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, 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
      Employer Identification 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  x  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  x





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





Yes   ̈  No  x





The
numbers of shares outstanding of each of the issuer's classes of common equity,
as of November 19, 2008, are as follows:





Class
      of Securities
              
              Shares
      OutstandingCommon
      Stock, $0.001 par value
              
              73,663,284





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







1


FORM
      10-Q
              SEPTEMBER
      30, 2008





IMAGIN MOLECULAR CORPORATION


FOR
THE QUARTER ENDED SEPTEMBER 30, 2008


TABLE
OF CONTENTS








INDEX
                PagePART
      I  - FINANCIAL INFORMATIONITEM 1 - FINANCIAL STATEMENTS
                3Consolidated Balance Sheet at September 30, 2008 (unaudited)
      and December 31, 2007
                3Consolidated Statements of Operations for the three and nine
      months ended September 30, 2008 and 2007 (unaudited)
                4Consolidated Statement of Cash Flows for the nine months
      ended September 30, 2008 and 2007 (unaudited)
                5Notes to Unaudited Financial Statements
                7ITEM 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
      CONDITION AND RESULTS OF OPERATIONS
                15ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
      MARKET RISK
                20ITEM 4 - CONTROLS AND PROCEDURES
                20PART
      II-OTHER INFORMATIONITEM 1 - LEGAL PROCEEDINGS
                21ITEM 2 - UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
      PROCEEDS
                21ITEM 3 - DEFAULTS UPON SENIOR
SECURITIES
                21ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY
      HOLDERS
                21ITEM 5 - OTHER INFORMATION
                21ITEM 6 – EXHIBITS
                21




2
 Table of Contents


FORM
      10-Q
                  SEPTEMBER
      30, 2008





PART
1 – FINANCIAL INFORMATION





ITEM 1.  Financial Statements





The
unaudited balance sheet of the Registrant as of September 30, 2008, the balance
sheet at December 31, 2007, the unaudited statements of operations for the three
and nine months ended September 30, 2008 and 2007, and the unaudited statements
of cash flows for the nine months ended September 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 CORPORATIONAND SUBSIDIARIES





CONSOLIDATED
BALANCE SHEETS








September
      30, 2008
                              (Unaudited)
                            
                            
                            December
      31, 2007ASSETSCurrent
      assets:Cash
      and cash equivalents
                            
                            $
                            54,209
                            
                            
                            $
                            24,120Accounts
      receivable
                            
                            
                            51,000
                            
                            
                            
                            120,422Total
      current assets
                            
                            
                            105,209
                            
                            
                            
                            144,542Property
      and equipment, net
                            
                            
                            189,592
                            
                            
                            
                            208,909Other
      assets:Notes
      receivable from Positron Corporation, including accrued
      interest
                            
                            
                            2,248,875
                            
                            
                            
                            1,346,000Investment
      in securities of Positron Corp.
                            
                            
                            1,251,430
                            
                            
                            
                            1,368,586Total
      assets
                            
                            $
                            3,795,106
                            
                            
                            $
                            3,068,037LIABILITIES
      AND STOCKHOLDERS’ DEFICITCurrent
      liabilities:Accounts
      payable
                            
                            $
                            62,480
                            
                            
                            $
                            104,951Advance
      from shareholders
                            
                            
                            5,100
                            
                            
                            
                            5,100Accrued
      expenses
                            
                            
                            188,878
                            
                            
                            
                            182,373Current
      portion of promissory note payable
                            
                            
                            159,164
                            
                            
                            
                            128,580Accrued
      interest
                            
                            
                            7,120
                            
                            
                            
                            4,994Due
      to related party
                            
                            
                            104,860
                            
                            
                            
                            296,750Total
      current liabilities
                            
                            
                            527,602
                            
                            
                            
                            722,748Promissory
      note payable – less current portion
                            
                            
                            32,769
                            
                            
                            
                            125,404Deposits
      for equity investment
                            
                            
                            200,000
                            
                            
                            
                            --Majority
      interest in consolidated subsidiary
                            
                            
                            230,270
                            
                            
                            
                            216,245Total
      liabilities
                            
                            
                            990,641
                            
                            
                            
                            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
                            
                            
                            (2,586,567)
                            
                            
                            
                            (2,617,392)Total
      stockholders’ equity
                            
                            
                            2,804,465
                            
                            
                            
