Document:

ex10_1.htm

    
      
Confidential
      Information Memorandum
      
        

      

      
        

      

      
        

      

      
        IMAGING
          PET TECHNOLOGIES

      

      
        

      

      
        

      

      
        

      

      
        	
                Resale
                  Restrictions:

              	 	
                You
                  will be restricted from selling your securities for an indefinite
                  period.
                  See "Resale Restrictions" in separate
                  document.

              
	 	 	 
	
                Purchaser's
                  Rights:

              	 	
                You
                  have 2 business days to cancel your agreement to purchase these
                  securities. If there is a misrepresentation in this Memorandum,
                  you have
                  the right to sue either for damages or to cancel the agreement.
                  See
                  "Purchasers' Rights" in separate
                  document.

              

      

      
        

      

      
        No
          securities regulatory authority has assessed the merits of these securities
          or
          reviewed this Memorandum. Any representation to the contrary is an offence.
          This
          is a risky investment. See "Risk Factors" in
          separate document.

      

      
        

      

      
         

         

      

      
        	
                Confidential

              	
                March
                  23, 2006

              
	
                THIS
                  CIM HAS BEEN DELIVERED SUBJECT TO STRICT OBLIGATIONS OF
                  CONFIDENTIALITY

              

      

      
        
          
          

        

        
          Page
            1

          
            

          

        

        
          
          

        

      

      
        TABLE
          OF CONTENTS

      

      
        

      

      
        	
                1.

              	
                Separate
                  Document - Non- Disclosure Agreement

              	 
	 	 	 
	 	
                IPT
                  Subscription Form

              	 
	 	 	 
	
                2.

              	
                Risk
                  Acknowledgement

              	
                3

              
	 	 	 
	
                3.

              	
                Project
                  SPECT/PET- Introduction

              	
                4-6

              
	 	 	 
	
                4.

              	
                The
                  Plan -Summary

              	
                7-8

              
	 	 	 
	
                5.

              	
                Term
                  Sheet-$1.5 Million Debt Financing

              	
                9

              
	 	 	 
	
                6.

              	
                Term
                  Sheet-$2.5 Million Equity Funding

              	
                10-11

              
	 	 	 
	
                7.

              	
                Use
                  of Proceeds - Debt and Equity Offerings

              	
                12

              
	 	 	 
	
                8.

              	
                Exit
                  Strategy-Debt Offering

              	
                13-14

              
	 	 	 
	
                9.

              	
                Exit
                  Strategy- Equity Offering

              	
                15-16

              
	 	 	 
	
                10.

              	
                IPT
                  Funding - IPT ProForma Balance Sheet - Schedule D 

              	
                17

              
	 	 	 
	
                11.

              	
                Appendix
                  1 -

              	
                IS2
                  Financial Statements - Feb. 28, 2006.

              	 
	 	 	 	 
	
                12.

              	
                Appendix
                  2 -

              	
                IS2
                  Financial Statements - Dec 31, 2005.

              	 
	 	 	 	 
	
                13.

              	
                Appendix
                  3 -

              	
                Imaging
                  PET Technologies (IPT) Overview.

              	 
	 	 	 	 
	 	 	
                >Quantum
                  Molecular Technologies, Inc. (QMT)

              	 
	 	 	 	 
	
                14.

              	
                Appendix
                  4 -

              	
                IS2
                  Medical Systems Inc., Confidential Information Memorandum.

              	 
	 	 	 	 
	
                15.

              	
                Appendix
                  5 -

              	
                POSITRON
                  Corporation - Private Placement Offering Memorandum.

              	 

      

      

      
        
          	
                  
                    Separate
                      Documents:

                  

                
	 
	
                  1.

                	
                  Subscription
                    Agreements (where applicable)

                
	 	 	 	 
	
                  2.

                	
                  Copies
                    of "National and Ontario Prospectus and Registration
                    Exemptions"

                
	 	
                  (i)

                	
                  National
                    Instrument 45-106

                
	 	
                  (ii)

                	
                  OSC
                    Rule 45-501

                
	 	 	
                  
                    (where
                      applicable and as requested)

                  

                
	 
	
                  3.

                	
                  Risk
                    Factors (as requested)

                
	 

        

      

       

      
        	
                Confidential

              	
                March
                  23, 2006

              
	
                THIS
                  CIM HAS BEEN DELIVERED SUBJECT TO STRICT OBLIGATIONS OF
                  CONFIDENTIALITY

              

      

      
        
          
          

        

        
          Page
            2

          
            

          

        

        
          
          

        

      

      
        CONFIDENTIAL
          INFORMATION MEMORANDUM

      

      
        

      

      
        RE:   RISK
          ACKNOWLEDGEMENT

      

      
        

      

      
        

      

      
        

      

      
        This
          Confidential Information Memorandum ("CIM") has been prepared on behalf
          of
          imaging PET Technologies (IPT) and is solely for use by parties interested
          in a
          transaction with IPT. This CIM under no circumstances is to be construed
          as an
          offering of securities except as an exemption exists under the securities
          laws
          in all Canadian provincial jurisdictions relating to "accredited investors".
          No
          parties will evaluate or pursue the transactions herein discussed unless
          they
          have attested in writing that they in fact qualify as an "accredited investor"
          as defined in "National and Ontario Prospectus and Registration Exemptions
          of
          Rules 45-106 and/or OSC Rule 45-501. Unless otherwise stated, all amounts
          are in
          Canadian dollars.

      

      
        

      

      
        The
          information contained herein has been prepared to assist interested parties
          in
          making their own evaluation of IPT and does not purport to contain all
          of the
          information that a prospective purchaser or investor may desire. Prospective
          investors should conduct their own investigation and analysis of IPT and
          the
          information contained in this CIM. This memorandum includes certain statements,
          estimates and projections with respect to IPT's anticipated performance.
          Such
          statements, estimates and projections reflect various assumptions by management
          concerning anticipated results, which may or may not prove to be correct.
          No
          representations or warranties are made or implied by IPT as to the accuracy
          of
          such statements, estimates, projections and assumptions with respect to
          the
          information in the CIM. Parties who wish to pursue this matter further
          will be
          provided with such other information as mutually agreed. Any eventual agreement
          will contain such representations and warranties as agreed to between the
          parties.

      

      
        

      

      
        By
          accepting the CIM, the recipient acknowledges and agrees that: (1) all
          of the
          information contained herein or made available in connection with a further
          investigation of IPT is confidential, will be treated in a confidential
          manner,
          and the recipient will not, directly or indirectly, disclose or permit
          its
          agents or affiliates to disclose any of such information, (2) no personnel
          of
          IPT and no clients, customers, suppliers or other parties having dealings
          with
          IPT are to be contacted directly or indirectly under any circumstances
          by or on
          behalf of the recipient without the prior written consent of IPT, (3) IPT
          makes
          no representation or warranty as to the accuracy of the CIM and neither
          shall
          have any liability for any representation (express or implied) contained
          in, or
          for any omissions from, the CIM or any other written or oral communications
          transmitted to the recipient in the course of its evaluation of IPT on
          IS2, and
          (4) if the recipient does not wish to pursue this matter or upon our request,
          the recipient will return the CIM to IPT as soon as practicable, together
          with
          any other materials relating to IPT which the recipient may have received
          from
          IPT.

      

      
        
All
          communications relating to the CIM should be directed to:

      

      
                                 
          Please call Patrick Rooney, principal
          at:       Bus:   (905)
          712-9500 X 223 and/or

      

      
                                
          Cell:   (416)274-7569

      

      
        

      

      
        	
                Confidential

              	
                March
                  23, 2006

              
	
                THIS
                  CIM HAS BEEN DELIVERED SUBJECT TO STRICT OBLIGATIONS OF
                  CONFIDENTIALITY

              

      

      
        
          
          

        

        
          Page
            3

          
            

          

        

        
          
          

        

      

      
        March
          24/2006

      

      
        PROJECT
          SPECT/PET:

      

      
        PROJECT
          TO FINANCE MOLEUCLAR IMAGING VENTURE

      

      
        

      

      
        (This
          memo is written as an introduction only to the Project SPECT/CT
          Transaction)

      

      
        

      

      
        	
                Overview

              

      

      
        

      

      
        State-of-the-art
          Molecular Imaging in medicine is synonymous with Positron Emission Tomography,
          PET Scanning.  PET Scan technology is essential in the diagnosis, staging
          and treatment planning for critical illness (C.I.). SPECT stands for "single
          photon emission computed tomography".  SPECT is often called a "Poor man's
          PET".

      

      
        

      

      
        Critical
          illness kills 60% of the world's population.  Critical illness is defined
          as cancer, cardiac and neurological diseases.  In order to effectively find
          and treat these critical illness diseases, we must view the body at the
          cellular, molecular or functional level.  Only PET and to a limited degree
          SPECT technologies allow that type of specific analysis.

      

      
        

      

      
        MRI's,
          CAT and/or CT Scans ail look at the anatomy. The latter will image a tumor
          but
          only a PET will tell an MD what's going on and at what location disease
          is
          present inside the tumor.  Biopsies are invasive and can be dangerous, PET
          is non­-invasive and has no side effects.

      

      
        

      

      
        There
          were 1.4 million PET Scans performed in the USA in 2005, of which 100,000
          were
          Cardiac PET Scans. The lion's share were cancer-related PET Scans. The
          standard
          of care for the diagnosis and treatment planning for cardiac disease is
          SPECT.
          There were over 10 million SPECT procedures performed in the USA in 2005.
          A
          SPECT scanner will sell for between $200,000 and $500,000, while a PET
          and/or
          PET/CT scanner will sell for between $900,000 and $3.5
          million.

      

      
        

      

      
        	
                The
                  Opportunity

              

      

      
        

      

      
        SPECT
          is
          in virtually every hospital that treats heart patients and in many large
          cardiology practices. Cardiac PET, although the gold standard in working
          to
          prevent and reverse coronary artery disease is only in the top 50 cardiac
          hospitals in the USA and Japan. PET is not approved for reimbursement in
          Canada,
          except in Quebec where PET Scans for some cancers only have just been
          approved.

      

      
        

      

      
        With
          this
          short overview of the PET and SPECT markets, we have only scraped the surface
          in
          defining the opportunity. CTI (CTMI:NASDAQ), shipped its first breakthrough
          product, the PET/CT scanner in 2001.

      

      
        

      

      
        	
                Confidential

              	
                March
                  23, 2006

              
	
                THIS
                  CIM HAS BEEN DELIVERED SUBJECT TO STRICT OBLIGATIONS OF
                  CONFIDENTIALITY

              

      

      
        
          
          

        

        
          Page
            4

          
            

          

        

        
          
          

        

      

      
        CTI
          was
          not much more than a one product company, yet, it was sold in 2005 on a
          market
          capitalization of $2 billion to Siemens.

