U. S.
SECURITIES AND EXCHANGE
 COMMISSION
 Washington,
D.C. 20549
 
 FORM
10Q-SB
 
 (Mark
One)
 
 (x)
Quarterly Report under section 13 or 15(d) of the Securities Exchange Act of
1934 for the quarterly period ended June 30, 2005.
 
 ( )
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**
 (Formerly
Known As)
 
 Cipher
Holding Corporation
 (Name of
small business in its charter)
 
 Delaware
    13-4099008(State
      or other Jurisdiction of Incorporation)
    (IRS
      Employer Identification No.)
 
 3801 N.
Washington St. Oak Brook, IL 60523
 (Address
of Principal executive Offices including Zip Code)
 
 (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 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 [ ]
 
 State the
number of shares outstanding of each of the issuer's classes of common equity,
as of the latest practicable date:
 
 Shares of
Common Stock outstanding at August 02, 2005: 49,430,311 shares
 
 Documents
incorporated by reference: None
 
 Transitional
Small Business Disclosure Format (check one): Yes [ X ] No [ ]
 
  
  
 
 
 **IMAGIN
      MOLECULAR CORPORATION**(Formerly
      known as)Cipher
      Holding CorporationForm
      10-Qsb - Quarter Ended June 30, 2005INDEXPART
      I FINANCIAL INFORMATIONItem
      1.
    Financial
      Statements:Balance
      Sheets at June 30, 2005 (Unaudited) and December 31, 2004
      (Audited)Statements
      of Operations for the six Months ended June 30, 2005 and 2004, and Three
      Months ended June 30, 2005 and 2004 (Unaudited)Statements
      of Cash Flows for the Six Months Ended June 30, 2005 and 2004
      (Unaudited)Notes
      to Financial StatementsItem
      2.
    Management's
      Discussion and AnalysisItem
      3.
    Controls
      and ProceduresPART
      II
    OTHER
      INFORMATIONItem
      6.
    Exhibits
      and Reports on Form 8-KSIGNATURESEXHIBITSPART
      I - FINANCIAL INFORMATIONITEM
      1.
    FINANCIAL
      STATEMENTS
 
 PART 1 -
FINANCIAL INFORMATION
 
 ITEM 1.
FINANCIAL STATEMENTS
 
 The
unaudited balance sheet of the Registrant as of June 30, 2005, the audited
balance sheet at December 31, 2004, and the unaudited statements of operations
for the six months ended June 30, 2005 and 2004 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****(FORMERLY
      KNOWN AS)****Cipher
      Holding Corporation****(A
      Development Stage Company)****Consolidated
      Balance Sheets**June
      30, 2005
    
    December
      31, 2004(Unaudited)
    
    (Audited)ASSETSCash
    
    $
    4,834
    
    $
    1,625Total
      current assets
    
    
    4,834
    
    
    1,625Other
      assetsConvertible
      notes receivable
    
    
    1,304,000
    
    
    --Total
      Assets
    
    $
    1,308,844
    
    $
    1,625LIABILITIES
      AND STOCKHOLDERS’ DEFICITAccounts
      payable
    
    $
    33,252
    
    $
    21,196Notes
      payable to shareholders’
    
    
    250,974
    
    
    225,974Notes
      payable - Other
    
    
    180,000
    
    
    130,000Interest
      payable
    
    
    45,879
    
    
    33,279Total
      current liabilities
    
    
    510,105
    
    
    410,449Commitments
      and contingencies Stockholders' (Deficit):Preferred
      Stock, 5,000,000 share Authorized, no shares issued and
      Outstanding
    
    
    --
    
    
    --Common
      stock, $0.001 par value; 95,000,000 shares authorized and 49,430,311 and
      19,205,311 shares issued and outstanding, on June 30, 2005 and December
      31, 2004.
    
    
    49,631
    
    
    19,206Additional
      paid-in capital
    
    
    1,625,602
    
    
    342,233(Deficit)
      accumulated during the development stage
    
    
    (876,494
    )
    
    (770,263
    )Total
      Stockholders' (Deficit)
    
    
    798,739
    
    
    (408,824
    )Total
      Liabilities and Stockholders' (Deficit)
    
    $
    1,308,844
    
    $
    1,625The
      accompanying notes are an integral part of the financial
      statements.
 