                            2,003,640Total
      liabilities and stockholders’ equity
                            
                            $
                            3,795,106
                            
                            
                            $
                            3,068,037





See
accompanying notes




3
 Table of Contents


FORM
      10-Q
              SEPTEMBER
      30, 2008





IMAGIN MOLECULAR CORPORATION


CONSOLIDATED
STATEMENTS OF OPERATIONS


(Unaudited)





Three
      Months Ended
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      Nine
      Months EndedSeptember
      30, 2008
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      September
      30, 2007
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      September
      30, 2008
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      September
      30, 2007Revenues:
                                                                                                                                      
                                                                                                                                      $
                                                                                                                                      154,045
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      $
                                                                                                                                      65,091
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      $
                                                                                                                                      460,045
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      $
                                                                                                                                      113,300Costs
      of revenues:
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      90,315
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      117,090
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      270,945
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      215,018Gross
      profit (loss)
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      63,730
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      (51,999
                                                                                                                                      )
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      189,100
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      (101,718
                                                                                                                                      )Operating
      expenses:Professional
      fees
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      9,645
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      3,700
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      66,785
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      103,058Marketing,
      general and administrative
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      7,587
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      21,506
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      28,732
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      174,503Total
      operating expenses
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      17,232
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      25,206
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      95,517
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      277,561Income
      (loss) from operations
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      46,498
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      (77,205
                                                                                                                                      )
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      93,583
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      (379,279
                                                                                                                                      )Interest
      income
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      43,979
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      --
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      67,875
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      --Interest
      expense
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      (5,201
                                                                                                                                      )
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      (9,652
                                                                                                                                      )
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      (18,069
                                                                                                                                      )
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      (25,637
                                                                                                                                      )Equity
      in losses of Positron Corporation
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      (6,345)
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      (61,531)
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      (117,156)
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      (61,531
                                                                                                                                      )Total
      other income (expense)
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      32,433
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      (71,183
                                                                                                                                      )
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      (67,350)
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      (87,168
                                                                                                                                      )Income
      (loss) from continuing operations  income taxes
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      78,931
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      (148,388
                                                                                                                                      )
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      26,233
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      (466,447
                                                                                                                                      )Income
      taxes
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      --
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      --
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      --
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      --Income
      (loss) from continuing operations
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      78,931
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      (148,388
                                                                                                                                      )
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      26,233
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      (466,447)Income
      (loss) from discontinued operations
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      (188
                                                                                                                                      )
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      (18,148)
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      4,590
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      (19,746)Net
      earnings (loss)
                                                                                                                                      
                                                                                                                                      $
                                                                                                                                      78,743
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      $
                                                                                                                                      (166,536
                                                                                                                                      )
                                                                                                                                      
                                                                                                                                      $
                                                                                                                                      30,823
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      $
                                                                                                                                      (486,193)Earnings
      (Loss) Per Share:Basic:From
      continuing operations
                                                                                                                                      
                                                                                                                                      $
                                                                                                                                      0.0008
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      $
                                                                                                                                      (0.0018)
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      $
                                                                                                                                      0.0003
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      $
                                                                                                                                      (0.0062)From
      discontinued operations
                                                                                                                                      
                                                                                                                                      $
                                                                                                                                      0.0000
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      $
                                                                                                                                      (0.0001)
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      $
                                                                                                                                      0.0000
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      $
                                                                                                                                      (0.0002)Net
      income (loss)
                                                                                                                                      
                                                                                                                                      $
                                                                                                                                      0.0008
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      $
                                                                                                                                      (0.0019)
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      $
                                                                                                                                      0.0003
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      $
                                                                                                                                      (0.0064)Diluted:From
      continuing operations
                                                                                                                                      
                                                                                                                                      $
                                                                                                                                      0.0004
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      $
                                                                                                                                      (0.0018)
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      $
                                                                                                                                      0.0002
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      $
                                                                                                                                      (0.0062)From
      discontinued operations
                                                                                                                                      
                                                                                                                                      $
                                                                                                                                      0.0000
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      $
                                                                                                                                      (0.0001)
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      $
                                                                                                                                      0.0000
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      $
                                                                                                                                      (0.0002)Net
      loss
                                                                                                                                      
                                                                                                                                      $
                                                                                                                                      0.0004
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      $
                                                                                                                                      (0.0019)
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      $
                                                                                                                                      0.0002
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      $
                                                                                                                                      (0.0064)Weighted
      average common shares:Basic:
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      93,663,284
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      71,190,757
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      93,663,284
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      76,016,153Diluted:
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      181,413,284
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      71,190,757
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      171,603,065
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      76,016,153