      

      
        

      

      
        Imaging
          PET Technologies (IPT), a joint venture company owned 49.9% by Quantum
          Molecular
          Pharmaceuticals and 50.1% by Positron Corporation, plans to complete the
          acquisition of IS2 Medical Systems, Inc., as the cornerstone of developing
          a
          breakthrough PET product which we evaluate as potentially the size of the
          PET/CT
          opportunity.

      

      
        

      

      
        We
          are
          seeking to raise (CDN) $4 million in a unique vehicle that we call imaging
          PET
          Technologies (IPT). IPT will acquire ail of the net assets of IS2 at a
          price
          equal to 10% of the invested capital to date into IS2 by Canadian venture
          funds.
          We will then introduce leading-edge, innovative, PET technology into IPT
          designed to integrate our new PET technology with the SPECT technology
          of IS2.
          The marriage of the two technologies and the planned collaboration between
          the
          two Research and Development teams could help create a technology breakthrough
          in PET which could change the face of molecular imaging and therefore the
          face
          and future of critical diseases, that is, cancer, cardiac, and neurological
          diseases.

      

      
        

      

      
        	
                The
                  Financial Transaction

              

      

      
        

      

      
        We
          are
          looking for two tranches, $1,500,000 of secured debt which will be used
          to buy
          all of the tangible and intangible assets of IS2 and $2.5 million in common
          stock equity which will be infused into the newly-formed acquisition corporation
          called "Imaging PET Technologies" (IPT). The secured debt will have the
          security
          of inventory, receivables and other tangible and intangible assets of IPT.
          Both
          tranches will receive significant warrant positions to acquire POSITRON
          Corporation common shares (POSC.OB Bulletin Board). The POSC common shares
          under
          option will be acquired by IPT with the proceeds of the IPT equity financing.
          Furthermore, the $2.5 million equity will be convertible into 5 million
          shares
          of IPT or 50 million shares of Positron, at the holders option. If our
          game plan
          is executed effectively, there is the possibility of a many fold return
          on
          capital.

      

      
        

      

      
        	
                Conclusion

              

      

      
        

      

      
        The
          understanding of PET technology by an investor in the medical products
          and
          services market segment is essential when evaluating all investments since
          measuring disease at the molecular level is the Holy Grail. The understanding
          of
          PET, if a family member develops or is suspected of developing a critical
          illness (60% of us will die of one) is more important than the
          first.

      

      
        

      

      
        We
          would
          like to talk to investors interested in this investment suggestion. We
          will make
          the definitive statement that it will be rewarding either financially or
          in your
          personal life.

      

      
        

      

      
        	
                Confidential

              	
                March
                  23, 2006

              
	
                THIS
                  CIM HAS BEEN DELIVERED SUBJECT TO STRICT OBLIGATIONS OF
                  CONFIDENTIALITY

              

      

      
        
          
          

        

        
          Page
            5

          
            

          

        

        
          
          

        

      

      
        Please
          call Patrick Rooney, principal at:     Bus:  (905)
          712-9500 X 223 and/or

         
          Cell:  (416) 274-7569

      

      
        

      

      
            Associated
          websites:

      

      
        

      

      
        www.tmagincentres.com
          

      

      
        

      

      
        www.IS2medical.com
          

      

      
        

      

      
        www.positron.com
          

      

      
        

      

      
        www.careimaging.com
          

      

      
        

      

      
        www.petscan.ca

      

      
        

      

      
        

      

      
        

      

      
        	
                Confidential

              	
                March
                  23, 2006

              
	
                THIS
                  CIM HAS BEEN DELIVERED SUBJECT TO STRICT OBLIGATIONS OF
                  CONFIDENTIALITY

              

      

      
        
          
          

        

        
          Page
            6

          
            

          

        

        
          
          

        

      

      
        THE
          PLAN
– SUMMARY

      

      
        

      

      
        THE
          PLAN:

      

      
        

      

      
        
          	
                  •

                	
                  To
                    raise $2,500,000 of new equity and $1,500,000 of new secured
                    debt for
                    IPT.

                

        

      

      
        

      

      
        
          	
                  •

                	
                  To
                    acquire 100% of the existing debt of IS2 from the current 1S2
                    secured
                    lenders for (CDN) $1,160,000. To move to foreclose on the assets
                    of
                    IS2.

                

        

      

      
        

      

      
        
          	
                  •

                	
                  To
                    develop state-of-the-art PET technology in IPT through a 71%
                    owned
                    subsidiary called Quantum Molecular Technologies, Inc.
                    (QMT)

                

        

      

      
        

      

      
        FOLLOW-ON
          CAPITAL RAISING:

      

      
        

      

      
        
          	
                  •

                	
                  To
                    raise up to $10,000,000 for IPT at a projected price of $1.00
                    per
                    share.

                

        

      

      
        

      

      
        HIGHLIGHTS
          OF IS2:

      

      
        

      

      
        
          	
                  •

                	
                  $14
                    million of equity has been infused into IS2 to develop state-of-the-art,
                    efficient SPECT cameras used mainly for cardiac and cancer
                    diagnosis.

                

        

      

      
        

      

      
        
          	
                  •

                	
                  Balance
                    Sheet of IPT (post acquisition) will have no debt with the exception
                    of
                    the $1.5 million in acquisition debt and positive
                    net worth.

                

        

      

      
        

      

      
        
          	
                  •

                	
                  2005
                    year was profitable for IS2 on an EBITDA basis before R & D
                    expenditures.

                

        

      

      
        

      

      
        
          	
                  •

                	
                  The
                    cardiac market has anannual cost of $400 billion in the USA versus
                    $200 billion for cancer.

                

        

      

      
        

      

      
        
          	
                  •

                	
                  There
                    were over 10 million SPECT scans mostly for cardiac diagnosis
                    performed in the USA in 2005 versus 1.4 million PET scans mostly
                    for
                    cancer diagnosis.

                

        

      

      
        

      

      
        
          	
                  •

                	
                  IS2
                    is a prime vehicle for Positron and Quantum's goal to bring an
                    inexpensive
                    PET scanner into the cardiac market to compete with
                    SPECT.

                

        

      

      
        

      

      
        
          	
                  •

                	
                  IS2
                    will provide cash flow, management, scientists, a customer base
                    and a more
                    complete suite of products to complement the POSITRON PET products
                    which
                    will be introduced from China in
                    2006.

                

        

      

      
        

      

      
        	
                Confidential

              	
                March
                  23, 2006

              
	
                THIS
                  CIM HAS BEEN DELIVERED SUBJECT TO STRICT OBLIGATIONS OF
                  CONFIDENTIALITY

              

      

      
        
          
          

        

        
          Page
            7

          
            

          

        

        
          
          

        

      

      
        
          	
                  
                    •
   

                	
                  IS2/IPT
                    will have an agreement to supply cardiac PET and SPECT into a
                    new concept
                    to be introduced into markets across Canada called "IMAGIN CriticalCARE
                    Clinics" (ICCC), capitalizing on PET-assisted programs for the
                    prevention
                    and reversal of coronary artery disease which currently do not
                    exist in
                    Canada.

                

        

      

      
         

        
 

      

      
        	
                Confidential

              	
                March
                  23, 2006

              
	
                THIS
                  CIM HAS BEEN DELIVERED SUBJECT TO STRICT OBLIGATIONS OF
                  CONFIDENTIALITY

              

      

      
        
          
          

        

        
          Page
            8

          
            

          

        

        
          
          

        

      

      
        SCHEDULE
          A

      

      
        

      

      
        	
                Term
                  Sheet on the IPT Acquisition Debt
                  Funding

              

      

      
         

         

      

      
        

      

      
        	
                
                  Purpose:

                

              	
                To
                  fund the acquisition of the secured debt of   IS2 Medical
                  Systems.

              
	
                Funding
                  Proposal:

              	
                
                  $1,500,000
                    Note.

                

              
	
                
                  Due
                    Date:

                

              	
                
                  Term
                    loan of 12 to 24 months amortization to begin on the 6 month
                    anniversary
                    of funding.

                

              
	
                Interest
                  Rate:

              	
                
                  12%-14%
                    per annum.

                

              
	
                
                  Option
                    in IPT equity:

                

              	
                
                  To
                    buy 1,500,000 IPT common shares @ .50¢
                    per
                    share for a 2 year period.

                

              
	
                
                  Equity
                    Kicker:

                

              	
                
                  Option
                    to buy 7,500,000 shares of POSITRON Corporation @ 05¢
                    per
                    share exercisable for 1 year.

                

              
	
                
                  Collateral:

                

              	
                
                  Security
                    interest registered on inventory, receivables and other assets
                    of IPT post
                    acquisition

                

              
	
                
                  Use
                    of Proceeds:

                

              	
                
                  Acquisition
                    of the current outstanding Convertible Debt of IS2 which is secured
                    by all
                    of its assets and for working capital. Price to purchase debt
                    (US) $1
                    million with the remainder of the net proceeds to be used as
                    working
                    capital. (See Schedule of Balance Sheet Adjustments
                    attached)

                

              

      

      
        

      

      
        	
                Confidential

              	
                March
                  23, 2006

              
	
                THIS
                  CIM HAS BEEN DELIVERED SUBJECT TO STRICT OBLIGATIONS OF
                  CONFIDENTIALITY

              

      

      
        
          
          

        

        
          Page
            9

          
            

          

        

        
          
          

        

      

      
        SCHEDULE
          B

      

      
        

      

      
        	
                Term
                  Sheet for Equity Funding of Imaging PET Technologies, Inc.
                  (IPT)

              

      

      
        

      

      
        	
                
                  Purpose:

                

              	
                
                  Equity
                    funding for the financing of IPT which will serve as the acquisition
                    vehicle for IS2 Medical Systems, Inc. Furthermore, IPT will have
                    an option
                    to acquire an equity stake in POSITRON Corporation (POSC.OB NASD
                    Bulletin
                    Board: current price:   (US) 15¢)
                    and will own a 71% control equity position in Quantum Molecular
                    Technologies, Inc. (QMT)

                

                 

              
	
                
                  Total
                    Amount to be Raised:

                

              	
                (CDN)
                  $2,500,000

                 

              
	
                
                  Price
                    per Unit:

                

              	
                (CDN)
                  $50,000

                 

              
	
                
                  No.
                    of Units:

                

              	
                Up
                  to 50 units.

                 

              
	
                
                  Qualities
                    of the IPT $50,000 units:

                

              	
                
                  Each
                    (CDN) $50,000 unit will be convertible for a one year period
                    at the option
                    of the holder into either:

                

                
                   

                

                
                  a.100,000
                    common shares of IPT, times 50 units = 5,000,000 shares of
                    IPT

                

                
                   

                

                
                  or

                

                
                   

                

                
                  b.1,000,000
                    common shares of Positron Corporation, times 50 units = 50,000,000
                    common
                    shares.

