UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549





FORM
10-Q/A




x
            QUARTERLY REPORT PURSUANT TO
      SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE
      QUARTERLY PERIOD ENDED SEPTEMBER 30,
  2007.





 ̈
            TRANSITION REPORT UNDER 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




Delaware
              
              13-4099008(State
      of Incorporation)
              
              (IRS
      Employer Identification No.)








104 W.
Chestnut  #315 Hinsdale, IL 60521


(Address
of Principal Executive Offices)








(630)
371-5583


(Registrant’s
Telephone Number)





Indicate
by check mark whether Registrant (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
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 
       ̈





As of
November 14, 2007, there were 93,663,284 shares of the Registrant’s Common
Stock, $.001 par value outstanding.





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





EXPLANATORY
NOTE





The
Registrant has filed this Form 10-Q/A to amend its Quarterly Report on Form
10-QSB for the period ending September 30, 2007 to revise its financial
statements for the period covered in this report to apply the equity method of
accounting to its investments in Positron Corporation (“Positron”) and to change
the classification of advances made to Positron from a financing activity to an
investing activity.








1





FORM 10-Q/A
              SEPTEMBER 30,
  2007





IMAGINMOLECULAR CORPORATION


TABLE
OF CONTENTS


Form
10-QSB for the quarter ended September 30, 2007





PART
      I – FINANCIAL INFORMATION
              
              PageItem
      1.  Financial Statements
              
              3Consolidated Balance Sheets at September 30, 2007 and December
      31, 2006
              
              3Consolidated Statements of Operations for the three and nine
      months ended September 30, 2007 and 2006
              
              4Consolidated Statements of Cash Flows for the nine months
      ended September 30, 2007 and 2006
              
              5Notes to Financial Statements
              
              7Item
      2.  Management’s Discussion and
      Analysis
              
              14Item
      3.  Controls and Procedures
              
              18PART
      II – OTHER INFORMATION
              
              19Item
      1.  Legal Proceedings
              
              19Item
      2.   Unregistered Sales of Equity Securities
      and Use of Proceeds
              
              19Item
      3.  Submission of Matters to a Vote of Security
      Holders
              
              19Item
      4.   Other Information
              
              19Item
      6.  Exhibits
              
              19Signature Page
              
              20





2
 Table of Contents




FORM 10-Q/A
                SEPTEMBER 30,
  2007


PART
1 – FINANCIAL INFORMATION





ITEM1.  Financial Statements





The
unaudited balance sheet of the Registrant as of September 30, 2007, the balance
sheet at December 31, 2006, the unaudited statements of operations for the three
and nine months ended September 30, 2007 and 2006, and the unaudited statements
of cash flows for the nine months ended September 30, 2007 and 2006
follow.  The unaudited financial statements reflect all adjustments
that are, in the opinion of management, necessary to a fair statement of the
results for the interim periods presented.





IMAGIN
MOLECULAR CORPORATION AND SUBSIDIARIES





CONSOLIDATEDBALANCE SHEETS








September 30, 2007
                  (Unaudited)
                
                
                December31, 2006ASSETSCurrent
      assets:Cash
      and cash equivalents
                
                $
                1,766
                
                
                $
                3,138Accounts
      receivable
                
                
                132,356
                
                
                
                163,539Due
      from affiliate
                
                
                740,000
                
                
                
                --Total
      current assets
                
                
                874,122
                
                
                
                166,677Property
      and equipment, net
                
                
                215,348
                
                
                
                234,666Other
      assets:Investment
      in securities of Positron Corp.
                
                
                1,526,535
                
                
                
                1,588,066Total
      assets
                
                $
                2,616,005
                
                
                $
                1,989,409LIABILITIES
      AND STOCKHOLDERS’ DEFICITCurrent
      liabilities:Accounts
      payable
                
                $
                103,982
                
                
                $
                97,577Advance
      from shareholders
                
                
                5,100
                
                
                
                69,616Accrued
      expenses
                
                
                152,903
                
                
                
                158,246Current
      portion of promissory note payable
                
                
                116,450
                
                
                
                81,684Notes
      payable – other
                
                
                --
                
                
                
                180,000Advances
      from affiliate
                
                
                284,283
                
                
                
                185,385Interest
      payable
                
                
                2,709
                
                
                
                75,732Total
      current liabilities
                
                
                665,427
                
                
                
                848,240Promissory
      note payable
                
                
                154,485
                
                
                
                205,860Majority
      interest in consolidated subsidiary (discontinued
      operations)
                
                
                216,977
                
                
                
                --Total
      liabilities
                
                
                1,036,889
                
                
                
                1,054,100Stockholders’
      Equity:Preferred
      Stock, 5,000,000 shares Authorized, 1,000,000 shares issued and
      outstanding
                
                
                400,000
                
                
                