See
accompanying notes




4
 Table of Contents


FORM
      10-Q
              SEPTEMBER
      30, 2008





IMAGIN MOLECULARCORPORATION AND SUBSIDIARIES


CONSOLIDATED
STATEMENTS OF CASH FLOWS


(Unaudited)








Nine
      Months EndedSeptember
      30, 2008
                    
                    
                    September
      30, 2007Cash
      flows from operating activities:Income
      (loss) from continuing operations
                    
                    $
                    26,233
                    
                    
                    $
                    (466,447)Income
      (loss) from discontinued operations
                    
                    
                    4,590
                    
                    
                    
                    (19,746)Net
      income (loss)
                    
                    
                    30,823
                    
                    
                    
                    (486,193
                    )Adjustment
      to reconcile net income (loss) to net cash provided by (used in)
      operating activitiesCommon
      stock issued for services
                    
                    
                    --
                    
                    
                    
                    230,000Depreciation
      expense
                    
                    
                    19,317
                    
                    
                    
                    19,317Equity
      in losses of Positron Corporation
                    
                    
                    117,156
                    
                    
                    
                    61,531Majority
      interest in income of subsidiary
                    
                    
                    14,025
                    
                    
                    
                    2,254Changes
      in operating assets and liabilities:Accounts
      receivable
                    
                    
                    69,422
                    
                    
                    
                    31,183Interest
      receivable
                    
                    
                    (67,875
                    )
                    
                    
                    --Accounts
      payable and accrued liabilities
                    
                    
                    (33,838
                    )
                    
                    
                    (6,852)Net
      cash provided by (used in) operating activities
                    
                    
                    149,030
                    
                    
                    
                    (148,760)Cash
      flows from investing activities:Note
      receivable to related party
                    
                    
                    (835,000
                    )
                    
                    
                    (740,000)Net
      cash used in investing activities
                    
                    
                    (835,000
                    )
                    
                    
                    (740,000)Cash
      flows from financing activities:Issuance
      of common stock
                    
                    
                    --
                    
                    
                    
                    400,000Issuance
      of preferred stock
                    
                    
                    770,000
                    
                    
                    
                    400,000Advance
      from shareholder
                    
                    
                    --
                    
                    
                    
                    5,100Advance
      from affiliate
                    
                    
                    --
                    
                    
                    
                    98,898Payments
      to affiliates
                    
                    
                    (191,890
                    )
                    
                    
                    --Payments
      of note payable
                    
                    
                    (62,051
                    )
                    
                    
                    (16,610)Deposit
      for equity investment
                    
                    
                    200,000
                    
                    
                    
                    --Net
      cash provided by financing activities
                    
                    
                    716,059
                    
                    
                    
                    887,388Net
      increase (decrease) in cash
                    
                    
                    30,089
                    
                    
                    
                    (1,372)Cash
      at beginning of period
                    
                    
                    24,120
                    
                    
                    
                    3,138Cash
      at end of period
                    
                    $
                    54,209
                    
                    
                    $
                    1,766Supplemental
      cash flow information:Interest
      paid
                    
                    $
                    15,942
                    
                    
                    $
                    22,921Income
      taxes paid
                    
                    
                    --
                    
                    
                    
                    --





See
accompanying notes




5
 Table of Contents


FORM
      10-Q
              SEPTEMBER
      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
                SEPTEMBER
      30, 2008





IMAGIN MOLECULARCORPORATION 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. 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. 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. 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
 Table of Contents


FORM
      10-Q
              SEPTEMBER
      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 $2,586,567 as of September 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 September 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 stock for an aggregate of 10.5% of the outstanding common
stock of Positron on a fully-diluted basis. In addition, as of September 30,
2008, the Company had advanced an additional $2,248,875 including accrued
interest 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
              SEPTEMBER
      30, 2008





NOTE
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





Principles
of Consolidation and Nature of Operations





For the
periods ended September 30, 2008 and 2007, the financial statements include the
accounts and transactions of Imagin Molecular Corporation and its subsidiaries
Cipher Multimedia, Inc. (a discontinued operation),  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
addition, the Company adopted the provisions of FASB released FASB
Interpretation No. 48, "Accounting for Uncertainty in Income Taxes," an
interpretation of FASB Statement No. 109 ("FIN 48") in the first quarter of
2007. 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.