  -1-
  
 
 
 
 **IMAGIN
      MOLECULAR CORPORATION****(FORMERLY
      KNOWN AS)****Cipher
      Holding Corporation****(A
      Development Stage Company)****Consolidated
      Statement Of Operations****For
      The Six Month Period Ended June 30, 2005 And 2004
    And****The
      Period From September 13, 2002 (Inception) To June 30,
      2005**InceptionSeptember
      13,June
      30,
    
    June
      30,
    
    2002
      to June 30,2005
    
    2004
    
    2005Revenues:
    
    $
    2,145
    
    $
    350
    
    $
    4,813Operating
      expenses:Professional
      fees
    
    
    79,957
    
    
    88,925
    
    
    604,487Research
      and development
    
    
    --
    
    
    --
    
    
    11,400Marketing,
      general, and administrative
    
    
    15,819
    
    
    10,596
    
    
    124,028Total
      operating expenses
    
    
    95,776
    
    
    99,521
    
    
    739,915Operating
      loss
    
    
    (
      93,631
    )
    
    (
      99,171
    )
    
    (735,102
    )Other
      (expenses):Interest
      expense
    
    
    (12,600
    )
    
    (6,760
    )
    
    (141,392
    )Total
      other expenses
    
    
    (
      12,000
    )
    
    (
      6,760
    )
    
    (141,392
    )Net
      loss
    
    
    (
      106,231
    )
    
    (
      105,931
    )
    
    (876,494
    )Provision
      for income taxes:Tax
      benefit of loss carryforward
    
    
    --
    
    
    --
    
    
    --Net
      loss
    
    $
    (106,231
    )
    $
    (105,931
    )
    $
    (876,494
    )Per
      share amounts:Loss
      per share
    
    
    (0.005
    )
    
    (0.005
    )
    
    (0.05
    )Weighted
      average common shares
    
    
    23,972,256
    
    
    18,262,259
    
    
    17,676,605The
      accompanying notes are an integral part of the financial
      statements.
 
 
  -2-
  
 
 
 **IMAGIN
      MOLECULAR CORPORATION****(FORMERLY
      KNOWN AS)****Cipher
      Holding Corporation****(A
      Development Stage Company)****Consolidated
      Statement Of Operations****For
      The Three Month Period Ended June 30, 2005 And
    2004**June
      30, 2005
    
    June
      30, 2004(Unaudited)
    
    (Unaudited)Revenues:
    
    $
    625
    
    $
    180Operating
      expenses:Professional
      fees
    
    
    36,073
    
    
    77,125Marketing,
      general, and administrative
    
    
    12,341
    
    
    5,507Total
      operating expenses
    
    
    48,414
    
    
    82,632Operating
      loss
    
    
    (
      47,789
    )
    
    (82,452
    )Other
      (expenses)Interest
      expense
    
    
    (
      6,387
    )
    
    (
      2,020
    )Total
      other expenses
    
    
    (
      6,387
    )
    
    (
      2,020
    )Net
      income(loss)
    
    
    (
      54,176
    )
    
    (
      84,472
    )Provision
      for income taxes:Tax
      benefit of loss carryforward
    
    
    --
    
    
    --Net
      income (loss)
    
    $
    (57,176
    )
    $
    (
      84,472
    )Per
      share amounts:Loss
      per share
    
    
    (0.002
    )
    
    (0.004
    )Weighted
      average common shares
    
    
    23,972,256
    
    
    18,878,478The
      accompanying notes are an integral part of the financial
      statements.
 
 
 
  -3-
  
 
 **IMAGIN
      MOLECULAR CORPORATION****(FORMERLY
      KNOWN AS)****Cipher
      Holding Corporation****(A
      Development Stage Company)****Consolidated
      Statement Of Cash Flows****For
      The Six Month Period Ended June 30, 2005 And 2004
    And****The
      Period From September 13, 2002 (Inception) To June 30,
      2005**Six
      months ended
    
    September
      13,June
      30,
    
    June
      30,
    
    2002
      to June 30,2005
    
    2004
    
    2005Cash
      Flows From Operating Activities:Net
      (loss)
    
    $
    (106,231
    )
    $
    (105,931
    )
    $
    (876,494
    )Adjustments
      to reconcile net (loss) to net cash (used) by operating
      activities:Shares
      issued for services
    
    
    1,569
    
    
    --
    
    
    1,569Changes
      in operating current assets and liabilities:Interest
      expense- beneficial conversion
    
    
    --
    
    
    --
    
    
    95,514Accounts
      payable
    
    
    12,047
    
    
    (
      1,455
    )
    
    33,243Interest
      payable
    
    
    12,599
    
    
    2,876
    
    
    45,878Net
      cash (used) by operating activities
    
    
    (80,016
    )
    
    (104,510
    )
    
    (700,290
    )Cash
      Flows From Financing Activities:Notes
      payable shareholders’
    
    
    25,000
    
    
    32,643
    
    
    327,825Issuance
      of notes
    
    
    50,000
    
    
    5,000
    
    
    103,148Issuance
      of common stock
    
    
    --
    
    
    --
    
    
    123,470Additional
      paid in capital
    
    
    8,225
    
    
    67,124
    
    
    150,681Net
      cash flows provided by (used in) Financing activities
    
    
    83,225
    
    
    104,767
    
    
    705,124Net
      increase in cash
    
    
    3,209
    
    
    257
    
    
    4,834Cash
      at beginning of period
    
    
    1,625
    
    
    230
    
    
    --Cash
      at end of period
    
    $
    4,834
    
    $
    487
    
    $
    4,834The
      accompanying notes are an integral part of the financial
      statements.
 