                --Common
      Stock, $0.001 par value; 95,000,000 shares authorized, 93,663,284 and
      67,276,617 shares issued and outstanding
                
                
                93,663
                
                
                
                67,277Additional
      paid-in capital
                
                
                3,530,369
                
                
                
                2,826,755Accumulated
      deficit
                
                
                (2,444,916)
                
                
                
                (1,958,723
                )Total
      stockholders’ equity
                
                
                1,579,116
                
                
                
                935,309Total
      liabilities and stockholders’ equity
                
                $
                2,616,005
                
                
                $
                1,989,409





See
accompanying notes





3
 Table of Contents




FORM 10-Q/A
                SEPTEMBER 30,
  2007


IMAGIN
MOLECULAR CORPORATION


CONSOLIDATED STATEMENTS OF OPERATIONS


(Unaudited)





Three Months Ended
                
                
                Nine Months EndedSept. 30, 2007
                
                
                Sept. 30, 2006
                
                
                Sept. 30, 2007
                
                
                Sept. 30, 2006Revenues:
                
                $
                65,091
                
                
                $
                43,991
                
                
                $
                113,300
                
                
                $
                186,586Costs
      of revenues:
                
                
                117,090
                
                
                
                103,900
                
                
                
                215,018
                
                
                
                271,050Gross
      loss
                
                
                (51,999
                )
                
                
                (59,909
                )
                
                
                (101,718
                )
                
                
                (84,464
                )Operating
      expenses:Professional
      fees
                
                
                3,700
                
                
                
                --
                
                
                
                103,058
                
                
                
                763,000Marketing,
      general and administrative
                
                
                21,506
                
                
                
                47,160
                
                
                
                174,503
                
                
                
                128,224Total
      operating expenses
                
                
                25,206
                
                
                
                47,160
                
                
                
                277,561
                
                
                
                891,224Loss
      from operations
                
                
                (77,205
                )
                
                
                (107,069
                )
                
                
                (379,279
                )
                
                
                (975,688
                )Other
      income (expense)Interest
      income
                
                
                --
                
                
                
                20,357
                
                
                
                --
                
                
                
                145,218Interest
      expense
                
                
                (9,652
                )
                
                
                (3,250
                )
                
                
                (25,637
                )
                
                
                (13,578
                )Equity
      in losses of Positron Corporation
                
                
                (61,531)
                
                
                
                --
                
                
                
                (61,531)
                
                
                
                --Total
      other income (expense)
                
                
                (71,183)
                
                
                
                17,107
                
                
                
                (87,168)
                
                
                
                131,640Loss
      from continuing operations before majority interest in
      subsidiary
                
                
                (148,388)
                
                
                
                (89,962
                )
                
                
                (466,447)
                
                
                
                (844,048
                )Majority
      interest in loss of subsidiary
                
                
                (10,369
                )
                
                
                --
                
                
                
                (2,254
                )
                
                
                --Loss
      from continuing operations
                
                
                (158,757)
                
                
                
                (89,962
                )
                
                
                (468,701)
                
                
                
                (844,048
                )Loss
      from discontinued operations
                
                
                (7,779
                )
                
                
                (8,740
                )
                
                
                (17,492
                )
                
                
                (73,694
                )Net
      loss
                
                $
                (166,536)
                
                
                $
                (98,702
                )
                
                $
                (486,193)
                
                
                $
                (917,742
                )Loss
      Per Share:From
      continuing operations
                
                $
                (0.0018
                )
                
                $
                (0.0013
                )
                
                $
                (0.0062
                )
                
                $
                (0.0130
                )From
      discontinued operations
                
                $
                (0.0001
                )
                
                $
                (0.0001
                )
                
                $
                (0.0002
                )
                
                $
                (0.0011
                )Net
      loss
                
                $
                (0.0019
                )
                
                $
                (0.0014
                )
                
                $
                (0.0064
                )
                
                $
                (0.0141
                )Weighted
      average common shares
                
                
                88,663,284
                
                
                
                67,266,617
                
                
                
                76,016,153
                
                
                
                65,037,653




See
accompanying notes





4
 Table of Contents


FORM 10-Q/A
                SEPTEMBER 30,
  2007


IMAGIN
MOLECULAR CORPORATION AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF CASH FLOWS


(Unaudited)








Nine Months EndedSeptember 30, 2007
                
                
                September 30, 2006Cash
      flows from operating activities:Loss
      from continuing operations
                
                $
                (468,701)
                
                
                $
                (844,048
                )Loss
      from discontinued operations
                
                
                (17,492
                )
                
                
                (73,694)Net
      loss
                
                
                (486,193)
                
                
                
                (917,742
                )Adjustment
      to reconcile net loss to net cash used in operating
      activitiesCommon
      stock issued for services
                
                
                230,000
                
                
                
                763,000Depreciation
      expense
                
                
                19,317
                
                
                