                

                 

                
                  After
                    the one year period each unit will be automatically convertible
                    into
                    1,000,000 common shares of POSC if the holder does not choose
                    to convert
                    prior to the 1st
                    year
                    anniversary.

                

                 

                
                  The
                    shares of POSC and IPT will be held in trust by "Zak Muscovitch,
                    Esq"
                    until the holder exercises his/her option to convert.

                

                 

                
                  Holders
                    will receive a notarized contract which evidences the number
                    of units
                    purchased.

                

                 

                
                  Holders
                    can convert at any time during the first year into either the
                    POSITRON
                    common shares or IPT common shares at their option.

                

                 

              
	
                Prices
                  per Share:

              	
                
                  50¢
                    per IPT share.

                

                
                   

                

                
                  05¢
                    per POSITRON share.

                

                 

              
	
                
                  Equity
                    Kicker:

                

              	
                
                  Warrants
                    to acquire 12,500,000 shares of POSC for (US) 05¢per
                    share exercisable for 1 year.

                   

                

              
	
                
                  #
                    of Warrants per Unit:

                

              	
                
                  250,000
                    warrants to acquire 250,000 POSC shares at (US) 05¢ per share
                    exercisable for 1 year for total offering.

                   

                

              
	
                
                  Price
                    to exercise POSC warrants per Unit:

                

              	
                
                  (US)
                    $12,500

                   

                

              

      

      
        

      

      
        	
                Confidential

              	
                March
                  23, 2006

              
	
                THIS
                  CIM HAS BEEN DELIVERED SUBJECT TO STRICT OBLIGATIONS OF
                  CONFIDENTIALITY

              

      

      
        
          
          

        

        
          Page
            10

          
            

          

        

        
          
          

        

      

      
         

      

      
        	
                
                  Current
                    Trading price of POSC

                

                
                  (POSC.OB)
                    (OTC Bulletin

                

                
                  Board)

                

              	
                15¢

              
	
                
                  Brokers
                    commission:

                

              	
                
                  Up
                    to 7.5% on the debt portion and 10% on the equity portion paid
                    only to Limited Market Dealers in Ontario and to qualified agents
                    in other
                    provinces.

                

              
	
                
                  Use
                    of Proceeds:

                

              	
                (US)
                  $1,400,000 to be used to acquire POSITRON Corporation equity pursuant
                  to a
                  funding agreement, (CDN) $534,000 earmarked to fund the working
                  capital of
                  Quantum Molecular Technologies, and IS2.    (See
                  Attached Schedule C)

              
	
                
                  Closing:

                

              	
                
                  Simultaneously
                    with or at a later date to the closing on the debt financing
                    herein described.

                

                 

              

      

      
        

      

      
        	
                Confidential

              	
                March
                  23, 2006

              
	
                THIS
                  CIM HAS BEEN DELIVERED SUBJECT TO STRICT OBLIGATIONS OF
                  CONFIDENTIALITY

              

      

      
        
          
          

        

        
          Page
            11

          
            

          

        

        
          
          

        

      

      
        SCHEDULE
          C

      

      
        

      

      
        	
                USE
                  OF PROCEEDS

              

      

      
         

         

      

      
        	
                USE
                  OF PROCEEDS:

              	
                CDN$    
                  

              

      

      
         

      

      
        
          	
                  A.

                	
                  USE
                    OF PROCEEDS -   Debt
                    Offering 

                	 	 
	 	 	 	 	 
	 	
                  Use
                    of $1.5 million Secured Debt: 

                	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	
                  1.   Acquisition
                    of IS2 existing convertible debt (US $1M)

                	
                  $
                    1,160,000

                	 
	 	 	
                  
                    2.   Projected
                      commissions and/or transaction costs

                  

                	
                           
                    112,500

                	 
	 	 	
                  
                    3.   Addition
                      to IPT Working Capital

                  

                	
                           
                    227,500

                	 
	 	 	 	 	 
	 	 	 	 	 
	 	
                  Gross
                    proceeds from IPT debt offering 

                	
                  
                    
                      $
                        1,500,000

                    

                  

                	 
	 	 	 	 	 
	
                  B.

                	
                  USE
                    OF PROCEEDS -   IPT Equity
                    Offering 

                	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	
                  
                    Use
                      of $2.5 million investment funds to purchase IPT equity: 

                  

                	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	
                  
                    1.   Funding
                      for QMT and IS2 working capital

                  

                	
                  $   
                    534,000

                	 
	 	 	
                  
                    2.   Acquisition
                      of POSITRON equity

                  

                	
                  $
                    1,624,000

                	 
	 	 	
                  
                    3.   Commissions
                      and transaction costs

                  

                	
                  $   
                    340,000

                	 
	 	 	 	 	 
	 	 	 	 	 
	 	
                  
                    Gross
                      proceeds from IPT equity offering. 

                  

                	
                  $
                    2,500,000

                	 
	 	 	 	 	 

        

      

      
        

      

      
        	
                Confidential

              	
                March
                  23, 2006

              
	
                THIS
                  CIM HAS BEEN DELIVERED SUBJECT TO STRICT OBLIGATIONS OF
                  CONFIDENTIALITY

              

      

      
        
          
          

        

        
          Page
            12

          
            

          

        

        
          
          

        

      

      
        EXIT
          STRATEGY - IPT Debt Offering

      

      
        

      

      
        

      

      
        
          	
                  (A)

                	
                  Acquisition
                    Debt Funding: $1.5 million secured debt with warrants
                    attached.

                

        

      

      
        

      

      
        
          	
                	
                  a.

                	
                  The
                    IPT Pro Forma opening balance sheet as restated at February 28,
                    2006 and
                    as restated with the net cash infusion of the $1,500,000 new
                    debt offering
                    will cause a beginning cash equivalents balance of in excess
                    of
                    $1,000,000.

                

        

      

      
        

      

      
        After
          reflecting March losses and certain balance sheet adjustments, the cash
          equivalents should be in excess of $900,000.

      

      
        

      

      
        
          	
                	
                  b.

                	
                  IPT
                    will raise $2.5 million in new equity simultaneous with the debt
                    financing. IPT will both secure and guarantee the $1.5 million
                    debt.

                

        

      

      
        

      

      
        
          	
                	
                  c.

                	
                  Beginning
                    in Calendar 2007, as demonstrated in the IS2 "Confidential Information
                    Memorandum", IPT upon owning the IS2 net assets should begin
                    to generate
                    substantial cash flow.

                

        

      

      
        

      

      
        
          	
                	
                  d.

                	
                  The
                    factors of (a), (b), and (c)
                    should adequately support an amortization
                    schedule to be
                    negotiated which is anticipated to commence after a 6 month revitalization
                    period has passed.

                

        

      

      
        

      

      
        
          	
                	
                  e.

                	
                  The
                    option to buy 1,500,000 IPT common shares at .50¢
                    per
                    share for a 2 year period puts a post money valuation of approximately,
                    (CDN) $13,250,000 on IPT. The projected growth as outlined in
                    the CIM of
                    IS2 if successfully achieved should command a market capitalization
                    on
                    disposition substantially
                    higher.

                

        

      

      
        

      

      
        The
          long
          term plan is to merge 100% of IPT on terms to be negotiated.

      

      
        

      

      
        
          	
                	
                  f.

                	
                  The
                    warrants to acquire 7,500,000
                    POSITRON common shares at .05¢
                    for a one year period represent
                    a significant kicker. An exercise price for all 7.5
million
                    common shares @
                    .05¢
                    = $375,000. At the current
                    trading price of POSC on the Bulletin Board (symbol POSC.OB)
                    =
                    .15¢
                    last sale.), the 7.5 million
                    shares have a $750,000 paper profit after reflecting a mark to
                    market.

                

        

      

      
        

      

      
        	
                Confidential

              	
                March
                  23, 2006

              
	
                THIS
                  CIM HAS BEEN DELIVERED SUBJECT TO STRICT OBLIGATIONS OF
                  CONFIDENTIALITY

              

      

      
        
          
          

        

        
          Page
            13

          
            

          

        

        
          
          

        

      

      
        Under
          current USA securities rules a holder of the POSC shares after exercise
          would
          have a one year holding period under Rule 144 or Regulation S. IPX is
          negotiating piggyback registration rights for the shares underlying the
          warrants
          which could accelerate the ability to gain liquidity.

      

      
        

      

      
        

      

      
        

      

      
        Note:

      

      
        

      

      
        The
          Canadian Provincial Securities laws governing private placements do not
          allow
          for projections of returns on investment or estimates and/or promises of
          the
          time when public trading of instruments sold as private placements may
          occur.

      

      
        

      

      
        The
          exit strategy outlined herein is not a promise or projection that the
          instruments herein sold will ever develop a public trading market for the
          benefit of the holders.

      

      
        

      

      
        

      

      
        	
                Confidential

              	
                March
                  23, 2006

              
	
                THIS
                  CIM HAS BEEN DELIVERED SUBJECT TO STRICT OBLIGATIONS OF
                  CONFIDENTIALITY

              

      

      
        

      

      
        
          
          

        

        
          Page
            14

          
            

          

        

        
          
          

        

      

      
        EXIT
          STRATEGY - IPT Equity Funding

      

      
        

      

      
        

      

      
        
          	
                  (B)

                	
                  Equity
                    Funding of IPT: $2.5 million of $50,000 units with dual convertible
                    features and warrants
                    attached.

                

        

      

      
        

      

      
        

      

      
        
          	
                	
                  a.

                	
                  A
                    unit of $50,000 is being sold to accredited investors only which
                    gives the
                    holder the rights to convert for a 1 year period into 1,000,000
                    POSC
                    shares or at the holders option to convert into 100,000 common
                    shares of
                    IPT, additionally the holder will receive warrants to acquire
                    250,000
                    common shares of POSITRON Corp. at a price of .05$ per POSC share
                    exercisable for 1 year.

                

        

      

      
        

      

      
        

      

      
        
          	
                	
                  b.

                	
                  IPT
                    will own 100% of the IS2 net assets and operations of IS2. Based
                    on the
                    numbers present in the IS2 CIM (attached Appendix 4), the IS2
                    subsidiary
                    will add substantial value to the interest of the IPT
                    shareholders.

                

        

      

      
        

      

      
        

      

      
        
          	
                	
                  c.

                	
                  IPT
                    has entered into an agreement with Quantum and its affiliated
                    companies
                    whereby as part of the acquisition by IPT of QMT from QMP, IPT
                    will have
                    the right to participate with QMP to acquire up to one-half of
                    the $4
                    million convertible POSC preferred share funding negotiated by
                    iMAGIN and
                    assigned to Quantum Molecular Pharmaceutical (QMP) which instruments
                    would
                    convert into 200 million common shares of
                    POSC.