 
  -4-
  
 **IMAGIN
MOLECULAR CORPORATION**
 **(FORMERLY
KNOWN AS)**
 **Cipher
Holding Corporation**
 **(A
Development Stage Company)**
 **Consolidated
Statement of Cash Flows**
 **For
The Six Month Period Ended June 30, 2005 And 2004 And**
 **The
Period From September 13, 2002 (Inception) To June 30,
2005**
 (CONTINUED)
 
 SUPPLEMENTARY
SCHEDULE OF NONCASH TRANSACTIONS
 
 2004
 
 During
the year ended December 31, 2004, 1,552,500 shares were issued in exchange for
consulting services, which amounted to $76,973.
 
 The
amount of $10,746, the proceeds from issuance of the convertible debt, equal to
the difference between the fair value of the common stock and the conversion
price, was allocated to additional paid-in-capital. Because the debt is
convertible at the date of issuance, the debt discount of $10,746 was charged to
interest expense at that date.
 
 
 2005
 
 On March
28, 2005, the Company issued 200,000 shares of common stock, par value .001 to a
consultant for website development services performed. We computed the cost of
each share using the Black Scholes model with a risk free rate of 4% and a
volatility of 230%.
 
 On June
29, 2005, we purchased Positron Corp. convertible promissory notes from
Imagin Molecular Corp. for 30,000,000 restricted shares valued at $1,304,000.
The value was determined by the actual cash paid by Imagin for the notes.
 
 
 
 The
accompanying notes are an integral part of the financial
statements.
 
  -5-
  **IMAGIN
MOLECULAR CORPORATION**
 **(FORMERLY
KNOWN AS)**
 **Cipher
Holding Corporation**
 **(A
Development Stage Company)**
 **Notes
To Consolidated Financial Statements**
 
 
 **NOTE
1 - 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 we believe 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 our audited financial statements and
notes thereto included in its Form 10-KSB for the fiscal year ended December 31,
2004. Results of operations for the interim periods are not indicative of annual
results.
 
 On May
23, 2005 our Board of Directors and shareholders holdings 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 our 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, we issued 30,000,000 shares (the
“Exchange Shares”) of our common stock, par value $.001 per share (the “Common
Stock”) in exchange for convertible promissory notes made by Positron
Corporation, a publicly owned Texas corporation (“Positron”) (the “Positron
Notes”). 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
accordance with the terms of the Exchange and the issuance of the Exchange
Shares to IDC, IDC became the controlling shareholder of the Company being the
beneficial owner of 30,000,000 of the 49,430,311 issued and outstanding shares
of Common Stock upon consummation of the Exchange on June 29, 2005.
 
 Accordingly,
our Board of Directors subsequently resolved to change our principal operations
from multimedia encryption technology to positron emission tomography and
medical imaging.
  -6-
  
 **IMAGIN
MOLECULAR CORPORATION**
 **(FORMERLY
KNOWN AS)**
 **Cipher
Holding Corporation**
 **(A
Development Stage Company)**
 **Notes
To Consolidated Financial Statements**
 
 **NOTE
1 - BASIS OF PRESENTATION (continued)**
 
 SUMMARY
OF THE EXCHANGE
 
 Under the
terms of the Securities Exchange Agreement (the “Agreement”), we have exchanged
30,000,000 newly-issued shares of our Common Stock for the Positron Notes and
shares. Positron is a publicly owned Texas corporation which designs,
manufactures and markets medical imaging devices utilizing Positron Emission
Tomography (“PET”) technology. PET technology permits the measurement of the
biological processes of organs and tissues and produces anatomical and
structural issues. PET systems are used by physicians in the diagnosis and
management of heart disease and certain other neurological and oncological
illnesses. A copy of the Securities Exchange Agreement is attached to our Form
8-K Current Report filed with the Securities and Exchange Commission on April
20, 2005.
 
 The
Conversion Shares, when issued will represent approximately 60.6% of the issued
and outstanding shares of Positron Common Stock. We intend to retain the
Positron Notes and shares as an asset and we do not have any present intentions
to distribute the Positron Notes or the Conversion Shares  underlying
the  Positron
Notes as a dividend to our stockholders. While we will be a potential
controlling shareholder of Positron, notwithstanding the appointment or election
of officers and directors of our choosing, we will not directly control
Positron’s ongoing management nor be involved in its day-to-day operations.
 
 
 **NOTE
2. BUSINESS ORGANIZATION**
 
 Imagin
Molecular Corporation (Imagin) (FKA) Cipher Holding Corporation ("Cipher"), a
development stage company, was originally incorporated under the laws of the
State of Colorado on September 19, 1997 under the name Buffalo Capital VI, Ltd.
We commenced our operations upon incorporation and has been in the development
stage since then and have had very little revenue.
 