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 nine month period ended
September 30, 2008, dilutive securities included in 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
              SEPTEMBER
      30, 2008





Nine
      Months Ended September 30, 2008
                      
                      
                      Three
      Months Ended September 30, 2008Convertible
      Series A Preferred Stock
                      
                      
                      87,750,000
                      
                      
                      
                      87,750,000





For the
three and nine months ended September 30, 2007, the dilutive effect of the
preferred shares outstanding are not included in the weighted average share
outstanding, as the effect would be anti-dilutive.





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
 Table of Contents


FORM
      10-Q
                SEPTEMBER
      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 September 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 nine months ended
September 30, 2008 and 2007 were as follows:


Nine
      Months EndedSeptember 30, 2008
                        
                        September 30, 2007Operating
      (expenses):
                        
                        $
                        (3,394
                        )
                        
                        $
                        (28,915
                        )Other
      income:
                        
                        
                        22,009
                        
                        
                        
                        11,423Income
      (loss) before majority interest
                        
                        
                        18,615
                        
                        
                        
                        (17,492
                        )Majority
      interest in (income) loss
                        
                        
                        (14,025
                        )
                        
                        
                        (2,254
                        )Net
      income (loss)
                        
                        $
                        4,590
                        
                        
                        $
                        (19,746
                        )





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 (“Note 1”), 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 nine months ended September 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 (“Note
2”), 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 $67,875 at September 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 September 30, 2008.








NOTE
7. IMAGIN DIAGNOSTIC CENTRES INC. CONVERTIBLE NOTES RECEIVABLE





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
                SEPTEMBER
      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
September 30, 2008, the Company owned 2.56% 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 $2,248,875 including accrued interest at
September 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.





Based on
its percentage of ownership of Positron common stock, for the three and nine
months ended September 30, 2008, the Company recorded equity in the losses of
Positron of $6,345 and $117,156, respectively, reducing the carrying value of
the Positron securities to $1,251,430 at September 30, 2008.  At
September 30, 2008, the Company’s 4,000,000 shares of Positron’s common stock
had an aggregate market value of $308,000.








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





Three
      Months Ended
                                      September
      30, 2008
                                    
                                    
                                    Nine
      Months Ended
                                      March
      31, 2008Revenues
                                    
                                    $
                                    384,000
                                    
                                    
                                    $
                                    1,577,000Loss
      from operations
                                    
                                    
                                    (899,000
                                    )
                                    
                                    
                                    (3,124,000
                                    )Net
      loss
                                    
                                    
                                    (265,000
                                    )
                                    
                                    
                                    (3,381,000
                                    )Loss
      per share
                                    
                                    $
                                    --
                                    
                                    
                                    $
                                    (0.03
                                    )Weighted
      average shares outstanding
                                    
                                    
                                    156,240,000
                                    
                                    
                                    
                                    126,357,000





September 30,
      2008Current
      assets
                  
                  $
                  2,232,000Total
      assets
                  
                  
                  5,637,000Current
      liabilities
                  
                  
                  7,801,000Total
      liabilities
                  
                  
                  10,660,000Stockholders’
      deficit
                  
                  
                  (5,023,000
                  )Common
      shares outstanding
                  
                  
                  156,240,000




12
 Table of Contents


FORM
      10-Q
                SEPTEMBER
      30, 2008


The
underlying common shares related to anti-dilutive securities not included in
Positron’s net loss per share calculation as of September 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 September 30, 2008 and December 31, 2007 consisted of the
following:








September 30,
                    2008
                  
                  
                  December
      31,
                    2007Machinery
      and equipment
                  
                  $
                  234,760
                  
                  
                  $
                  234,760Computers
      and software
                  
                  
                  9,442
                  
                  
                  
                  9,442Subtotal
                  
                  
                  244,202
                  
                  
                  
                  244,202Less:
      accumulated depreciation
                  
                  
                  (54,610
                  )
                  
                  
                  (35,293
                  )Total
                  
                  $
                  189,592
                  
                  
                  $
                  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 September
30, 2008 the principal balance of the promissory note is $191,933, of which
$159,164 is included in current liabilities.




13
 Table of Contents


FORM
      10-Q
                SEPTEMBER
      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 September 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
nine months ended September 30, 2008, the Company recorded the minimum revenue
from the lease of $459,000.





NOTE
11.  DUE TO RELATED PARTY








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





September
      30,
                    2008
                  
                  
                  December
      31,
                    2007Positron
      Corporation and Subsidiaries
                  
                  $
                  104,860
                  
                  
                  $
                  296,750








NOTE
12. STOCKHOLDERS' EQUITY AND RELATED PARTY TRANSACTIONS AND SUBSEQUENT
EVENT





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
                SEPTEMBER
      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
September 30, 2008, Solaris had advanced the Company an additional $200,000, the
terms of which have yet to be finalized.  This amount has been
recorded as a non-current liability at September 30, 2008.