                

        

      

      
        

      

      
        The
          appreciation of the POSC share position could accrue to the IPT shareholders
          indirectly on a pro rata basis or could be distributed at a later
          date.

      

      
        

      

      
        
          	
                	
                  d.

                	
                  At
                    a future date, IPT plans to raise an additional $10,000,000 through
                    the
                    sale of 10,000,000 common shares of IPT for a price of $1.00
                    per share.
                    This offering will be structured as an exempt offering under
                    Canadian
                    Securities law defined in National and Ontario Prospectus and
                    Registration
                    Exemptions sub-category, National Instrument 45-106 and OSC Rule
                    45-501,
                    as amended.

                

        

      

      
        

      

      
        
          	
                	
                  e.

                	
                  Each
                    $50,000 unit holder will
                    have the right for a one year period to purchase 250,000 POSC
                    shares at
                    .05¢
                    (through an assignment from IPT)
                    for a gross amount of (US)
                    $12,500.

                

        

      

      
        

      

      
        	
                Confidential

              	
                March
                  23, 2006

              
	
                THIS
                  CIM HAS BEEN DELIVERED SUBJECT TO STRICT OBLIGATIONS OF
                  CONFIDENTIALITY

              

      

      
        
          
          

        

        
          Page
            15

          
            

          

        

        
          
          

        

      

      
        At
          current market prices for POSC common shares as they trade in the Bulletin
          Board
          (market symbol: POSC.OB .15¢),
          the
          warrants would have a net market value marked to the market of (US) $25,000
          an
          amount equal to one-half the value placed on the $50,000
          units.

      

      
        

      

      
        If
          a
          (CDN) $50,000 unit was converted into 1,000,000 common shares of POSC,
          the
          market value of the POSC shares would be (US) $150,000 marked to the
          market.

         

         

      

      
        Note:

      

      
        

      

      
        No
          promises of appreciation or promises of trading markets for the underlying
          securities of a private placement can be made according to the harmonized
          Securities Rules of the provinces. No promises are herein made as to the
          liquidity or the timing of liquidity on the herein described investment
          instruments.

      

      
        

      

      
        	
                Confidential

              	
                March
                  23, 2006

              
	
                THIS
                  CIM HAS BEEN DELIVERED SUBJECT TO STRICT OBLIGATIONS OF
                  CONFIDENTIALITY

              

      

      
        
          
          

        

        
          Page
            16

          
            

          

        

        
          
          

        

      

      
        SCHEDULE
          D

      

      
        

      

      
        IMAGING
          PET TECHNOLOGIES, INC.

      

      
        PRO-FORMA
          BALANCE SHEET

      

      
        As
          of February 28, 2006

      

      
        

      

      
        

      

      
        	 	 	 	
                
                  Pre-Acquisition
                    of
                    

                   IS2
                    Assets

                

              	 	 	
                Post
                  Acquisiton of 

                IS2
                  Assets

              	 
	 	 	 	 	 	 	 	 
	
                Assets

              	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 
	
                
                  Cash

                

              	 	 	$	
                511,000

              	 	 	$	
                738,500

              	 
	
                Investment
                  in Quantum Molecular Technologies 

              	 	 	
                2,000,000

              	 	 	 	
                2,000,000

              	 
	
                Investment
                  in POSITRON Corporation Equity 

              	 	 	
                1,624,000

              	 	 	 	
                1,624,000

              	 
	
                
                  Investment
                    in IS2 Assets 

                

              	 	 	 	 	 	 	
                1,160,000

              	 
	 	 	 	 	 	 	 	 	 	 
	
                Total
                  Assets 

              	 	$	
                4,135,000

              	 	 	$	
                5,522,500

              	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 
	
                
                  Liabilities
                    and Net Worth 

                

              	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 
	
                
                  Liabilities:

                

              	 	 	 	
                -0-

              	 	 	 	 	 
	
                Secured
                  Debt from private placement 

              	 	 	 	 	 	$	
                1,500,000

              	 
	
                
                  Net
                    Worth: 

                

              	 	 	 	 	 	 	 	 
	 	
                Contributed
                  Capital - Initial Capital

              	 	 	
                2,010,000

              	 	 	 	
                2,010,000

              	 
	 	
                
                  Invested
                    Capital - Unit Offering  (1)

                

              	 	 	
                
                  2,500,000

                

              	 	 	 	
                
                  2,500,000

                

              	 
	 	
                Total
                  contributed capital

              	 	 	
                4,510,000

              	 	 	 	
                4,510,000

              	 
	 	
                Losses,
                  (costs of transaction)

              	 	 	(375,000	)	 	 	(487,500	)
	 	
                Total
                  net worth

              	 	 	
                
                  4,135,000

                

              	 	 	 	
                
                  4,022,500

                

              	 
	
                
                  Total
                    Liabilities and Net Worth 

                

              	 	$	
                4,135,000

              	 	 	$	
                5,522,500

              	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 
	
                
                  (1)
                    Reflects effect of $2.5 million Equity investment from current
                    private
                    placement only.

                

              	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 
	
                
                  (2)
                    Represents the beginning Balance Sheet prior to the assumption
                    of certain
                    current assets and liabilities as outlined on the IS2 Balance
                    sheet
                    attached dated February 28, 2006. The closing balance sheet will
                    be
                    adjusted to a date in April, 2006.

                

              	 	 	 	 	 	 	 	 

      

      
        
          
          

        

        
          Page
            17

          
            

          

        

        
          
          

        

      

      
        tS2
          Medical Systems Inc.

      

      
        Balance
          Sheet

      

      
        As
          at
          December 31, 2005

        
          

        

      

      
         

         

      

      
        	 	 	 	
              	 $
	
                Assets

              	 	 	 	 
	 	 	 	 	 
	
                
                  Current
                    assets

                

              	 	 	 	 
	
                
                  Cash
                    and cash equivablents

                

              	 	 	
                716,684

              	 
	
                
                  Restricted
                    cash

                

              	 	 	
                
                  100,000

                

              	 
	
                
                  Accounts
                    receivable

                

              	 	 	
                
                  148,646

                

              	 
	
                
                  Other
                    receivables

                

              	 	 	
                
                  21,358

                

              	 
	
                
                  Investment
                    tax credits receivable

                

              	 	 	
                
                  433,509

                

              	 
	
                
                  Prepaid
                    expenses

                

              	 	 	
                
                  86,967

                

              	 
	
                
                  Inventory

                

              	 	 	
                
                  1,638,586

                

              	 
	 	 	 	
                
                  3,145,749

                

              	 
	 	 	 	 	 
	
                Capital
                  assets

              	 	 	
                146,153

              	 
	
                Deferred
                  patent costs

              	 	 	
                102,730

              	 
	 	 	 	 	 
	 	 	 	
                3,394,632

              	 
	 	 	 	 	 
	 	 	 	 	 
	
                
                  Liabilities
                    and Shareholders' Equity

                

              	 	 	 	 
	 	 	 	 	 
	
                
                  Current
                    liabilities

                

              	 	 	 	 
	
                Accounts
                  payable and accrued liabilities

              	 	 	
                1,037,744

              	 
	
                Customer
                  deposits

              	 	 	
                141,521

              	 
	
                Current
                  portion of obligations under capital leases

              	 	 	
                11,655

              	 
	
                Convertible
                  debenture

              	 	 	
                1,290,569

              	 
	 	 	 	 	 
	 	 	 	
                2,481,489

              	 
	
                Obligation
                  under capital leases

              	 	 	
                9,284

              	 
	 	 	 	 	 
	 	 	 	
                2,490,772

              	 
	 	 	 	 	 
	 	 	 	 	 
	
                
                  Shareholders'
                    equity

                

              	 	 	 	 
	
                Capital
                  Stock

              	 	 	
                14,300,533

              	 
	
                Stock
                  Options Salary Expense

              	 	 	
                59,434

              	 
	
                Deficit

              	 	 	(13,456,107	)
	 	 	 	 	 
	 	 	 	
                903,859

              	 
	 	 	 	 	 
	 	 	 	
                3,394,632

              	 

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        APPENDIX
          2

      

      
        

      

      
        IS2
          Medical Systems Inc.

      

      
        Financial
          Statements

      

      
        Dec.
          31,2005

      

      
        (Unaudited)

      

      
        

      

      
        

      

      
        

      

      
        Balance
          Sheet

      

      
        and

      

      
        Profit/Loss
          Statement

      

      
        For
          Year Ended Dec. 31, 2005

      

      
        

      

      
        

      

      
        

      

      
        	
                Prepared
                  By:

              	
                Donna
                  Anderson

              	
                Date:     March
                  8,2006

              
	 	 	 
	 	
                Manager,
                  Finance & Administration IS2 Medical Systems
                  inc.

              	 

      

      
        

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        IS2
          Medical Systems Inc.

      

      
        Statement
          of Loss and Deficit

      

      
        For
          the period ended December 31, 2005

        
          

        

      

      
        

      

      
        	 	 	 	 	 	 	
                Month

              	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
                Year
                  to Date

              	 	 	 	 	 	 	 
	 	 	 	
                ACTUAL

              	 	 	 	 	 	 	 	 	
                BUDGET

              	 	 	 	 	 	 	 	 	
                ACTUAL

              	 	 	 	 	 	
                BUDGET

              	 	 	 	 
	
                Units

              	 	 	 $	 	 	 	 	 	 	
                Units

              	 	 	 $	 	 	 	 	 	 	
                Units

              	 	 	 	$	 	 	
                Units

              	 	 	 $	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
                Bookings:

              	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
                SR

              	 	 	 	 	 	 	
                259,708

              	 	 	 	
                8

              	 	 	 	
                1,369,187

              	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
                SC

              	 	 	 	 	 	 	 	 	 	 	
                1

              	 	 	 	
                228,198

              	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	
                -

              	 	 	 	
                -

              	 	 	
                Attenuation
                  Correction

              	 	 	 	
                -

              	 	 	 	
                -

              	 	 	 	
                2

              	 	 	 	
                61,676

              	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	
                -

              	 	 	 	
                -

              	 	 	
                Equine
                  Head

              	 	 	 	
                1

              	 	 	 	
                113,597

              	 	 	 	
                -

              	 	 	 	
                -

              	 	 	 	 	 
	 	
                2

              	 	 	 	
                261,545

              	 	 	 	 	 	 	 	
                4

              	 	 	 	
                838,780

              	 	 	
                Pulse
                  CDC/SH

              	 	 	 	
                32

              	 	 	 	
                5,375,640

              	 	 	 	
                41

              	 	 	 	
                8,597,495

              	 	 	 	 	 
	 	
                2

              	 	 	 	
                261,545

              	 	 	 	 	 	 	 	
                4

              	 	 	 	
                838,780

              	 	 	
                Total
                  Bookings

              	 	 	 	
                34

              	 	 	 	
                5,748,945

              	 	 	 	
                50

              	 	 	 	
                10,256,558

              	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
                Revenue:

              	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
                SR

              	 	 	 	
                2

              	 	 	 	
                478,723

              	 	 	 	
                6

              	 	 	 	
                1,369,168

              	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
                SC

              	 	 	 	
                -

              	 	 	 	 	 	 	 	
                1

              	 	 	 	
                228,128

              	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	
                -

              	 	 	 	 	 	 	
                Attenuation
                  Correction

              	 	 	 	
                -

              	 	 	 	
                -

              	 	 	 	
                2

              	 	 	 	
                61,676

              	 	 	 	 	 
	 	 	 	 	 	
                571,163

              	 	 	 	 	 	 	 	
                3

              	 	 	 	
                629,065

              	 	 	
                Pulse
                  CDC/SH

              	 	 	 	
                37

              	 	 	 	
                6,446,407

              	 	 	 	
                39

              	 	 	 	
                5,178,105

              	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
                -

              	 	 	
                Accessories

              	 	 	 	
                -

              	 	 	 	
                105,710

              	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	
                -

              	 	 	 	
                -

              	 	 	 	 	 	 	 	
                -

              	 	 	 	
                -

              	 	 	
                Equine
                  Head

              	 	 	 	
                1

              	 	 	 	
                113,597

              	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	
                31,739

              	 	 	 	 	 	 	 	 	 	 	 	
                19,167

              	 	 	
                Service
                  Revenue

              	 	 	 	 	 	 	 	
                323,310

              	 	 	 	 	 	 	 	
                230,003

              	 	 	 	 	 
	 	
                4

              	 	 	 	
                602,902

              	 	 	 	 	 	 	 	
                3

              	 	 	 	
                648,252

              	 	 	
                Total
                  Revenue

              	 	 	 	
                40

              	 	 	 	
                7,467,747

              	 	 	 	
                48

              	 	 	 	
                10,067,170

              	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
                Cost
                  of Goods Sold:

              	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
                SR
                  Materials

              	 	 	 	 	 	 	 	
                318,431

              	 	 	 	 	 	 	 	
                785,588

              	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
                SC
                  Materials

              	 	 	 	 	 	 	 	
                -

              	 	 	 	 	 	 	 	
                114,819

              	 	 	 	 	 
	 	 	 	 	 	
                -

              	 	 	 	 	 	 	 	 	 	 	 	
                -

              	 	 	
                Attenuation
                  Correction

              	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
                54,274

              	 	 	 	 	 
	 	 	 	 	 	
                351,903

              	 	 	 	 	 	 	 	 	 	 	 	
                375,000

              	 	 	
                Pulse
                  CDC/SH Materials

              	 	 	 	 	 	 	 	
                3,720,416

              	 	 	 	 	 	 	 	
                4,875,000

              	 	 	 	 	 
	 	 	 	 	 	
                1,901

              	 	 	 	 	 	 	 	 	 	 	 	
                -

              	 	 	
                Accessories
                  Materials

              	 	 	 	 	 	 	 	
                59,552

              	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	
                -

              	 	 	 	 	 	 	 	 	 	 	 	
                -

              	 	 	
                Equine
                  Head

              	 	 	 	 	 	 	 	
                70,191

              	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	
                37,852

              	 	 	 	 	 	 	 	 	 	 	 	
                43,606

              	 	 	
                Production

              	 	 	 	 	 	 	 	
                530,005

              	 	 	 	 	 	 	 	
                531,951

              	 	 	 	 	 
	 	 	 	 	 	
                -

              	 	 	 	 	 	 	 	 	 	 	 	
                5,483

              	 	 	
                Installation/Training
                  (Direct Labour)

              	 	 	 	 	 	 	 	
                15,650

              	 	 	 	 	 	 	 	
                84,074

              	 	 	 	 	 
	 	 	 	 	 	
                20,699

              	 	 	 	 	 	 	 	 	 	 	 	
                13,259

              	 	 	
                Production
                  Overhead

              	 	 	 	 	 	 	 	
                180,081

              	 	 	 	 	 	 	 	
                158,469

              	 	 	 	 	 
	 	 	 	 	 	
                10,859

              	 	 	 	 	 	 	 	 	 	 	 	
                11,500

              	 	 	
                Service

              	 	 	 	 	 	 	 	
                192,454

              	 	 	 	 	 	 	 	
                138,000

              	 	 	 	 	 
	 	 	 	 	 	
                423,215

              	 	 	 	 	 	 	 	 	 	 	 	
                448,878

              	 	 	
                Total
                  Cost of Goods Sold

              	 	 	 	 	 	 	 	
                5,066,780

              	 	 	 	 	 	 	 	
                6,723,175

              	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	29.80	%	 	 	
                179,687

              	 	 	 	30.75	%	 	 	 	 	 	 	
                199,374

              	 	 	
                Gross
                  Contribution

              	 	 	 	 	 	 	 	
                2,380,987

              	 	 	 	31.89	%	 	 	
                3,343,995

              	 	 	 	33.22	%
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                %
                  of Rev

              	 	 	 	 	 	 	
                %
                  of Rev

              	 	 	 	 	 	 	 	 	 	 	
                Operating
                  Expenses:

              	 	 	 	 	 	 	 	 	 	 	
                %
                  of Rev

              	 	 	 	 	 	 	
                %
                  of Rev

              	 
	 	3.48	%	 	 	
                20,562

              	 	 	 	4.80	%	 	 	 	 	 	 	
                29,809

              	 	 	
                Sales

              	 	 	 	 	 	 	 	
                313,770

              	 	 	 	4.20	%	 	 	
                397,581

              	 	 	 	3.95	%
	 	0.73	%	 	 	
                4,404

              	 	 	 	9.95	%	 	 	 	 	 	 	
                64,481

              	 	 	
                Sales
                  - Commission

              	 	 	 	 	 	 	 	
                88,406

              	 	 	 	1.18	%	 	 	
                1,008,307

              	 	 	 	10.02	%
	 	8.02	%	 	 	
                117

              	 	 	 	0.49	%	 	 	 	 	 	 	
                3,145

              	 	 	
                Sales
                  – Royalties

              	 	 	 	 	 	 	 	
                1,025

              	 	 	 	0.01	%	 	 	
                74,185

              	 	 	 	0.74	%
	 	2.22	%	 	 	
                13,406

              	 	 	 	2.18	%	 	 	 	 	 	 	
                14,161

              	 	 	
                Marketing

              	 	 	 	 	 	 	 	
                288,890

              	 	 	 	3.87	%	 	 	
                396,191

              	 	 	 	3.94	%
	 	7.24	%	 	 	
                43,882

              	 	 	 	9.44	%	 	 	 	 	 	 	
                61,331

              	 	 	
                Administration

              	 	 	 	 	 	 	 	
                748,159

              	 	 	 	10.02	%	 	 	
                748,060

              	 	 	 	7.43	%
	 	1.07	%	 	 	
                6,442

              	 	 	 	0.98	%	 	 	 	 	 	 	
                6,358

              	 	 	
                Quality
                  Assurance

              	 	 	 	 	 	 	 	
                119,724

              	 	 	 	1.80	%	 	 	
                51,396

              	 	 	 	0.81	%
	 	3.28	%	 	 	
                19,644

              	 	 	 	3.37	%	 	 	 	 	 	 	
                21,853

              	 	 	
                Service/Clinical
                  Applications

              	 	 	 	 	 	 	 	
                219,732

              	 	 	 	2.34	%	 	 	
                197,561

              	 	 	 	1.90	%
	 	5.48	%	 	 	
                33,054

              	 	 	 	4.37	%	 	 	 	 	 	 	
                28,309

              	 	 	
                Warranty

              	 	 	 	 	 	 	 	
                413,725

              	 	 	 	5.54	%	 	 	
                442,764

              	 	 	 	4.40	%
	 	4.65	%	 	 	
                40,120

              	 	 	 	8.23	%	 	 	 	 	 	 	
                53,489

              	 	 	
                Reasearch
                  and Development

              	 	 	 	 	 	 	 	
                572,347

              	 	 	 	7.60	%	 	 	
                889,886

              	 	 	 	8.84	%
	 	-21.55	%	 	 	(129,939	)	 	 	-2.06	%	 	 	 	 	 	 	(13,372	)	 	
                ITC
                  Credits

              	 	 	 	 	 	 	 	(325,532	)	 	 	-4.38	%	 	 	(222,464	)	 	 	-2.25	%
	 	 	 	 	 	
                51,772

              	 	 	 	 	 	 	 	 	 	 	 	
                269,564

              	 	 	
                Total
                  Operating Expenses

              	 	 	 	 	 	 	 	
                2,440,048

              	 	 	 	32.07	%	 	 	
                4,013,359

              	 	 	 	30.87	%
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
                -

              	 	 	 	 	 	 	 	 	 
	 	21.22	%	 	 	
                127,915

              	 	 	 	-10.83	%	 	 	 	 	 	 	(70,190	)	 	
                Earnings
                  Before Interest, Taxes, Depn & Amort

              	 	 	 	 	 	 	 	(59,061	)	 	 	-0.79	%	 	 	(669,364	)	 	 	-6.05	%
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
                Interest,
                  Taxes, Depn & Amort

              	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	
                20,908

              	 	 	 	 	 	 	 	 	 	 	 	
                21,126

              	 	 	
                Interest

              	 	 	 	 	 	 	 	
                221,751

              	 	 	 	 	 	 	 	
                241,874

              	 	 	 	 	 
	 	 	 	 	 	
                36,137

              	 	 	 	 	 	 	 	 	 	 	 	
                13,647

              	 	 	
                Depreciation
                  & Amortization

              	 	 	 	 	 	 	 	
                168,248

              	 	 	 	 	 	 	 	
                137,396

              	 	 	 	 	 
	 	 	 	 	 	
                -

              	 	 	 	 	 	 	 	 	 	 	 	
                -

              	 	 	
                IRAP
                  Royalties

              	 	 	 	 	 	 	 	
                108,782

              	 	 	 	 	 	 	 	
                106,198

              	 	 	 	 	 
	 	3.46	%	 	 	 	 	 	 	5.34	%	 	 	 	 	 	 	
                34,773

              	 	 	 	 	 	 	 	 	 	 	 	
                496,751

              	 	 	 	5.85	%	 	 	
                485,468

              	 	 	 	4.82	%
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	
                70,870

              	 	 	 	-16.19	%	 	 	 	 	 	 	(104,963	)	 	
                Income
                  (Loss)

              	 	 	 	 	 	 	 	(555,821	)	 	 	-7.44	%	 	 	(1,154,832	)	 	 	-11.47	%
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
                Income
                  Tax Provision

              	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	
                70,870

              	 	 	 	 	 	 	 	 	 	 	 	(104,963	)	 	
                Net
                  Income (Loss)

              	 	 	 	 	 	 	 	(555,821	)	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
                Deficit
                  – Beginning of Period

              	 	 	 	 	 	 	 	(12,900,286	)	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
                Defecit
                  – End of Period

              	 	 	 	 	 	 	 	(13,456,107	)	 	 	 	 	 	 	 	 	 	 	 	 

      

      
        

          
            
              
              

            

            
              
              

              
                

              

            

            
              
              

            

          

        

        
          
             

            Appendix
              3

          

          
            

          

          
            Imaging
              PET Technologies- OVERVIEW

          

          
            

          

          
            

          

          
            1.
              Executive Overview

          

          
            

          

          
            Imaging
              PET Technologies (IPT) was formed for the purpose of acquiring 100%
              of the debt
              and net assets of IS2 Medical Systems, (IS2), an Ottawa-based manufacturer
              of
              diagnostic imaging equipment which is used in nuclear medicine for
              the diagnosis
              and staging of heart, cancer and neurological diseases.