 Cipher
Holding Corporation was a digital distribution solution and marketing company
which secures and allows access to digital content through proprietary encoding,
encryption and authorization technology.
 
 Reverse
Merger
 
 On August
19, 2003, Momentum Holdings Corporation (the "Company", Midwest Merger
Management, LLC, a Kentucky limited liability Company and Brentwood Capital
Corp., a New York Corporation (collectively, the "Selling Shareholders"),
consummated the terms of a Stock Purchase Agreement (the "Agreement") with
Cipher Multimedia, Inc., a privately-owned, Illinois corporation ("Cipher").
Pursuant to the terms of the Agreement, Cipher purchased an aggregate of
1,900,000 shares of the 2,100,011 issued and outstanding shares of our common
Stock, par value $.001 per share, from the Selling shareholders for the purchase
price of $275,000 of cash and debt. Cipher delivered the sum of $150,000 by wire
transfer and executed promissory notes in the amount of $60,000 due on September
6, 2003 and a second promissory note in the amount of $65,000 due on December 5,
2003. These notes were paid in April 2004.
 
 Also,
under the terms of the exchange agreement, Momentum exchanged 14,052,800
newly-issued shares of common stock for all of the issued and outstanding shares
of common stock of Cipher, amounting to 100% of Cipher's outstanding capital
stock after the Exchange, leaving 16,152,811 shares of the Company's stock
issued and outstanding.
  -7-
  
 **IMAGIN
MOLECULAR CORPORATION**
 **(FORMERLY
KNOWN AS)**
 **Cipher
Holding Corporation**
 **(A
Development Stage Company)**
 **Notes
To Consolidated Financial Statements**
 
 
 **NOTE
2. BUSINESS ORGANIZATION (continued)**
 
 As a
result of the reverse merger agreement, Cipher acquired voting control of
Momentum on August 19, 2003 and became Momentum's majority
shareholder.
 
 Also on
August 19, 2003, Anthony R. Russo and Danny L. Pixler resigned as the sole
officers and directors of the Company. Patrick Rooney was elected as the
Company's President and Chairman of the Board of Directors and Corey Conn was
elected as the Company's Chief Financial Officer, Secretary and
Director.
 
 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 $879,622 as of June 30, 2005. The Company's ability to
continue as a going concern is dependent upon the successful completion of
additional financing arrangements and its ability to develop and sell its
services. Management plans to raise equity capital to finance the operating and
capital requirements of the Company. While we are expending our 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 our business plan
will be successful.
 
 **NOTE
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**
 
 Principles
of Consolidation and Nature of Operations
 
 For the
period ended June 30, 2005 and June 30, 2004 and from inception, September 13,
2002 to June 30, 2005, the financial statements only include the transactions of
Cipher Holding Corporation and not that of Momentum Holdings Corp.
 
 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.
 
 Loss Per
Share
 
 Loss per
share is computed based on the weighted average number of shares of common stock
outstanding. All per share data retroactively reflects the effect of the reverse
acquisition.
 
  -8-
  
 **IMAGIN
MOLECULAR CORPORATION**
 **(FORMERLY
KNOWN AS)**
 **Cipher
Holding Corporation**
 **(A
Development Stage Company)**
 **Notes
To Consolidated Financial Statements**
 
 **NOTE
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)**
 
 
 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
December 2004, the FASB issued SFAS No.123 (revised 2004), "Share-Based Payment"
("SFAS 123R"), which replaces SFAS No. 123, "Accounting for Stock-Based
Compensation" ("SFAS 123") and supercedes APB Opinion No. 25, "Accounting for
Stock Issued to Employees. "SFAS 123R requires that all share-based payments to
employees, including grants of employee stock options, be recognized in the
financial statements based on their fair values, beginning with the first
interim or annual period after June 15, 2005, with early adoption encouraged.
The pro forma disclosures previously permitted under SFAS 123, no longer will be
an alternative to financial statement recognition. We are required to adopt SFAS
123R in the third quarter of 2005. Under SFAS 123R, we must determine the
appropriate fair value model to be used in valuing share-based payments, the
amortization method for compensation cost and the transition method to be used
at the date of adoption. Upon adoption, we may choose from two transition
methods: the modified-prospective transition approach or the
modified-retroactive transition approach. Under the modified-prospective
transition approach we would be required to recognize compensation cost for
awards that were granted prior to, but not vested as of the date of adoption.
Prior periods remain unchanged and pro forma disclosures previously required by
SFAS No. 123 continue to be required. Under the modified-retrospective
transition method, we would be required to restate prior periods by recognizing
compensation cost in the amounts previously reported in the pro forma disclosure
under SFAS No. 123. Under this method, we would be permitted to apply this
presentation to all periods presented or to the start of the fiscal year in
which SFAS No. 123R is adopted. We would also be required to follow the same
guidelines as in the modified-prospective transition method for awards granted
subsequent to adoption and those that were granted and not yet vested. We are
currently evaluating the requirements of SFAS 123R and its impact on our
consolidated results of operations and earnings per share. We have not yet
determined the method of adoption or the effect of adopting SFAS 123R, and it
has not been determined whether the adoption will result in amounts similar to
the current pro forma disclosures under SFAS 123.
 