                3,097Amortization
      of discount on notes receivable
                
                
                --
                
                
                
                (54,378
                )Equity
      in losses of Positron Corporation
                
                
                61,531
                
                
                
                --Majority
      interest in income of subsidiary
                
                
                2,254
                
                
                
                --Changes
      in operating assets and liabilities:Accounts
      receivable
                
                
                31,183
                
                
                
                (178,884
                )Interest
      receivable
                
                
                --
                
                
                
                (93,637
                )Accounts
      payable and accrued liabilities
                
                
                1,062
                
                
                
                241,202Interest
      payable
                
                
                (7,914
                )
                
                
                13,578Net
      cash used in operating activities
                
                
                (148,760
                )
                
                
                (223,764
                )Cash
      flows from investing activities:Purchase
      of fixed assets
                
                
                --
                
                
                
                (241,105
                )Advances
      to related party
                
                
                (740,000
                )
                
                
                --Net
      cash used in investing activities
                
                
                (740,000)--
                
                
                
                (241,105
                )Cash
      flows from financing activities:Issuance
      of common stock
                
                
                400,000
                
                
                
                --Issuance
      of preferred stock
                
                
                400,000
                
                
                
                --Advances
      from shareholders
                
                
                5,100
                
                
                
                167,290Advance
      from affiliate
                
                
                98,898
                
                
                
                55,616Payments
      of note payable
                
                
                (16,610
                )
                
                
                --Proceeds
      from promissory notes
                
                
                --
                
                
                
                250,000Net
      cash provided by financing activities
                
                
                887,388
                
                
                
                472,906Net
      increase (decrease) in cash
                
                
                (1,372
                )
                
                
                8,037Cash
      at beginning of period
                
                
                3,138
                
                
                
                1,376Cash
      at end of period
                
                $
                1,766
                
                
                $
                9,413Supplemental
      cash flow information:Interest
      paid
                
                $
                22,921
                
                
                $
                --Income
      taxes paid
                
                
                --
                
                
                
                --





See
accompanying notes





5
 Table of Contents


FORM 10-Q/A
                SEPTEMBER 30,
  2007


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.





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





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





2006





On
January 4, 2006, the Company issued 481,481 shares of common stock, par value
$0.001 to a non-affiliated shareholder in final satisfaction of a $13,000
advance made to the Company. The shares were valued at $0.027 per
share.





On
January 4, 2006, the Company issued 7,054,825 shares of common stock, par value
$0.001 to an affiliated shareholder in final satisfaction of a $253,974 advance
made to the Company. The shares were valued at $0.036 per share.





On April
13, 2006, the Company issued 50,000 shares of common stock, par value $0.001 per
share, to a consultant for services performed. The shares were valued at $0.26
per share.





On May
26, 2006, the Company issued 50,000 shares of common stock, par value $0.001 per
share, to a consultant for services performed. The shares were valued at $0.17
per share.





During
September 2006, the Company converted notes receivable and accrued interest due
from Positron Corporation into 762,358 shares of Positron Corporation Series B
Preferred Stock, par value $1.00.  The Company subsequently converted
40,000 shares of Positron Series B Preferred Stock into 4,000,000 shares of
Positron Corporation common stock, par value $0.01.





See
accompanying notes.





6
 Table of Contents


FORM 10-Q/A
                SEPTEMBER 30,
  2007


IMAGINMOLECULAR CORPORATION AND SUBSIDIARIES


SELECTED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS








NOTE
1. BUSINESS ORGANIZATION





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





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




Positron
Acquisition Corp.





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





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





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





Imagin
Nuclear Partners Corporation





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





7
 Table of Contents


FORM 10-Q/A
                SEPTEMBER 30,
  2007
 In May
2007, INP and BIMC executed a new lease agreement whereby BIMC leases PET
scanning cameras and other related radiologic equipment from INP for the purpose
of operating a PET Lab at its site.  The initial term of the agreement
is three years. (See NOTE
8) INP intends to joint venture with hospitals or physician groups to own
or operate nuclear medicine imaging centers throughout North America.  The
Company plans to offer a full spectrum of Positron Emission Tomography imaging
services as well as a robust coronary disease reversal and prevention program.
The Company intends to partner with cardiology groups who are less invasively
oriented and desire program differentiation from competition.  The Company
believes that their methodology to detection and management is more cost
effective than traditional methods currently employed.




NOTE
2.  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, 2006.  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 $2,444,916 as of September 30,
2007.  The Company’s ability to continue as a going concern is
dependent upon the success of INP and the PET scanning at the Beth Israel
Medical Center as well as completion of additional financing
arrangements.  Management plans to raise equity capital to finance the
operating and capital requirements of the Company.  While the Company
is expending its best efforts to achieve the above plans, 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.