On
November 18, 2008, Solaris, Positron and the Company executed and consummated a
Securities Exchange Agreement whereby the Company transferred and assigned all
of its rights title and interest to Note 1, Note 2 and the Security (see note
6) in exchange for the return of the 20,000,000 shares of the Company’s
common stock and 4,387,500 shares of Series A to be retired and cancelled on the
Company’s books and records and the retirement and satisfaction of any
obligations to the advances made in the amount of $200,000.




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'sDiscussion 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
              SEPTEMBER
      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 endedSeptember 30,
2008and
2007





During
the three months ended September 30, 2008 the Company had  net
earnings of $78,743 compared to a net loss of $166,536 for the three months
ended September 30, 2007.





Revenues
for the three months ended September 30, 2008 were $154,045 compared to $65,091
during the three months ended September 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 September 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.




16
 Table of Contents


FORM
      10-Q
              SEPTEMBER
      30, 2008





The
Company had gross profit of $63,730 and a gross loss of $51,999 for the three
months ended September 30, 2008 and 2007, respectively.  For the three
months ended September 30, 2008, costs of revenues were $90,315 compared to
$117,090 for the three months ended September 30, 2007.  Costs of
revenues represent monthly charges for rubidium, the agent necessary to operate
the PET system. For the three months ended September 30, 2007, the Company also
charged to costs of revenue $30,000 of monthly fixed maintenance fees for the
PET system under a service contract with Positron Corporation. The Company did
not renew the maintenance agreement in 2008.





Operating
expenses decreased to $17,232 from $25,206 for the three months ended September
30, 2008 and 2007, respectively.   Operating expenses consist
primarily of professional fees, consulting fees and depreciation.





Interest
expense on notes payable was $5,201 and $9,652 for the three months ended
September 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 $191,933
at September 30, 2008 compared to $270,935 at September 30,
2007.   The Company recorded interest income for the notes
receivable from Positron Corporation in the amount of $43,979 for the three
months ended September 30, 2008.





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 and nine months ended September 30, 2008, the Company recorded equity in
the losses of Positron of $6,345 and 117,156.  For the three months
ended September 30, 2007, the Company recorded equity in the losses of Positron
of $61,531.








Comparison of the Results of
Operations for the Nine Months endedSeptember 30,
2008and
2007





During
the nine months ended September 30, 2008 the Company had  net earnings
of $30,823 compared to a net loss of $486,193 for the nine months ended
September 30, 2007.





Revenues
for the nine months ended September 30, 2008 were $460,045 compared to $113,300
during the nine months ended September 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 nine months ended September 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.





The
Company had gross profit of $189,100 and a gross loss of $101,718 for the nine
months ended September 30, 2008 and 2007, respectively.  For the nine
months ended September 30, 2008, costs of revenues were $270,945 which includes
nine months of rubidium purchases, as compared to $215,018 for the nine months
ended September 30, 2007, during which time rubidium was purchased for only six
months due to the suspension of scans at BIMC.





Operating
expenses for the nine months ended September 30, 2008 and 2007, were $95,517 and
$277,561, respectively. For the nine months ended September 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 $18,069 and $25,637 for the nine months ended
September 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 Company recorded interest income for the
notes receivable from Positron Corporation in the amount of $67,875 for the nine
months ended September 30, 2008.  For the nine months ended September
30, 2008 and 2007, the Company recorded equity in the losses of Positron
Corporation of $117,156 and $61,531, respectively.








Discontinued Operations of
Cipher Multimedia (“Cipher”)





Income
from discontinued operations for the nine months ended September 30, 2008 was
$4,590 compared to a loss of $19,746 for the same period in 2007.  No
revenue was recorded by Cipher in either period.  During the nine
months ended September 30, 2008, Cipher recorded other income of $22,009 the
majority of which is attributed to debt forgiveness of amounts accrued during
2006 and 2007. Cipher’s loss for the period ended September 30, 2007 is
attributable primarily to professional fees and other general and administrative
expenses.




17
 Table of Contents


FORM
      10-Q
                SEPTEMBER
      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
$14,025 for the nine months ended September 30, 2008 as compared to majority
interest in the loss of $ 2,254 during 2007.  These amounts are
included in the income (loss) from discontinued operations for the three
and nine months ended September 30, 2008 and 2007.