 In
December 2004, the FASB issued Staff Position ("FSP") No.109-2, "Accounting and
Disclosure Guidance for the Foreign Earnings Repatriation Provision within the
American Jobs Creation Act of 2004" ("FSP 109-2"). This position provides
guidance under FASB Statement No.109 ("SFAS 109"), "Accounting for Income
Taxes", with respect to recording the potential impact of the repatriation
provisions of the American Jobs Creation Act of 2004 (the "Jobs Act") on
enterprises' income tax expense and deferred tax liability. The Jobs Act was
enacted on October 22, 2004. FSP 109-2 states that an enterprise is allowed time
beyond the financial reporting period of enactment to evaluate the effect of the
Jobs Act on its plan for reinvestment or repatriation of foreign earnings for
purposes of applying SFAS 109.   The Company does not have accumulated
income earned abroad and The Act and the FSP No. 109-2 do not have any
effect on the Company's financial statements.
 
  -9-
  **IMAGIN
MOLECULAR CORPORATION**
 **(FORMERLY
KNOWN AS)**
 **Cipher
Holding Corporation**
 **(A
Development Stage Company)**
 **Notes
To Consolidated Financial Statements**
 
 
 **NOTE
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)**
 
 
 New
Accounting Pronouncements
 
 In
December 2004, the FASB issued SFAS No. 153, "Exchanges of Nonmonetary Assets -
An Amendment of APB Opinion No. 29, Accounting for Nonmonetary Transactions"
("SFAS 153"). SFAS 153 eliminates the exception from fair value measurement for
nonmonetary exchanges of similar productive assets in paragraph 21(b) of APB
Opinion No. 29, "Accounting for Nonmonetary Transactions," and replaces it with
an exception for exchanges that do not have commercial substance. SFAS 153
specifies that a nonmonetary exchange have commercial substance if the future
cash flows of the entity are expected to change significantly as a result of the
exchange. SFAS 153 is effective for fiscal periods beginning after June 15,
2005. We have considered SFAS 153 and have determined that this pronouncement is
not applicable to our current operations.
 
 In
November 2004, the FASB issued SFAS No. 151, "Inventory Costs - An Amendment of
ARB Opinion No. 43, Chapter 4" ("SFAS 151"). SFAS 151 amends the guidance in ARB
No. 43, Chapter 4, "Inventory Pricing," to clarify the accounting for abnormal
amounts of idle facility expense, freight, handling costs, and wasted material
(spoilage). Among other provisions, the new rule requires that items such as
idle facility expense, excessive spoilage, double freight, and rehandling costs
be recognized as current period charges regardless of whether they meet the
criterion of "so abnormal" as stated in ARB No. 43. Additionally, SFAS 151
requires that the allocation of fixed production overheads to the costs of
conversion be based on the normal capacity of the production facilities. SFAS
151 is effective for fiscal years beginning after June 15, 2005. We have
considered SFAS 151 and have determined that this pronouncement will not
materially impact our consolidated results of operations.
 
 In
November 2004, the FASB issued SFAS No. 152, "Accounting for Real Estate
Time-Sharing Transactions - An amendment of SFAS No. 66 and 67". This statement
amends SFAS No. 66, "Accounting for Sales of Real Estate, to reference the
financial accounting and reporting guidance for real estate time-sharing
transactions which is provided in AICPA Statement of Position ("SOP") 04-2,
"Accounting for Real Estate Time-Sharing Transactions." This statement also
amends SFAS No. 67, "Accounting for Costs and Initial Rental Operations of Real
Estate Projects," to state the guidance for (a) incidental costs and (b) costs
incurred to sell real estate projects does not apply to real estate time-sharing
transactions. The accounting for those costs is subject to guidance in SOP 04-2.
SFAS 152 is effective for fiscal years beginning after June 15, 2005. We have
considered SFAS 152 and have determined that this pronouncement is not
applicable to our current operations.
 
 In
December 2003, the FASB issued a revision to Statement No. 132, Employers'
Disclosures about Pensions and Other Postretirement Benefits. This revision
requires additional disclosures by the Company regarding its plan assets,
investment strategies, plan obligations and cash flows. We have considered
revised statement 132 and have determined that at this time this pronouncement
is not applicable to our current operations.
 