          

          
            

          

          
            IS2's
              main imaging products are defined as SPECT (Single Photon Emitting
              Computed
              Tomography) gamma cameras in contrast to PET (Positron Emission Tomography)
              scanners. The average SPECT camera sells for $200,000 to $300,000 while
              the
              average standalone PET camera sells for $900,000 to $1.2
              million.

          

          
            

          

          
            IPT
              has
              further entered into an agreement whereby it acquired from Quantum
              Molecular
              Pharmaceuticals (QMP), certain rights and obligations to fund POSITRON
              Corporation (NASD: Bulletin Board: POSC) which will in turn fund Quantum
              Molecular Technologies, Inc. (QMT), the company currently conducting
              Dr. Irving
              Weinberg's research effort in developing new molecular image technologies.
              It is
              planned that many aspects of the research effort will be conducted
              on location
              at and in conjunction with IS2. As part of the transaction, IPT will
              acquire
              from QMP and POSITRON Corp for IPT common stock valued at (CDN) $2,000,000
              a 71%
              owned control position in QMT.

          

          
            

          

          
            SPECT
              Scanners are used primarily for cardiac and/or bone scans. Over 10
              million SPECT
              procedures were performed in the USA in 2005, while only 1.4 million
              PET Scans
              were performed in 2005. 88% of PET Scans were performed on cancer patients,
              8%
              on cardiac patients and 4% on neurology cases.

          

          
            

          

          
            

          

          
            	
                    Confidential

                  	
                    March
                      23, 2006

                  
	
                    THIS
                      CIM HAS BEEN DELIVERED SUBJECT TO STRICT OBLIGATIONS OF
                      CONFIDENTIALITY

                  

          

          
            
              
              

            

            
              Page
                1

              
                

              

            

            
              
              

            

          

          
            2.
              STRUCTURE: Proposed and Pro Forma

          

          

          

          

          

          

          

           

          
            	
                    Confidential

                  	
                    March
                      23, 2006

                  
	
                    THIS
                      CIM HAS BEEN DELIVERED SUBJECT TO STRICT OBLIGATIONS OF
                      CONFIDENTIALITY

                  

          

          
            
              
              

            

            
              Page
                2

              
                

              

            

            
              
              

            

          

          
            3.
              Capitalization of IPT:

          

          
            

          

          
            	
                    Contributed
                      Capital:

                  	 	 	 
	
                    Cash

                  	 	$	
                    10,000

                  	 
	
                    Estimated
                      Current Market Value of 71% of GMT.

                  	 	$	
                    2.000,000

                  	 
	
                    Total
                      initial capital.    

                  	 	$	
                    2,010,000

                  	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	
                    #
                      of shares o/s

                  	 
	
                    Total
                      shares outstanding owned by QMP and POSC:

                  	 	
                    20,100,000
                      shrs

                  	 
	 	 	 	 	 
	
                    Options
                      reserved for key employees:

                  	 	
                    2,000,000
                      shrs,

                  	 
	 	 	 	 	 
	
                    Total
                      number of IPT shares outstanding - pre-financing:

                  	 	 	
                    22,100,000

                  	 
	 	 	 	 	 
	
                    Total common
                      shares offered if units are converted to IPT shares:

                  	 	 	
                    5,000,000

                  	 
	
                    (5,000,000
                      shares @ 50¢
                      =
                      $2,500,000)

                  	 	 	 	 
	 	 	 	 	 
	
                    Total
                      number of IPT common shares outstanding - post financing:

                  	 	 	
                    27,100,000

                  	 
	 	 	 	 	 
	
                    Total
                      # of common shares behind the debt holders option (1,500,000
                      @ 50¢

                  	 	 	
                    1,500,000

                  	 
	
                    =
                      $750,000)

                  	 	 	
                    28,600,000

                  	 

          

          
            

          

          
            4.
              Proposed Financing:

          

          
            

          

          
            	
                    A.

                  	
                    From
                      Secured Lender:

                  	 	$	1,500,000	(1)
	
                    B.

                  	
                    From
                      New Equity

                  	 	$	2,500,000	(2)
	 	
                    Total
                      Financing

                  	 	$	
                    4,000,000

                  	 

          

          
            

          

          
            Reference
              notes:

          

          
            

          

          
            
              	
                      1.

                    	
                      Lender
                        will receive 12% -14% return. Interest and principal paid
                        on a schedule of
                        12 to 24 months of principal amortization beginning in 6
                        months. Borrower
                        will have the right to repay at any time, lenders will be
                        given a package
                        of warrants to acquire POSITRON shares at a price and for
                        a period to be
                        negotiated. (See proposed term sheet for "Acquisition Debt
                        Financing"
                        Schedule A.)

                    

            

          

          
            

          

          
            

          

          
            	
                    Confidential

                  	
                    March
                      23, 2006

                  
	
                    THIS
                      CIM HAS BEEN DELIVERED SUBJECT TO STRICT OBLIGATIONS OF
                      CONFIDENTIALITY

                  

          

          
            

              
                
                  
                  

                

                
                  Page
                    3

                  
                    

                  

                

                
                  
                  

                

              

          

          
            
              	
                      2.

                    	
                      IPT
                        will offer separately 50
                        units of $50,000 which will convert into 5,000,000 common
                        shares of IPT or, at the
                        holders option, info 50,000,000 common shares
                        of POSITRON, plus warrants
                        to buy 12,500,000 POSITRON shares at (US)
                        5¢
                        per share
                        for a period of 1
                        year,

                    

            

          

          
            

          

          
            Equity
              units offered to accredited investors only in tranches of $50,000.
              ($50,000 x 50
              units) (See proposed term sheet for "Equity Funding of IPT" Schedule
              B.)

          

          
            

          

          
            
              	
                      3.

                    	
                      Qualities
                        of the IPT $50,000
                        units:

                    

            

          

          
            

          

          
            The
              units
              shall have unique convertible features.

          

          
            Each
              $50,000 unit will for a one year period be convertible at the option
              of
the
              holder into either;

          

          
            

          

          
            
              	
                    	
                      1.

                    	
                      100,000
                        common shares of IPT.

                    

            

          

          
            

          

          
            or

          

          
            

          

          
            
              	
                    	
                      2.

                    	
                      1,000,000
                        common shares of POSITRON
                        Corp.

                    

            

          

          
            

          

          
            If
              not
              converted earlier at the option of the holder, after a one year period
              the IPT
              $50,000 units will each be automatically converted into 1,000,000 common
              shares
              of POSC.

          

          
            

          

          
            5.
              Use
              of Proceeds:

          

          
            

          

          
            Consolidated
              Use of Proceeds: (in CDN $)

          

          

          
            	 	 	 	 
	
                    
                      Gross
                        Proceeds of financing:

                    

                  	 	
                    
                      (CDN)
                        $4,000,000

                    

                  	 
	 	 	 	 
	
                    
                      less
                        commissions and transaction costs:

                    

                  	 	$	
                    
                      450,000

                    

                  	 
	 	 	 	 	 
	
                    
                      Net
                        proceeds from offering

                    

                  	 	
                    
                      (CDN)
                        $3,550,000

                    

                  	 
	
                    
                      Conversion
                        of net proceeds to USA dollars @ 88% =

                    

                  	 	
                    
                      (US)
                        $3,115,000

                    

                  	 

          

          
            

          

          
            Consolidated
              Use of Proceeds: (in USA $)

          

          
            

          

          

          
            	
                    
                      Purchase
                        of 100% of net assets of lS2

                    

                  	
                    
                      (US)
                        $1,000,000

                    

                  
	
                    
                      Funding
                        to buy POSITRON common shares

                    

                  	
                    
                      (US)
                        $1,400,000

                    

                  
	
                    
                      Working
                        Capital

                    

                  	
                    
                      (US)
                        $   551,000

                    

                  
	
                    
                      Total
                        Use of Net Proceeds

                    

                  	
                    
                      (US)
                        $3,115,000

                    

                  

          

          
            

          

          
            	
                    Confidential

                  	
                    March
                      23, 2006

                  
	
                    THIS
                      CIM HAS BEEN DELIVERED SUBJECT TO STRICT OBLIGATIONS OF
                      CONFIDENTIALITY

                  

          

          
            

              
                
                  
                  

                

                
                  Page
                    4

                  
                    

                  

                

                
                  
                  

                

              

            

             

          

          
            6.
              Transaction with QMP and POSC

          

          
             

             

          

          
            QMP
              and
              POSC have entered into an agreement to form IPT for the dual purpose
              of
              acquiring the operations of IS2 and a 71% equity position in QMT. The
              parties
              will continue to have the obligation of funding a scientific team led
              by Dr.
              Irving Weinberg of Rockville, Maryland in the development of certain
              new
              PET-based technologies.

          

          
            

          

          
            Dr.
              Weinberg is the inventor of the Naviscan PET Systems (NAVISCAN) breast-specific
              PET Camera and a scientist considered a visionary in the global arena
              of nuclear
              medicine-based diagnostic imaging technologies.

          

          
            

          

          
            QMP
              and/or its affiliated companies is currently funding the technology
              and
              development activities of Dr. Weinberg, in a prior agreement QMP and
              POSC
              negotiated a transaction whereby QMP gifted to POSITRON Corporation
              a 20%
              interest in the technology effort of Dr. Weinberg which will be conducted
              in an
              entity incorporated as Quantum Molecular Technologies, Inc. (QMT), in
              exchange for an agreement with POSITRON to finance that research
              effort.

          

          
            

          

          
            iMAGIN
              agreed as part of the transaction to acquire (US) $4 Million worth
              of POSITRON
              equity. These funds will be infused to fund this effort consistent
              with a
              timetable to be developed. POSITRON was given a further option to acquire
              an
              additional 31% of the QMT and therefore its advanced PET technology
              effort for a
              price of 150 million POSITRON shares.