NOTE
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





Principles
of Consolidation and Nature of Operations





For the
periods ended September 30, 2007 and 2006, the financial statements include the
accounts and transactions of Imagin Molecular Corporation and its subsidiaries
Cipher Multimedia, Inc., Positron Acquisition Corp. and Imagin Nuclear Partners
Corporation. All Intercompany transactions and balances have been
eliminated.




Cash
and Cash Equivalents





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





8
 Table of Contents


FORM 10-Q/A
                SEPTEMBER 30,
  2007
 Income
Taxes





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





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




Revenue
recognition





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





Loss
Per Share





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





Use
of Estimates





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





New
Accounting Pronouncements





In
September 2006, the FASB issued Statement of Financial Accounting Standards No
157, "Fair Value Measurements". This statement defines fair value, establishes a
framework for measuring fair value under generally accepted accounting
principles, and expands disclosures about fair value measurements. The
statement will become effective in the fiscal first quarter of 2008 and the
Company will adopt the statement at that time. The Company believes that the
adoption of SFAS No 157 will not have a material effect on its results of
operations, cash flows or financial position.





9
 Table of Contents


FORM 10-Q/A
                SEPTEMBER 30,
  2007
 NOTE
5. CIPHER MULTIMEDIA INC. REORGANIZATION / DISCONTINUED
OPERATIONS





On
March 13, 2007, the Registrant reorganized its wholly-owned subsidiary Cipher
Multimedia, Inc., an Illinois corporation (“Cipher”) as a Nevada corporation via
merger with Cipher Multimedia, Inc., a Nevada corporation
(“Cipher-NV”).  In accordance with the Plan of Merger, each ten shares
of Cipher were exchanged for one share of Cipher-NV common
stock.  Also on March 13, 2007, the Registrant entered into employment
agreements on behalf of Cipher-NV with Julia Rzeppa as President and Chairman,
Corey Conn as Treasurer and Director and Domenic Hanzely as Vice President of
Product Development and Chief Technology officer.  Pursuant to the
terms of the employment agreements, each received 500,000 shares of Cipher
common stock as compensation.  Mr. Conn is also the Registrant’s Chief
Financial Officer.  On March 14, 2007, Cipher settled obligations with
its two largest creditors by retiring $148,973 in obligations to Patrick Rooney,
the Registrant’s former chairman and Chief Executive officer and Cipher-NV'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. As of
November 6, 2008 the spin off has not been completed.





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 nine months ended September 30,
2007 continue to be consolidated in the Registrant’s financial statements and
are reflected as discontinued operations.





Summarized
financial information for discontinued operations for the three and nine months
ended September 30, 2007 and 2006 were as follows:





Three Months Ended
                
                
                Nine Months EndedSept. 30, 2007
                
                
                Sept. 30, 2006
                
                
                Sept. 30, 2007
                
                
                Sept. 30, 2006Operating
      expenses:
                
                $
                7,995
                
                
                $
                9,076
                
                
                $
                28,915
                
                
                $
                50,170Other
      expenses (income):
                
                
                (216
                )
                
                
                (336
                )
                
                
                (11423
                )
                
                
                23,524Loss
      before majority interest
                
                
                7,779
                
                
                
                8,740
                
                
                
                17,492
                
                
                
                73,694Majority
      interest in loss
                
                
                10,369
                
                
                
                --
                
                
                
                2,254
                
                
                
                --Net
      loss
                
                $
                18,148
                
                
                $
                8,740
                
                
                $
                19,746
                
                
                $
                73,694




Sept. 30, 2007Total
      assets
                      
                      $
                      218Total
      liabilities
                      
                      
                      233,481Minority
      interest
                      
                      
                      2,254Stockholders’
      deficit
                      
                      
                      (235,517
                      )






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





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





10
 Table of Contents


FORM 10-Q/A
                SEPTEMBER 30,
  2007
 In a
second stage of the financing IDC agreed to purchase additional secured
convertible promissory notes in the aggregate principal amount of $1,300,000.
These notes were to be purchased over a six and a half month period, commencing
July 15, 2004. These notes are due and payable on May 21, 2006, the due date was
subsequently extended to September 30, 2006. These notes are initially
convertible into new shares of Series D Preferred Stock that, in turn is
convertible into an aggregate of 52,000,000 shares of Positron common stock. As
of 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, 2007, the Company owned approximately 4% 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 by the Company to Positron beginning in July 2007 and totaling
$740,000 at September 30, 2007. The advances were subsequently converted to a
note receivable that is collateralized by Positron common stock.  In
addition to the financing, on January 2, 2008 Corey Conn, who serves as Chief
Financial Officer for both companies, was elected to the Positron Board of
Directors. The two companies share one other common director; however Positron
has four directors that are not on the Company’s Board.