 
  -10-
  
 **IMAGIN
MOLECULAR CORPORATION**
 **(FORMERLY
KNOWN AS)**
 **Cipher
Holding Corporation**
 **(A
Development Stage Company)**
 **Notes
To Consolidated Financial Statements**
 
 **NOTE
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)**
 
 Restatement
of financial statements
 
 The
Company adopted recapitalization accounting for the reverse merger and restated
the financial statements and eliminated the recognition and immediate write off
of $275,000 of goodwill. The additional paid in capital was reduced by $275,000
for the liabilities incurred to acquire Momentum Holding
Corporation.
 
 Although
the restatement did not change the total stockholders' equity. The net loss,
accumulated deficit, and additional paid in capital were each reduced by
$275,000. The net loss per share before and after restatement are as
follows:
 
 From
      Inception toSeptember
      30,2004Net
      loss per shareAfter
      restatement
    $
      0.04Before
      restatement
    0.06
 
 
 **NOTE
3. IMAGIN DIAGNOSTIC CENTRES, INC. CONVERTIBLE NOTES
RECEIVABLE**
 
 On June
29, 2005 we purchased notes receivable for 30,000,000 restricted shares valued
at $1,304,000 below is a brief history of those notes. On May 26, 2004 and June
17, 2004, Positron Corporation (PC) 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 PC on the anniversary dates of these notes. The principal
and any unpaid interest must be paid 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
notes are initially convertible into new shares of Series C Preferred Stock
that, in turn are convertible into an aggregate of 35,000,000 shares of the PC’s
common stock. These notes are collateralized by all of the assets of PC. As of
June 30, 2005, principal of $700,000 has been advanced and remains outstanding
related to these notes. Full convertibility of the shares of Series C Preferred
Stock into common stock will require an amendment to the Articles of
Incorporation which must be approved by PC’s shareholders. PC has agreed to seek
such approval.
 
 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. 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 PC’s common stock. As
of June 30, 2005, principal of $1,208,500 has been advanced related to these
notes. On June 30, 2005, IDC converted $575,000 of these promissory notes into
shares of Series D Preferred Stock that, in turn were converted into 23,000,000
shares of the PC’s common stock. This conversion reduced the principal owed
under these promissory notes from $1,208,500 to $633,500. Full convertibility of
the shares of Series D Preferred Stock into common stock will require an
amendment to PC’s Articles of Incorporation which must be approved by the
shareholders. PC has agreed to seek such approval. We did not purchase the
notes($575,000) that were converted on June 30, 2005 for 23,000,000 shares of
Positron.
  -11-
  
 **IMAGIN
MOLECULAR CORPORATION**
 **(FORMERLY
KNOWN AS)**
 **Cipher
Holding Corporation**
 **(A
Development Stage Company)**
 **Notes
To Consolidated Financial Statements**
 
 **NOTE
3. IMAGIN DIAGNOSTIC CENTRES, INC. CONVERTIBLE NOTES RECEIVABLE
(Continued)**
 
 The
agreements with IDC provided for a $200,000 transaction fee payable to IDC upon
completion of the financing. Under terms of these agreements, this fee
obligation was to be reduced by an amount equal to $0.02 multiplied by the
number of warrants issued to IMAGIN. The agreements with IDC also provided for
the issuance of new warrants for the purchase of 4,575,000 shares of common
stock, which resulted in a $91,500 decrease in this fee obligation to $108,500.
This fee obligation is included in the principal of the notes payable to IDC at
June 30, 2005. The Company allocated the proceeds received from this convertible
debt with detachable warrants using the relative fair value of the individual
elements at the time of issuance. The notes payable to IDC contain an
unamortized discount balance of approximately $29,000 at June 30, 2005. The
discount of the debt is to be amortized over the term of the notes
payable.
 
 **NOTE
4. NOTES PAYABLE**
 
 Notes
Payable Other
 
 Imagin
Molecular Corporation (FKA) Cipher in consideration for the purchase of the
shares of Momentum paid the sellers $150,000 and issued two promissory notes in
the amounts of $60,000 and $65,000. The $60,000 and $65,000 notes bear 9%
interest and are payable within 30 and 120 days, respectively. The notes are
secured by the personal guarantees of Mr. Patrick Rooney a principal shareholder
and officer of the Company. These notes were repaid in April 2004.
 
 Related
Party Transaction
 
 On
December 28, 2004, the Registrant modified and amended a promissory note made by
Cipher in favor of John Rooney, brother of the Registrant’s President and
Chairman, in the principal amount of $130,000. Pursuant to the terms of the
amended note, we accepted the obligation for the payment of the note for the
release of the obligation of Cipher to repay principal and interest. The due
date of the note was extended to December 31, 2006, with interest at the rate of
10%. The note was amended to be convertible into 138,867 shares of our common
stock.
 