          

          
            

          

          
            This
              agreement will now be adjusted and the QMP/POSC joint venture in IPT
              will
              supercede the prior agreement.

          

          
            

          

          
            7.
              Follow-on Financing of IPT:

          

          
            

          

          
            It
              is the
              intent of IPT to raise capital at a price of $1.00 per share through
              the sale of
              10,000,000 common shares of IPT (Canada) based on the capitalization
              presented in Chart
              A.

          

          
            

          

          
            8.
              Use
              of Proceeds of 2nd
              Offering:

          

          
            

          

          
            The
              use
              of proceeds will be to finance the development of new advanced PET
              technologies
              and to fund the development and sales effort of the nuclear imaging
              diagnostic
              products of IS2.

          

          
            

          

          
            	
                    Confidential

                  	
                    March
                      23, 2006

                  
	
                    THIS
                      CIM HAS BEEN DELIVERED SUBJECT TO STRICT OBLIGATIONS OF
                      CONFIDENTIALITY

                  

          

          
            

              
                
                  
                  

                

                
                  Page
                    5

                  
                    

                  

                

                
                  
                  

                

              

            

             

          

          
            March
              26,
              2006

          

          
            

          

          
            QUANTUM
              MOLECULAR TECHNOLOGIES, INC. (QMT)

          

          
            

          

          
            QMT
              was
              established with a mission to develop novel and commercial radiotracers
              (biomarkers) to reach beyond FDG in parallel with the development of
              the next
              generation of PET imaging technologies designed to take advantage of
              these
              custom biomarkers. The fusion of organ-specific imaging devices and
              the matching
              of custom radiopharmaceuticals should drive the ability to determine
              disease at
              a truly molecular and personal patient level, The goal of QMT is to
              leapfrog the
              established molecular imaging device providers by being first to market
              with
              next generation technology and to create identifiable intellectual
              property
              protected by patents that eventually will drive significant revenue
              streams to
              Quantum through manufacturing, delivery and/or licensing of state-of-the-art
              PET
              devices and custom proprietary biomarkers.

          

          
            

          

          
            QMT
              is
              supported by a team assembled by QMP and led by Dr. Irving Weinberg,
              that is
              focused on managing and developing three core competencies:

          

          
            

          

          
            
              	
                    	
                      1.

                    	
                      The
                        development and investigation of novel biomarkers such as
                        prostate
                        markers.

                    

            

          

          
            

          

          
            
              	
                       

                    	
                      2.

                    	
                      The
                        development of organ-specific and
                        proprietary

                    

            

          

          
            

          

          
            
              	
                       

                    	
                      3.

                    	
                      approaches
                        to full body PET devices that will be used in parallel with
                        custom
                        biomarkers.

                    

            

          

          
            

          

          
            
              	
                       

                    	
                      4.

                    	
                      Development
                        of the core technology essential to the delivery of state-of-the-art
                        PET
                        device defined as the next generation solid state photo detectors
                        that can
                        be customized to create a wide range of superior yet inexpensive
                        imaging
                        devices.

                    

            

          

          
            

          

          
            The
              Holy
              Grail of PET device development is a true inexpensive solid state
              photo detector. The current generation of PET cameras relies on photo
              detector
              tubes to which crystals or scintillators have been "bonded". The underlying
              physics of PET technology relies on "positrons" decaying.  When
              positrons die they give off energy called gammas that have very specific
              energy
              levels. For PET radiopharmaceuticals, this energy level is defined
              as 511 key.
              When the gammas hit a special kind of crystal the ensuing impact gives
              off
              energy at a certain frequency defined as a color of light which is
              detected by
              the underlying and very expensive photo detector tubes. These crystals
              are
              usually cut into small blocks and are optimized by different vendors.
              The design
              of the current state-of-the-art full body PET camera which rely on
              photo
              detector tubes delivered by all of the major PET Scan manufacturers
              is limited
              to a resolution of about 7mm.

          

          
            
              
              

            

            
              
              

              
                

              

            

            
              
              

            

          

          
            The
              challenge using solid state technology is to do away with very expensive
              photo
              detector tubes and to bond "needles" of crystals directly to new solid
              state
              photo detectors. This breakthrough when achieved would allow for the
              manufacture
              of very inexpensive PET cameras with intrinsic resolution approaching
              1.5 mm. If
              the QMT program is successful, we would cause a paradigm shift in the
              resolution
              of nuclear medicine PET cameras, Because these detector/crystal pairings
              can be
              very small, it will be possible to design novel and perhaps even disposal
              PET
              cameras,

          

          
            

          

          
            The
              Weinberg team has been working with an international group of scientists
              to
              develop and patent this technology for QMP. Dr. Weinberg has been at
              the
              forefront of the evolution of PET and traces his roots back to his
              work as an
              experimental physicist as part of the original team of researchers
              including;
              Dr. Michael Phelps and Dr. Hoffman, who developed the first PET camera
              at
              UCLA.

          

          
            

          

          
            Through
              Dr. Weinberg's evolution as a radiologist and founder of NAVISCAN PET
              Systems,
              Inc., and inventor of the first breast-specific PET camera we believe
              we have a
              multi-talented, visionary and focused individual that should be able
              to
              contribute to Quantum's quest to leapfrog existing PET technology in
              order to
              give Quantum a significant headstart in the molecular industry's evolution.
              Supported by the assurance of a proprietary position that is patent
              protected,
              QMT hopes to develop a significant edge over the slower moving multinational
              companies that currently dominate the PET and molecular imaging
              industries.

          

          
            
              
              

            

            
              2

              
                

              

            

            
              
              

            

          

          
            APPENDIX
              4

          

          
            

          

          
            Confidential
              Information Memorandum

             

          

          

          

          

          
            IS2
              Medical
              Systems

             

          

          
            

          

          
            

          

          
            	
                    Confidential

                  	
                    March
                      7, 2006

                  
	
                    THIS
                      CIM HAS BEEN DELIVERED SUBJECT TO STRICT OBLIGATIONS OF
                      CONFIDENTIALITY

                  

          

          
            

              
                
                  
                  

                

                
                  Page
                    1

                  
                    

                  

                

                
                  
                  

                

              

            

             

          

          
            CONFIDENTIAL
              INFORMATION MEMORANDUM

          

          
            

          

          
            This
              Confidential Information Memorandum ("CIM") has been prepared on behalf
              of IS2
              Medical Systems (IS2) and is solely for use by parties interested in
              a
              transaction with IS2. This CIM under no circumstances is to be construed
              as an
              offering of securities. Unless otherwise stated, all amounts are in
              Canadian
              dollars.

          

          
            

          

          
            The
              information contained herein has been prepared to assist interested
              parties in
              making their own evaluation of IS2 and does not purport to contain
              all of the
              information that a prospective purchaser or investor may desire. Prospective
              investors should conduct their own investigation and analysis of IS2
              and the
              information contained in this CIM. This memorandum includes certain
              statements,
              estimates and projections with respect to IS2' anticipated performance.
              Such
              statements, estimates and projections reflect various assumptions by
              management
              concerning anticipated results, which may or may not prove to be correct.
              No
              representations or warranties are made or implied by IS2 as to the
              accuracy of
              such statements, estimates, projections and assumptions with respect
              to the
              information in the CIM. Parties who wish to pursue this matter further
              will be
              provided with such other information as mutually agreed. Any eventual
              agreement
              will contain such representations and warranties as agreed to between
              the
              parties.

          

          
            

          

          
            By
              accepting the CIM, the recipient acknowledges and agrees that: (1)
              all of the
              information contained herein or made available in connection with a
              further
              investigation of IS2 is confidential, will be treated in a confidential
              manner,
              and the recipient will not, directly or indirectly, disclose or permit
              its
              agents or affiliates to disclose any of such information, (2) no personnel
              of
              IS2 and no clients, customers, suppliers or other parties having dealings
              with
              IS2 are to be contacted directly or indirectly under any circumstances
              by or on
              behalf of the recipient without the prior written consent of IS2, (3)
              IS2 makes
              no representation or warranty as to the accuracy of the CIM and neither
              shall
              have any liability for any representation (express or implied) contained
              in, or
              for any omissions from, the CIM or any other written or oral communications
              transmitted to the recipient in the course of its evaluation of IS2,
              and (4) if
              the recipient does not wish to pursue this matter or upon our request,
              the
              recipient will return the CIM to IS2 as soon as practicable, together
              with any
              other materials relating to IS2 which the recipient may have received
              from
              IS2.

          

          
            

          

          
            AII
              communications relating to the CIM should be directed
              to:

          

          
            

          

          
            

          

          
            	
                    Confidential

                  	
                    March
                      7, 2006

                  
	
                    THIS
                      CIM HAS BEEN DELIVERED SUBJECT TO STRICT OBLIGATIONS OF
                      CONFIDENTIALITY

                  

          

          
            

              
                
                  
                  

                

                
                  Page
                    2

                  
                    

                  

                

                
                  
                  

                

              

            

             

          

          
            TABLE
              OF CONTENTS

             

          

          
            	
                    1.

                  	
                    Executive
                      Overview

                  	
                    4

                  
	 	
                    1.1.

                  	
                    The
                      Company

                  	
                    4

                  
	 	
                    1.2.

                  	
                    Business
                      Overview

                  	
                    4

                  
	 	
                    1.3.

                  	
                    Product
                      Overview

                  	
                    4

                  
	 	
                    1.4.

                  	
                    Customer
                      Base

                  	
                    4

                  
	 	
                    1.5.

                  	
                    Revenue
                      Summary

                  	
                    5

                  
	 	
                    1.6.

                  	
                    Core
                      Value Proposition

                  	
                    5

                  
	 	
                    1.7.

                  	
                    Competitive
                      Advantages

                  	
                    5

                  
	 	 	
                    1.7.1

                  	
                    Technical
                      Specifications

                  	
                    5

                  
	 	 	
                    1.7.2

                  	
                    Price

                  	
                    5

                  
	 	 	
                    1.7.3

                  	
                    Performance/Serviceability

                  	
                    5

                  
	 	 	
                    1.7.4

                  	
                    Ease
                      of Installation

                  	
                    6

                  
	 	 	
                    1.7.5

                  	
                    Connectivity

                  	
                    6

                  
	 	 	
                    1.7.6

                  	
                    Ease
                      of Use

                  	
                    6

                  
	 	 	
                    1.7.7

                  	
                    Field
                      Upgradeable Design

                  	
                    6

                  
	 	 	
                    1.7.8

                  	
                    ISO
                      Certification/CE Mark

                  	
                    6

                  
	 	
                    1.8.