Adoption
of the equity method of accounting for the Positron securities has resulted in
the restatement of the Company’s financial statements previously filed in
its September 30, 2007 quarterly report on Form 10-QSB.  Based on its
percentage of ownership of Positron common stock, for the three and nine months
ended September 30, 2007,  the Company recorded equity in the losses
of Positron of $61,531 reducing the carrying value of the Positron securities to
$1,526,535 at September 30, 2007.  At September 30, 2007, the
Company’s 4,000,000 shares of Positron’s common stock had an aggregate market
value of $280,000.





The
following table summarizes the impact of the restatement for the three and nine
months ended September 30, 2007:





Three Months Ended Sept.
      30,2007
                
                
                Nine Months Ended Sept.
      30,2007As
      Reported
                
                
                Adjustment
                
                
                Restated
                
                
                As
      Reported
                
                
                Adjustment
                
                
                RestatedSept
      30, 2007
                
                
                
                
                
                Sept
      30, 2007
                
                
                Sept
      30, 2007
                
                
                
                
                
                Sept
      30, 2007Net
      loss
                
                $
                (105,005
                )
                
                $
                (61,531
                )
                
                $
                (166,536
                )
                
                $
                (424,662
                )
                
                $
                (61,531
                )
                
                $
                (486,193
                )Basic
      and diluted loss per share
                
                $
                (0.0012
                )
                
                $
                (0.0007
                )
                
                $
                (0.0019
                )
                
                $
                (0.0055
                )
                
                $
                (0.0009
                )
                
                $
                (0.0064
                )Balance
      Sheet As Of September 30, 2007
                
                
                As
      Reported
                
                
                Adjustment
                
                
                RestatedTotal
      Assets
                
                
                $
                2,677,536
                
                
                $
                (61,531
                )
                
                $
                2,616,005Accumulated
      deficit
                
                
                $
                (2,383,385
                )
                
                $
                (61,531
                )
                
                $
                (2,444,916
                )





11
 Table of Contents


FORM 10-Q/A
                SEPTEMBER 30,
  2007
 Summarized
financial information for Positron for the three and nine months ended September
30, 2007 follows:





Three Months EndedSeptember 30, 2007
                          
                          
                          Nine Months Ended September 30,
      2007Revenues
                          
                          $
                          570,000
                          
                          
                          $
                          1,665,000Loss
      from operations
                          
                          
                          (1,240,000
                          )
                          
                          
                          (3,387,000
                          )Net
      loss
                          
                          
                          (1,504.000
                          )
                          
                          
                          (3,730,000
                          )Loss
      per share
                          
                          $
                          (0.02
                          )
                          
                          $
                          (0.04
                          )Weighted
      average shares outstanding
                          
                          
                          97,776,000
                          
                          
                          
                          93,624,000




Sept. 30, 2007Current
      assets
                
                $
                2,504,000Total
      assets
                
                
                5,407,000Current
      liabilities
                
                
                3,859,000Total
      liabilities
                
                
                6,392,000Stockholders’
      deficit
                
                
                (985,000
                )Common
      shares outstanding
                
                
                102,553,302








The
underlying common shares related to anti-dilutive securities not included in
Positron’s net loss per share calculation as of September 30, 2007 were as
follows:








Convertible
      Series A Preferred Stock
                
                
                464,000Convertible
      Series B Preferred Stock
                
                
                587,611,000Convertible
      Series G Preferred Stock
                
                
                11,139,000Stock
      Warrants
                
                
                58,374,000Stock
      Options
                
                
                19,500,000677,088,000







NOTE
7.  PROPERTY AND EQUIPMENT





Property
and equipment at September 30, 2007 and December 31, 2006 consisted of the
following:




Sept.
      30, 2007
                
                
                Dec.
      31, 2006Machinery
      and equipment
                
                $
                234,760
                
                
                $
                234,760Computers
      and software
                
                
                9,442
                
                
                
                9,442Subtotal
                
                
                244,202
                
                
                
                244,202Less:
      accumulated depreciation
                
                
                (28,854
                )
                
                
                (9,536
                )Total
                
                $
                215,348
                
                
                $
                234,666




NOTE
8.  NOTES PAYABLE





On
September 11, 2006, the Company issued a 12% secured promissory note to Cherry
Creek Capital Partners (“Cherry Creek”), an unrelated party, in the amount of
$300,000.  Pursuant to the terms of the note, commencing on October 1,
2006, 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, 2007 the principal balance of the promissory note is $270,935, of which
$116,450 is included in current liabilities.





As a
condition of the promissory note, on September 11, 2006 the Company and Cherry
Creek entered into an Assignment of Economic Interests whereby the Company shall
be obligated to pay Cherry Creek, on a quarterly basis, an amount equal to 5% of
operating income (as defined in the agreement), and upon the occurrence of a
liquidity event, a payment in the amount of 5% of the net proceeds of such
transaction. At September 30, 2007, no amounts had been recorded for these
items.