 On
December 29, 2004, John Rooney transferred the right to convert 800,000 shares
underlying the amended note to Solaris Opportunity Fund, L.P. (“Solaris”) in
satisfaction of unpaid obligations to Solaris in the aggregate amount of
$30,000. The Registrant’s President and Chairman, Patrick Rooney, is the
President of the general partner of Solaris.
 
 Notes
Payable Shareholder
 
 1. Our
principal shareholder loaned $150,000 to Cipher to provide for a part of the
acquisition cost of Momentum. The unsecured note is a demand note and is payable
no later than December 31, 2004. The interest on the note is the prime rate.
Since, the shareholder has loaned the corporation an additional
$23,000.
 
 2. The
principal shareholder has advanced funds to finance our working capital
requirements. The advances are made against a demand note that is payable by
December 31, 2004 interest on the amounts advanced is computed at prime rate.
The note may be converted to common stock at a rate of $0.01 per
share.
  -12-
  
 **IMAGIN
MOLECULAR CORPORATION**
 **(FORMERLY
KNOWN AS)**
 **Cipher
Holding Corporation**
 **(A
Development Stage Company)**
 **Notes
To Consolidated Financial Statements**
 
 **Item
2. Management's Discussion And Analysis Or Plan Of
Operation**
 
 For the
Six Months ended June 30, 2005 and 2004
 
 Results
of Operations
 
 We have
been at a development stage since the inception of our operations on September
13, 2002 and have had no substantial revenues to date.
 
 Total
operating expenses for 2Q5, 2Q4 and from inception were $95,776, $99,521 and
$739,915, respectively. Of the operating expenses professional fees were $79,957
(83%), $88,925 (89%) and $604,487 (81%), respectively. Marketing, general and
administrative expenses were $15,819 (16%), $10,596 (11%) and $124,028 (17%),
respectively. There were no research and development costs for 2Q5, 2Q4 and
$11,400 from inception to June 30, 2005, respectively.
 
 Based on
the limited operating background of the company and uncertainty of future cash
flows from operations, we determined that the goodwill resulting from the
acquisition of Momentum Holding Corp. was impaired and we wrote it off. The
write off contributed $275,000 or 31% of our total loss of $876,494, from
inception. The total loss from inception to June 30, 2005 was
$876,494.
 
 Financial
Condition
 
 We have
no substantial revenues or operating cash inflows since inception of operations.
The net cash used by operations were $80,016, $104,510, and $700,290, 2Q5, 2Q4
and from inception on September 13, 2002, respectively. We also expended
$150,000 for the acquisition of Momentum Holding Corp.
 
 The
principal source of cash inflows since inception were notes payable to a
shareholder, and issuance of common stock in the amounts of $130,000 and
$285,725, respectively.
 
 On June
30, 2005, we had a net working capital deficiency of $505,271 and total
stockholders' equity of $798,739.
  -13-
  **IMAGIN
MOLECULAR CORPORATION**
 **(FORMERLY
KNOWN AS)**
 **Cipher
Holding Corporation**
 **(A
Development Stage Company)**
 **Notes
To Consolidated Financial Statements**
 
 **Item
2. Management's Discussion And Analysis Or Plan Of Operation
(continued)**
 
 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. Future Plans Our Digital Rights Management
technology allows publishers and distributors to mass distribute, full-feature
video and/or software in a secure format. Secured digital content is delivered
in the form of CD/DVD's, PC disk drives, and Internet download. Once received,
the consumer has the ability to view a trailer of the video or demo the software
before the decision to purchase and unlock the full product for immediate use on
PC. The purchase and delivery transactions are immediate and facilitated through
our transaction processing service. Our technology protects publisher's content
from copyright infringement. This delivery of secure content enables publishers
and distributors to gain exposure through mass distribution, create and
immediately fulfill demand for digital product. We develop unique and cost
effective distribution campaigns for software and video content publishers. We
enable publisher's exposure and delivery to the end consumer on a massive scale.
Utilizing our technology and services, publishers produce multimedia CD's that
introduce, promote and sell digital content for immediate use on customer's PC.
Publishers can also offer an additional up sell opportunity to customers by
offering an additional feature on the unused portion of their own DVD's that
can
 be
purchased and immediately used by the consumer on their PC. Our distribution
solution focus is the development of campaigns that assist our clients with
greater reach and increased sales of products. Our services benefit the
following; major and independent film studios, software publishers, monthly
magazine and catalog companies, retail stores, Internet retailers, computer
manufacturers, Internet Service Providers and digital content direct marketing
companies. These companies represent substantial distribution opportunities of
CD's, DVD's, PC hard drives and Internet downloads per year.
 
 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 we believe 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.
 
 For the
Three Months Ended June 30, 2005 and 2004
 
 The
Company had total operating expenses of $48,414 for the three months ended June
30, 2005 as compared to $82,632 for the same period in 2004.
 
