectively.  For the three
months ended June 30, 2008, costs of revenues were $90,315 compared to $29,030
for the three months ended June 30, 2007.  Costs of revenues represent
monthly charges for rubidium, the agent necessary to operate the PET system. For
the three months ended June 30, 2008, three months of rubidium purchases are
included in costs of revenues compared to only one month during the three months
ended June 30, 2007.





Operating
expenses decreased to $38,656 from $224,250 for the three months ended June 30,
2008 and 2007, respectively. During the three months ended June 30, 2007, the
Company issued $80,000 of its common stock to a consultant for services
performed. In addition the Company issued 3,000,000 shares of it common stock to
its President Joseph Oliverio.  The value of the shares when issued
was $120,000 which the Company recorded as compensation expense.





Interest
expense on notes payable was $6,031 and $7,718 for the three months ended June
30, 2008 and 2007, respectively.  Interest in each of the periods is
for interest on the note payable to Cherry Creek Capital
Partners.  The expense decreased in accordance with the note payable
amortization schedule.  The balance of the note payable was $201,064
at June 30, 2008 compared to $287,543 at June 30, 2007.




During
the third quarter of 2007 the Company adopted the equity method of accounting
for its investment in securities of Positron Corporation.  For the
three months ended June 30, 2008, the Company recorded equity in the losses of
Positron of $69,513.






Comparison of the Results of
Operations for the Six Months ended June 30, 2008 and 2007





During
the six months ended June 30, 2008 the Company had a net loss of $47,920
compared to a net loss of $319,657 for the six months ended June 30,
2007.





Revenues
for the six months ended June 30, 2008 were $306,000 compared to $48,209 during
the six months ended June 30, 2007.  The increase is due to the
minimum monthly lease payment of $51,000 that is due under the lease agreement
with BIMC that was executed in May of 2007. September 2007 was the first month
in which the minimum payment was recognized. Due to the uncertainty surrounding
reimbursement, for the six months ended June 30, 2007 the Company used an
estimate of 40% for scans billed but not reimbursable and therefore revenues
recognized represented only 60% of scans billed during the
period.   In addition, the 2007 revenue were significantly
impacted by the suspension of scans at BIMC from February to May 2007 pending
contract re-negotiation.





The
Company had gross profit of $125,370 and a gross loss of $49,719 for the six
months ended June 30, 2008 and 2007, respectively.  For the six months
ended June 30, 2008, costs of revenues were $180,630 which includes six months
of rubidium purchases, as compared to $97,928 for the six months ended June 30,
2007, during which time rubidium was purchased for only three months due to the
suspension of scans at BIMC.





Operating
expenses for the six months ended June 30, 2008 and 2007, were $78,285 and
$252,354, respectively. For the six months ended June 30, 2007, the Company
charged $200,000 to operations for common stock issued for services, including
$120,000 of compensation expense.





Interest
expense on notes payable was $12,868 and $15,985 for the six months ended June
30, 2008 and 2007, respectively.  Interest in each of the periods is
for interest on the note payable to Cherry Creek Capital
Partners.  The expense decreased in accordance with the note payable
amortization schedule. For the
six months ended June 30, 2008, the Company recorded equity in the losses of
Positron Corporation of $110,811.





Discontinued Operations of
Cipher Multimedia (“Cipher”)





Income
from discontinued operations for the six months ended June 30, 2008 was $4,778
compared to a loss of $1,599 for the same period in 2007.  No revenue
was recorded by Cipher in either period.  During the six months ended
June 30, 2008, Cipher recorded other income of $21,859 related to debt
forgiveness of amounts accrued during 2006 and 2007. Cipher’s loss for the
period ended June 30, 2007 is attributable primarily to professional fees and
other general and administrative expenses.





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      10-Q
            JUNE
      30, 2008





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 income of Cipher of
$14,600 for the six months ended June 30, 2008 as compared to majority interest
in the loss of $8,115 during 2007.








Liquidity and Capital
Resources




At June
30, 2008, the Company had current assets of $108,894 and current liabilities of
$546,458 compared to December 31, 2007 when the Company had current assets and
current liabilities of $144,542 and $722,748, respectively.  Cash and
cash equivalents at June 30, 2008 were $4,219 and accounts receivable were
$104,675.  The Company also had $1,346,000 due from Positron
Corporation, a related party, at June 30, 2008 which was converted to a note
payable on April 10, 2008 and is due December 31, 2008.  During the
six months ended June 30, 2008, the Company advanced Positron additional funds
in the amount of $835,000.  On August 18, 2008, those advances were
formalized into a promissory note, with interest at 8%, due on December 31,
2008. The August 18, 2008 note is also secured by a pledge of 100,000,000 shares
of Positron’s common stock. Accrued interest on the note totaled $23,896 at June
30, 2008..  Due to the uncertainty surrounding Positron’s ability to
repay the loans by the due date, the notes and the accrued interest have been
recorded as non-current assets at June 30, 2008.