12
 Table of Contents


FORM 10-Q/A
                SEPTEMBER 30,
  2007
 NOTE
9. EQUIPMENT LEASE AGREEMENT





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





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





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





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





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





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





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




NOTE
10.  RELATED PARTY TRANSACTIONS





In
September 2006, INP purchased from Positron, a refurbished HZL Positron Emission
Tomography (“PET”) Imaging System.  The machine is being used at the
cardiac imaging center located in Beth Israel Medical Center in New York City.
The total cost of the machine, which includes sales tax and installation was
$234,760. The Company also executed a service and maintenance contract with
Positron for the machine. For the three and nine months ended September 30,
2007, Positron billed the Company $30,000 and $40,000, respectively under the
service contract.





Advances
from and payables to affiliates at September 30, 2007 and December 31, 2006
consisted of the following:





September
      30, 2007
                
                
                December
      31, 2006Positron
      Corporation and Subsidiaries
                
                $
                284,283
                
                
                $
                185,385





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





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





During
the nine months ended September 30, 2007, the Company advanced funds to Positron
Corporation.  At September 30, 2007 the outstanding amount of these
advances totaled $740,000.





13
 Table of Contents


FORM 10-Q/A
                SEPTEMBER 30,
  2007
 NOTE
11. STOCKHOLDERS' EQUITY





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





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





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





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





On July
24, 2007, the Company consummated a Securities Purchase and Subscription
Agreement with Solaris. Solaris acquired 500,000 shares of the Registrant's
Series A Convertible Preferred Stock for $200,000.  The preferred
shares are convertible into a total of 10,000,000 shares of Imagin common stock.
The Company has authorized the issuance of 500,000 shares of Series A
Convertible Preferred Stock, par value $0.001 per share ("Series A
Preferred Stock") Each share of the Series A Preferred Stock is convertible
into 20 shares of Common Stock. Holders of the Series A Preferred stock may vote
on an as if converted basis on any matter requiring shareholder vote. The Series
A Preferred Stock is senior to the Company's common stock in liquidation.





On August
28, 2007, the Company consummated Securities Purchase and Subscription
Agreements with Solaris. Solaris acquired 500,000 shares of the Registrant's
Series A Convertible Preferred Stock for $200,000.  The preferred
shares are convertible into a total of 10,000,000 shares of Imagin common stock.
The Company has authorized the issuance of 500,000 shares of Series A
Convertible Preferred Stock, par value $0.001 per share ("Series A
Preferred Stock") Each share of the Series A Preferred Stock is convertible
into 20 shares of Common Stock. Holders of the Series A Preferred stock may vote
on an as if converted basis on any matter requiring shareholder vote. The Series
A Preferred Stock is senior to the Company's common stock in
liquidation.




NOTE
12. STOCK OPTION PLAN





On May
14, 2007, the Company’s Board of Directors (the “Board”) adopted the 2007 Stock
Option Plan (the “Plan”).  The Plan is administered by the Board and
provides for grants of qualified and nonqualified stock options to directors,
officers, employees and consultants.  The Plan authorizes the Board to
determine the terms of each award granted under the Plan, including number of
shares, exercise price, term, vesting and exercisability.  A total of
5,000,000 shares of the Company’s common stock have been authorized for issuance
under the Plan.  No shares have been granted as of September 30,
2007.






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




Operations of Imagin Nuclear
Partners




Results
for the three and nine months ended September 30, 2007 and 2006 include the
operations of the Company’s wholly-owned subsidiary Imagin Nuclear Partners
Corporation (“INP”).  In 2006 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”.)





14
 Table of Contents


FORM 10-Q/A
                SEPTEMBER 30,
  2007
 In
February 2007, operations at BIMC were temporarily suspended while the Company
and the hospital renegotiated the terms of their
agreement.  In June 2007, the parties executed a new lease
agreement that provides for minimum monthly lease payments to
INP.  Scans under the new agreement commenced in June
2007.





Reorganization of Cipher
Multimedia, Inc.





On
March 13, 2007, the Company reorganized its wholly-owned subsidiary Cipher
Multimedia, Inc., an Illinois corporation 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.  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’s common
stock, and retiring $35,750 in interest to a third-party in exchange for the
issuance of 1,787,500 shares of Cipher’s common stock. As of November 6, 2008
the spin off has not been completed.





The
results of Cipher-NV for the nine months ended September 30, 2007 are
consolidated in the Registrant’s financial statements and are reflected as
discontinued operations.





Comparison of the Results of
Operations for the Three Months ended September 30, 2007 and
2006





The
Company had net losses of $166,536 and $98,702 for the three months ended
September 30, 2007 and 2006, respectively.