Liquidity and Capital
Resources





At
September 30, 2008, the Company had current assets of $105,209 and current
liabilities of $527,602 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 September 30, 2008 were
$54,209 and accounts receivable were $51,000.  The Company also had
notes receivable of $2,181,000 due from Positron Corporation, a related party,
at September 30, 2008.  The notes are dated April 10, 2008 and August
18, 2008, with interest accruing at 8%, due on December 31, 2008. The notes are
secured by a pledge of 100,000,000 shares of Positron’s common stock. Accrued
interest on the note totaled $67,875 at September 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 September 30, 2008. On
November 18, 2008 Solaris, Positron and the Company executed and consummated a
Share Exchange Agreement whereby in exchange for its rights in the notes
receivable from Positron, the Company will receive all its common and preferred
shares owned by Solaris. The common stock and Series A preferred will be retired
and cancelled by the Company.





Current
liabilities at September 30, 2008 include accounts payable and accrued
liabilities including amounts due to affiliates of interest of $104,860 and the
current portion of the Cherry Creek note payable of $159,164.





The
Company had net cash provided by operating activities of $149,030 for the nine
months ended September 30, 2008 compared to net cash used in operating
activities of $148,760 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 notes
receivable due from Positron Corporation during the nine months ended September
30, 2008 as compared to $740,000 for the same period in 2007.





Net cash
provided by financing activities during the nine months ended September 30, 2008
was $716,059 which included a total of $970,000 in equity investments and
advances made by Solaris Opportunity Fund (“Solaris”), a related party.
Financing activities also includes approximately $62,000 of payments to Cherry
Creek against the note payable and repayment of amounts borrowed from affiliates
of approximately $192,000. During the nine months ended September 30, 2007, the
Company had cash provided by financing activities of $887,388 which included a
$800,000 equity investment form Solaris, approximately $99,000 of funds advanced
by Positron Corporation and $5,100 received from a shareholder.





On
September 30, 2008 the Company had an accumulated deficit of $2,586,567 and
stockholders’ total equity of $2,804,465.





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 September 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 10% of the voting shares
of Positron. As of September 30, 2008 amounts due from Positron including
accrued interest totaled $2,248,875. 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.




18
 Table of Contents


FORM
      10-Q
              SEPTEMBER
      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.




19
 Table of Contents


FORM
      10-Q
              SEPTEMBER
      30, 2008





ITEM 3.  Quantitativeand 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 September 30, 2008 that have materially
affected, or are reasonably likely to materially affect, the Company's internal
control over financial reporting.




20
 Table of Contents


FORM
      10-Q
                SEPTEMBER
      30, 2008





PART
II - OTHER INFORMATION





ITEM 1. Legal Proceedings





None.





ITEM 2. UnregisteredSales of Equity Securities and Use of
Proceeds





None.





ITEM 3. DefaultsUpon Senior Securities





None.





ITEM 4. Submissionof Matters to Vote of Security
Holders





None.





ITEM 5. OtherInformation





On
November 18, 2008, Solaris, Positron and the Company executed and consummated a
Securities Exchange Agreement whereby the Company transferred and assigned all
of its rights title and interest to Note 1, Note 2 and the Security in exchange
for the return of the 20,000,000 shares of the Company’s common stock and
4,387,500 shares of Series A to be retired and cancelled on the Company’s books
and records and the retirement and satisfaction of any obligations to the
advances made in the amount of $200,000 to the Company by Solaris. A copy of the
Securities Exchange Agreement is attached hereto as Exhibit 2.1.




ITEM 6. Exhibits





(a)  Exhibit
Index








Exhibit
                
                Description
      of the Exhibit2.1
                
                Securities
      Exchange Agreement among Solaris Opportunity Fund, L.P., Solaris
      Management LLC, Imagin Molecular Corporation and Positron Corporation
      dated November 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.




21
 Table of Contents


FORM
      10-Q
                SEPTEMBER
      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 19, 2008.





Imagin
Molecular Corporation





Date:     November
      19, 2008
                    /s/JosephG.OliverioJoseph G. OliverioChief
      Executive Office, DirectorDate:     November
      19, 2008
                    /s/CoreyN.ConnCorey N. ConnChief
      Financial
Officer








EXHIBIT
INDEX








Exhibit
                      
                      Description
      of the Exhibit2.1
                      
                      Securities
      Exchange Agreement among Solaris Opportunity Fund, L.P., Solaris
      Management LLC, Imagin Molecular Corporation and Positron Corporation
      dated November 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