Current
liabilities at June 30, 2008 include accounts payable and accrued liabilities
including amounts due to affiliates of interest of $149,860 and the current
portion of the Cherry Creek note payable of $136,491.





The
Company had net cash provided by operating activities of $44,909 for the six
months ended June 30, 2008 compared to net cash used in operating activities of
$84,218 for the same period in 2007.  The increase in cash flow from
operations is due to primarily to cash received from BIMC for minimum lease
payments required by the operating agreement between the Company and
BIMC.





The
Company used $835,000 in cash in investing activities related to the advances
made to Positron Corporation.





Net cash
provided by financing activities during the six months ended June 30, 2008 was
$770,190 which included a total of $970,000 in equity investments made by
Solaris Opportunity Fund (“Solaris”), a related party. Financing activities also
includes approximately $53,000 of payments to Cherry Creek against the note
payable and repayment of amounts borrowed from affiliates of approximately
$147,000. During the six months ended June 30, 2007, the Company had cash
provided by financing activities of $273,998 which included a $200,000 equity
investment form Solaris, approximately $69,000 of funds advanced by Positron
Corporation and $5,100 received from a shareholder.





On
June 30, 2008 the Company had an accumulated deficit of $2,665,312 and
stockholders' equity of $2,725,720.





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 June 30, 2008, the Company held 4,000,000 shares
of Positron’s common stock and 722,358 shares of Positron’s Series B Convertible
Preferred. The Company holds approximately 11% of the voting shares of Positron.
In addition, the Company holds notes receivable of $2,181,000 from
Positron.. As of June 30, 2008 amounts due from Positron including accrued
interest totaled $2,204,896. The viability of our wholly-owed subsidiary
Positron Acquisition Corporation, and the repayment of the note and 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 advanced to
Positron Corporation will ever be realized.





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FORM
      10-Q
            JUNE
      30, 2008





Effects
of Inflation




The
Registrant believes that the relatively moderate 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.





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FORM
      10-Q
            JUNE
      30, 2008





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




Evaluation
of 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 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.
 
 Changes
in Internal Control over Financial Reporting
 
 As
reported in our Annual Report on Form 10-KSB for the year ended December 31,
2007, management is aware that 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.
 
 There
have not been any changes in the Company's internal control over financial
reporting during the quarter ended June 30, 2008 that have materially affected,
or are reasonably likely to materially affect, the Company's internal control
over financial reporting.


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FORM
      10-Q
            JUNE
      30, 2008





PART
II - OTHER INFORMATION




ITEM 1. Legal Proceedings




None




ITEM 2. Changes in Securities




There
have been no changes in the instruments defining the rights or rights evidenced
by any class of registered securities.




ITEM 3. Defaults Upon Senior Securities




None




ITEM 4. Submission of Matters to Vote of Security
Holders




None




ITEM 5. Other Information




On August
18, 2008 , the Company formalized advances in the amount of $835,000 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 ( “Note
2”).  Note 2 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 the provisions of an addendum (the “Addendum”) to a Stock Pledge
Agreement entered into between the Company and Positron on April 10, 2008 (the
“Pledge Agreement”) the Pledged Shares are also pledged as security for a
promissory note made by Positron on that date in the amount of
$1,346,000  (“Note 1”).  Upon a default of Note 1, Note 2 or
the Pledge Agreement, the Company may sell the Pledged Shares to repay any and
all amounts due under Note 1 and/or Note2.




Also on
August 18, 2008, shareholders holding approximately 70% of our voting capital
stock approved an amendment to our Certificate of Incorporation to increase our
authorized capital stock to 300,000,000 shares of common stock and 20,000,000
shares of “blank-check” preferred stock.




ITEM 6. Exhibits





(a)  Exhibit
Index






Exhibit
            Description
      of the Exhibit10.1
            Promissory
      Note by Positron Corporation dated August 18, 200810.2
            Stock
      Pledge Agreement by Positron Corporation dated August 18,
    200831.1
            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.




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FORM
      10-Q
            JUNE
      30, 2008




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 New York, State of
New York on November 6, 2008.




Imagin
Molecular Corporation




Date:     November
      6, 2008
            /s/ Joseph G.
      OliverioJoseph
      G. OliverioChief
      Executive Office, DirectorDate:     November
      6, 2008
            /s/ Corey N.
      ConnCorey
      N. ConnChief
      Financial Officer







EXHIBIT
INDEX








Exhibit
            Description
      of the Exhibit10.1
            Promissory
      Note by Positron Corporation dated August 18, 200810.2
            Stock
      Pledge Agreement by Positron Corporation dated August 18,
200831.1
            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







22