Revenues
for the three months ended September 30, 2007 were $65,091 compared to $43,991
during the three months ended September 30, 2006.  The increase is due
in large part to the minimum 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. The Company
continues to use an estimate of 40% for scans billed but not reimbursable and
therefore net revenues recognized represent 60% of scans billed during the three
months ended September 30, 2007 and 2006.  To date reimbursements from
third party payers, including Medicare and Medicaid appear to be at
approximately 70%-75% of gross amounts billed.





The
Company had gross losses of $51,999 and $59,909 for the three months ended
September 30, 2007 and 2006, respectively.  For the three months ended
September 30, 2007, costs of revenues were $117,090 compared to $103,900 for the
three months ended September 30, 2006.  Costs of revenues for the
three months ended September 30, 2007 includes $30,000 of monthly maintenance
charges billed by Positron for service of the PET system at BIMC. The
maintenance contract was not executed until January 2007 and therefore no
maintenance expense was charged to costs of revenues for the three months ended
September 30, 2006.





Operating
expenses decreased to $25,206 from $47,160 for the three months ended September
30, 2007 and 2006, respectively. During the three months ended September 30,
2006 the Company accrued approximately $41,100 of administrative expenses at the
BIMC facility pursuant to the operating agreement between the hospital and the
Company.  Under the current agreement executed in May 2007, the
Company receives a fee per scan and is not obligated to pay any administrative
expenses to the hospital. Operating expenses for the three months ended
September 30, 2007 consist of professional fees, consulting services and medical
billing charges.





15
 Table of Contents


FORM 10-Q/A
                SEPTEMBER 30,
  2007
 Interest
income for the three months ended September 30, 2006 of $20,357 represented
accrued interest on a note receivable due to the Company’s wholly-owned
subsidiary, Positron Acquisition Corporation (“PAC”) from Positron Corporation,
an affiliate of the Company.  In September 2006, the note and all
accrued interest were converted into Positron Corporation preferred
stock.  Through June 30, 2007, the preferred stock was valued at the
previous carrying value of the note receivable and accrued interest at the date
of conversion.  During the current quarter the Company adopted the
equity method of accounting for its
investment in Positron Corporation.  For the three months ended
September 30, 2007, the Company recorded equity in the losses of Positron of
$61,531.





The
Company had no interest income for the three months ended September 30,
2007.  Interest expense on notes payable was $9,652 and $3,250 for the
three months ended September 30, 2007 and 2006, respectively.  The
2007 expense relates to accrued interest on the note payable to Cherry Creek
Capital Partners that was executed in September 2006.  The 2006
interest expense of $3,250 was interest accrued on a related party note that was
converted to equity as part of the Cipher reorganization in March
2007.




Comparison of the Results of
Operations for the Nine Months ended September 30, 2007 and
2006





The
Company had net losses of $424,662 and $917,742 for the nine months ended
September 30, 2007 and 2006, respectively.  Losses from continuing
operations were $407,170 and 844,048, respectively. The significantly larger
loss in 2006 is attributable in large part to higher operating
expenses.  Operating expenses for the nine months ended September 30,
2006 were $613,663 higher than the same period in 2007.





Revenues
for the nine months ended September 30, 2007 were $113,300 compared to $186,586
during the nine months ended September 30, 2006.  Operations at the
BIMC, where the Company generates all its revenue from PET scans were
temporarily suspended beginning in February 2007 pending the re-negotiation of
the contract between the Company and the hospital.  Scans at the
facility resumed in late June 2007.





Gross
loss of for the nine months ended September 30, 2007 was $101,718 compared to
$84,464 for the same period in 2006.  For the nine months ended
September 30, 2007 and 2006, costs of revenues were $215,018 and $271,050,
respectively.  The larger gross loss for the nine months ended
September 30, 2007 is attributed in large part to the low number of scans
performed during the period as a result of the temporary suspension of
scans.





Operating
expenses decreased to $277,561 for the nine months ended September 30, 2007 from
$891,224 for the same period in 2006. Professional fees for the nine months
ended September 30, 2007 were $103,058 compared to $763,000 for the same period
in 2006.  The entire 2006 expense for the nine months was the fair
value of common stock issued for services to consultants.  During the
nine months ended September 30, 2007, marketing, general and administrative
expenses were $174,503 compared to $128,224 for the nine months ended September
30, 2006.  The significant increase in 2007 is attributable primarily
to $80,000 of common stock issued for consulting services. The Company did not
issue any common stock for marketing or general and administrative services
during the nine months ended September 30, 2006.





Interest
income for the nine months ended September 30, 2006 of $145,218 represented
accrued interest on a note receivable due to the Company’s wholly-owned
subsidiary, Positron Acquisition Corporation (“PAC”) from Positron Corporation,
an affiliate of the Company.   In September 2006, the note and all
accrued interest were converted into Positron Corporation preferred
stock.  During the current quarter the Company adopted the equity
method of accounting for its
investment in Positron Corporation.  For the nine months ended
September 30, 2007, the Company recorded equity in the losses of Positron of
$61,531. The Company had no interest income for the nine months ended September
30, 2007.  Interest expense on notes payable was $25,637 and $13,578
for the nine months ended September 30, 2007 and 2006,
respectively.  The increase in interest expense results from the
interest on the note payable to Cherry Creek which the Company entered into in
September 2006.