 Professional
fees accounted for $36,073 of operating expense in 2Q5 as compared to $77,125 in
2Q4.
 
 Our total
operating losses were $54,176 in 2Q5 as compared to $84,472 in
2Q4.
  -14-
  
 **IMAGIN
MOLECULAR CORPORATION**
 **(FORMERLY
KNOWN AS)**
 **Cipher
Holding Corporation**
 **(A
Development Stage Company)**
 **Notes
To Consolidated Financial Statements**
 
 **Item
3. Controls And Procedures**
 
 (a)
Evaluation of disclosure controls and procedures
 
 An
evaluation of the effectiveness of the design and operation of the Company's
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e) as of June 30, 2005 was carried out under the supervision and with
the participation of the Company's management, including the President and Chief
Executive Officer and the Chief Financial Officer ("the Certifying Officers").
Based on that evaluation, the Certifying Officers concluded that the Company's
disclosure controls and procedures are effective.
 
 Disclosure
controls and procedures are designed to ensure that information required to be
disclosed in our reports filed or submitted under the Securities Exchange Act is
recorded, processed, summarized and reported within the time periods specified
in the SEC's rules and forms. Disclosure controls and procedures include,
without limitation, controls and procedures designed to ensure that information
required to be disclosed in our reports filed or submitted under the Securities
Exchange Act is accumulated and communicated to management, including our
President and Chief Financial Officer, as appropriate, to allow timely decisions
and timely reporting regarding required disclosure.
 
 (b)
Changes in internal controls
 
 There was
no change to the Company's internal control over financial reporting during the
quarter ended June 30, 2005 that materially affected, or is reasonably likely to
materially affect, the Company's internal control over financial
reporting.
 
 
 **PART
II. OTHER INFORMATION**
 
 ITEM 1.
Legal Proceedings
 
 None
 
 ITEM 2.
Changes in Securities
 
 There
have been no changes in the instruments defining the rights or rights evidenced
by any class of registered securities.
 
 There
have been no dividends declared.
 
 ITEM 3.
Defaults Upon Senior Securities
 
 None
 
 ITEM 4.
Submission of Matters to Vote of Security Holders
 
 As set
forth within the Company’s Definitive Information Statement filed with the
Securities and Exchange Commission on June 8, 2005, a majority of the Company’s
Shareholders, upon written consent, approved the exchange with IDC, approved an
amendment to the Company’s Articles of Incorporation to change the name of the
Company to Imagin Molecular Corporation and adopted the Company’s Amended
By-Laws.
  -15-
   ITEM 5.
Other Information
 
 Related
Party
 
 Patrick
G. Rooney, Chairman of the Board of the Company is the son of Patrick Rooney,
Director of Corporate Development of IMAGIN Diagnostic Centres, Inc. Patrick G.
Rooney was appointed to the Board of Directors of Positron Corporation in
connection with the financing with IDC.
 
 Registration
of Director and Principal Officer
 
 On August
19, 2005, Patrick G. Rooney, the Company’s Chairman, President and Chief
Executive officer resigned from these positions. The position of chairman was
filled upon unanimous consent of the Board of directors by Neil Sy, who will
also serve as the Company’s President and Chief Financial Officer. Corey Conn, a
Director of the Company, vacated the position of Chief Financial officer and was
elected to serve as the Company’s Chief Executive Officer.
 
 Neil Sy,
37, Chairman, Chief Financial officer. Mr. Sy is engaged in capital raising
ventures including consumer medicine and real estate properties in Chicago,
Illinois and Las Vegas, Nevada. Prior thereto and from 1997 to 2003, Mr. Sy was
a member of the Chicago Board Options Exchange as a market maker. Prior thereto,
and from 1992 to 1997, Mr. Sy worked on the Chicago Board Options Exchange as a
trade manager. Mr. Sy received a Bachelor’s Degree in Business Administration
from Southern Illinois University.
 
 ITEM 6.
Exhibits and Reports on Form 8-K
 
 
 (a)
Exhibits
 
 Exhibit
31.1 and 31.2 - Certification pursuant to Section 302 of Sarbanes-Oxley Act of
2002.
 Exhibit
32.1 and 32.2 - Certification pursuant to Section 906 of Sarbanes-Oxley Act of
2002.
 
 (b)
Reports on Form 8-K
 
 Form 8-K
filed with the Commission on April 20, 2005 reporting the execution of the Share
Exchange Agreement with Imagin Diagnostic Centres, Inc.
 
 
  -16-
  
 
 **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 August 22, 2005.
 
 Cipher
Holding Corporation
 
 By: /s/
Patrick Rooney
 
 Patrick
Rooney
 Chairman
of the Board, President
  -17-
  
 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 August 22, 2005.
 
 Cipher
Holding Corporation
 
 By: /s/
Neil Sy
 
 Neil Sy
 Chairman
of the Board, President