Discontinued Operations of
Cipher Multimedia (“Cipher”)





Losses
from discontinued operations for the three months ended September 30, 2007 and
2006 were $7,779 and 8,740, respectively.  No revenue was recorded by
Cipher in either period and losses are attributable primarily to professional
fees and other general and administrative expenses.





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 Table of Contents


FORM 10-Q/A
                SEPTEMBER 30,
  2007
 Losses
from discontinued operations for the nine months ended September 30, 2007 and
2006 were $17,492 and 73,694, respectively.  No revenue was recorded
by Cipher in either period. The loss for the nine months ended September 30,
2007 is attributable in large part to $30,000 of compensation expense in the
form of Cipher common stock.  Expenses were offset in part by
reversals of previously accrued interest and professional fees.  The
loss for the period ended September 30, 2006 includes a settlement payment of
$25,000 to a former officer of Cipher.





After the
reorganization of Cipher Multimedia, Inc. in March 2007, the Company owns
approximately 25% of the reorganized subsidiary, Cipher-NV.  As a
result the Company has recorded majority interest in the losses of Cipher of
$10,369 and $2,254 for the three and nine months ended September 30, 2007,
respectively.








Financial
Condition





The
Company had cash and cash equivalents of $1,766 and accounts receivable of
$132,356 on September 30, 2007.  On the same date, accounts payable
and accrued liabilities outstanding totaled $256,885.  During the
three months ended September 30, 2007 the Company received reimbursements from
managed health care payers including Medicare and Medicaid in the amount of
$121,000.  These reimbursements are for PET scans that were performed
as far back as March 2006. After working through a number of procedural and
documentation issues with Medicare and Medicaid, the Company is hopeful that a
large majority of its previously billed scans will be reimbursed. Under its new
arrangement with Beth Israel Medical Center, INP is guaranteed a minimum monthly
number of PET scans which should ultimately improve profitability. The Company
continues to be dependent upon INP and PET scanning at Beth Israel as its sole
source of revenue.





The
Company is dependent upon the success of INP and the PET scanning at the Beth
Israel facility and/or additional funds through debtor equity financings to
resolve liquidity issues and allow it to continue to operate as a going
concern.





On
September 30, 2007 the Company had an accumulated deficit of $2,444,916 and
total equity of $1,579,116.




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.





17
 Table of Contents





FORM 10-Q/A
                SEPTEMBER 30,
  2007
 PART
II - OTHER INFORMATION






ITEM6. Exhibits





(a)  Exhibit
Index








Exhibit
                
                Description
      of the Exhibit31.1
                
                Chairman
      of the Board Certification of Periodic Financial Report Pursuant to
      Section 302 of the Sarbanes-Oxley Act of 2002.31.2
                
                Chief
      Financial Officer Certification of Periodic Financial Report Pursuant to
      Section 302 of the Sarbanes-Oxley Act of 2002.32.1
                
                Chairman
      of the Board Certification Pursuant to 18 U.S.C. Section 1350, as adopted
      pursuant to Section 906 of the Sarbanes-Oxley Act of
  2002.32.2
                
                Chief
      Financial Officer Certification Pursuant to 18 U.S.C. Section 1350, as
      adopted pursuant to Section 906 of the Sarbanes Oxley Act of
      2002.




18
 Table of Contents


FORM 10-Q/A
                SEPTEMBER 30,
  2007
 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.





Imagin
Molecular Corporation





Date:   November
      10, 2008
                  /s/ Joseph G. OliverioJoseph
      G. OliverioChief
      Executive Office, DirectorDate:   November
      10, 2008
                  /s/ Corey N. ConnCorey
      N. ConnChief
      Financial
Officer








EXHIBIT
INDEX








Exhibit
                
                Description
      of the Exhibit31.1
                
                Chairman
      of the Board Certification of Periodic Financial Report Pursuant to
      Section 302 of the Sarbanes-Oxley Act of 2002.*31.2
                
                Chief
      Financial Officer Certification of Periodic Financial Report Pursuant to
      Section 302 of the Sarbanes-Oxley Act of 2002.*32.1
                
                Chairman
      of the Board Certification Pursuant to 18 U.S.C. Section 1350, as adopted
      pursuant to Section 906 of the Sarbanes-Oxley Act of
  2002.#32.2
                
                Chief
      Financial Officer Certification Pursuant to 18 U.S.C. Section 1350, as
      adopted pursuant to Section 906 of the Sarbanes Oxley Act of
      2002.#





* Filed
herewith





#
Furnished herewith






19