                  	
                    Investment
                      Considerations

                  	
                    6

                  
	 	 	
                    1.8.1

                  	
                    Domain
                      Expertise

                  	
                    6

                  
	 	 	
                    1.8.2

                  	
                    Intellectual
                      property Portfolio

                  	
                    6

                  
	 	 	
                    1.8.3

                  	
                    Growing
                      Customer Base

                  	
                    6

                  
	 	 	
                    1.8.4

                  	
                    Service
                      Opportunities

                  	
                    7

                  
	 	 	
                    1.8.5

                  	
                    Opportunity
                      to Improve Gross Margin

                  	
                    7

                  
	 	 	
                    1.8.6

                  	
                    Entry
                      Point into Mobile "Fee for Scan" Market

                  	
                    7

                  
	 	 	
                    1.8.7

                  	
                    Demographics
                      Support Strong Market Growth

                  	
                    7

                  
	
                    2.

                  	
                    Market
                      Opportunity

                  	
                    7

                  
	 	
                    2.1.

                  	
                    Nuclear
                      Imaging

                  	
                    7

                  
	 	
                    2.2.

                  	
                    Clinical
                      Applications for Nuclear Imaging

                  	
                    7

                  
	 	 	
                    2.2.1

                  	
                    Nuclear
                      Cardiology

                  	
                    8

                  
	 	 	
                    2.2.2

                  	
                    Brain
                      Imaging

                  	
                    8

                  
	 	 	
                    2.2.3

                  	
                    Breast
                      Imaging

                  	
                    8

                  
	 	
                    2.3.

                  	
                    Intellectual
                      Property

                  	
                    8

                  
	 	
                    2.4.

                  	
                    Competitive
                      Analysis

                  	
                    9

                  
	 	 	
                    2.4.1

                  	
                    Major
                      Players

                  	
                    9

                  
	 	 	
                    2.4.2

                  	
                    Competitive
                      Analysis - Technical

                  	
                    9

                  
	
                    3.

                  	
                    Potential
                      for Significant Growth

                  	
                    10

                  
	 	
                    3.1.

                  	
                    Potential
                      for Significant Revenue Growth

                  	
                    10

                  
	 	
                    3.2.

                  	
                    Potential
                      for Increased Revenue Margin

                  	
                    11

                  
	
                    4.

                  	
                    Corporate
                      Operations

                  	
                    12

                  
	
                    5.

                  	
                    Post
                      Acquisition Projected Financials for 2006 - 2010

                  	
                    12

                  
	 	
                    5.1.

                  	
                    Income
                      (Loss) Statement

                  	
                    12

                  
	 	
                    5.2.

                  	
                    Balance
                      Sheet

                  	
                    13

                  
	 	
                    5.3.

                  	
                    Cash
                      Flow

                  	
                    14

                  

          

          
            

          

          
            	
                    Confidential

                  	
                    March
                      7, 2006

                  
	
                    THIS
                      CIM HAS BEEN DELIVERED SUBJECT TO STRICT OBLIGATIONS OF
                      CONFIDENTIALITY

                  

          

          
            

              
                
                  
                  

                

                
                  Page
                    3

                  
                    

                  

                

                
                  
                  

                

              

            

             

          

          
            
              
                	
                        1.    Executive
                          Overview

                      

              

            

          

          
            

          

          
            
              	
                      1.1.

                    	
                      The
                        Company

                    

            

          

          
             

            IS2
              Medical Systems Inc. ("1S2" or "the Company") i a private company,
              founded in
              1994 and located in Ottawa, Ontario, Canada. The Company has 27 employees
              and
              has been capitalized with private investment from the founders, private
              individuals and institutional Investors. To date over $14 million has
              been
              invested in the equity of IS2.

          

          
            

          

          
            
              	
                      1.2.

                    	
                      Business
                        Overview

                    

            

          

          
            

          

          
            IS2
              designs, manufacturers and distributes a family of scintillation cameras
              that
              offer clinical users the highest resolution, most robust features and
              highest
              levels of performance and reliability in the industry. A scintillation,
              or gamma
              camera, is a diagnostic medical imaging system that is part of a family
              of
              systems commonly referred to as "body scanners." Gamma cameras are
              used in the
              diagnosis of heart disease, cancers and a variety of other disorders.
              A
              mechanical frame (a gantry) rotates an electronic detector head around
              a patient
              in order to take a series of clinical images of the inside of the body.
              Different from images from x-ray machines which show anatomy, nuclear
              medicine
              images after injecting in the patient a harmless radiopharmaceutical
              drug show
              how cells and organs function. The Company provides the best quality
              images at
              the lowest price in the industry. The scientific team responsible for
              the design
              and continued innovation of the company's world-class cameras comprise
              more than
              125 years of expertise in nuclear medicine, physics, mathematics and
              engineering. The Company is ISO certified and meets related medical
              device,
              safety and regulatory requirements, including USA FDA and Health Canada
              approval, and has a CE Mark necessary for European
              distribution.

          

          
            

          

          
            
              	
                      1.3.

                    	
                      Product
                        Overview

                    

            

          

          

          
            	
                    The
                      Company's signature product is its PulseCDCTM compact digital cardiac
                      camera. The key features of the PulseCDC include: smallest
                      footprint in
                      the industry, best performance specifications, lower cost single
                      head
                      version is field upgradeable to dual head, remote servicing
                      capabilities
                      are built in, FDA510K cleared for mobile installations and
                      all digital
                      event positioning. It also offers a unique reclining imaging
                      chair/bed
                      that improves patient comfort while allowing for supine and/or
                      prone
                      imaging in 180° or a full 360°. Patents have been filed for key aspects of
                      the design.

                  	
                    

                  

          

          
            

          

          
            The
              product roadmap includes attenuation correction, a variable geometry
              dual head
              camera, brain-imaging capability for the PulseCDC, a portable version
              of the
              PulseCDC, a breast cancer camera and a PET camera.

          

          
            

          

          
            
              	
                      1.4.

                    	
                      Customer
                        Base

                    

            

          

          
            

          

          
            The
              Company has more than 125 cameras in operation, primarily in the United
              States.
              Most recently, the PulseCDC received CE marking and the Company has
              closed sales
              in the UK, Germany, the Netherlands and Australia. Installations also
              exist in
              China. Since commencing sales in 1999 the Company's average annual
              growth rate
              exceeds 60%, using both a direct and channel sales strategy. The majority
              of
              annual service contracts, which represent a lucrative segment of the
              industry,
              are outsourced to local dealers in order to allow the Company to remain
              nimble
              with product development and innovation. The Company is able to capitalize
              on
              this revenue stream by directly holding service contracts. International
              markets
              remain largely untapped, representing significant growth potential.
              Initial
              installations exist in Asia, the Middle East and several other
              markets.

          

          
            

          

          
            	
                    Confidential

                  	
                    March
                      7, 2006

                  
	
                    THIS
                      CIM HAS BEEN DELIVERED SUBJECT TO STRICT OBLIGATIONS OF
                      CONFIDENTIALITY

                  

          

          
            

              
                
                  
                  

                

                
                  Page
                    4

                  
                    

                  

                

                
                  
                  

                

              

            

          

          
             

            
              	
                      1.5.

                    	
                      Revenue
                        Summary

                    

            

          

          

          
            	 	 	
                    
                      1999

                    

                  	 	 	
                    
                      2000

                    

                  	 	 	
                    
                      2001

                    

                  	 	 	
                    
                      2002

                    

                  	 	 	
                    
                      2003

                    

                  	 	 	
                    
                      2004

                    

                  	 	 	
                    
                      2005

                    

                  	 
	
                    
                      Revenues

                    

                  	 	$	
                    
                      861,456

                    

                  	 	 	$	
                    
                      1,385,747

                    

                  	 	 	$	
                    
                      3,872,502

                    

                  	 	 	$	
                    
                      4,947,014

                    

                  	 	 	$	
                    
                      4,241,241

                    

                  	 	 	
                    $

                  	
                    7,235,000

                  	 	 	
                    
                      $

                    

                  	
                    7,468,000

                  	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
                    Unaudited

                  	 	 	
                    Unaudited

                  	 
	
                    
                      Growth

                    

                  	 	 	 	 	 	 	
                    61%

                  	 	 	 	
                    179%

                  	 	 	 	
                    28%

                  	 	 	 	
                    (14%)

                  	 	 	 	
                    71%

                  	
                     

                  	 	 	
                    3%

                  	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	
                    
                      Initiation
                        of

                    

                  	 	 	
                    
                      Good

                    

                  	 	 	
                    
                      Great

                    

                  	 	 	
                    
                      Still

                    

                  	 	 	
                    
                      DCC
                        and

                    

                  	 	 	
                    
                      Introduction

                    

                  	 	 	
                    
                      SR
                        and SC

                    

                  	 
	 	 	
                    
                      revenues

                    

                  	 	 	
                    
                      growth

                    

                  	 	 	
                    
                      growth

                    

                  	 	 	
                    
                      growing

                    

                  	 	 	
                    
                      single

                    

                  	 	 	
                    
                      of

                    

                  	 	 	
                    
                      are
                        below

                    

                  	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
                    
                      but
                        at

                    

                  	 	 	
                    
                      heads
                        (SC,

                    

                  	 	 	
                    
                      PULSECDC

                    

                  	 	 	
                    
                      forecast

                    

                  	 
	 	 	
                    
                      Single
                        Head

                    

                  	 	 	
                    
                      Starting
                        to

                    

                  	 	 	
                    
                      Doing
                        well

                    

                  	 	 	
                    
                      reduced

                    

                  	 	 	
                    
                      SR)
                        all

                    

                  	 	 	
                    
                      (end
                        Q1)

                    

                  	 	 	 	 	 
	 	 	
                    
                      Rectangular

                    

                  	 	 	
                    
                      penetrate

                    

                  	 	 	
                    
                      with

                    

                  	 	 	
                    
                      rate

                    

                  	 	 	
                    
                      below

                    

                  	 	 	 	 	 	 	
                    
                      Pulse

                    

                  	 
	 	 	 	 	 	 	
                    
                      clinic

                    

                  	 	 	
                    
                      clinics

                    

                  	 	 	 	 	 	 	
                    
                      forecast

                    

                  	 	 	
                    
                      Pulse
                        is an

                    

                  	 	 	
                    
                      continued

                    

                  	 
	 	 	
                    
                      Single
                        Head

                    

                  	 	 	
                    
                      market

                    

                  	 	 	 	 	 	 	
                    
                      Single
                        head

                    

                  	 	 	 	 	 	 	
                    
                      immediate

                    

                  	 	 	
                    
                      strong
                        -

                    

                  	 
	 	 	
                    
                      Circular

                    

                  	 	 	 	 	 	 	
                    
                      Driven
                        by

                    

                  	 	 	
                    
                      sales
                        below

                    

                  	 	 	
                    
                      Exchange

                    

                  	 	 	
                    
                      success

                    

                  	 	 	
                    
                      near
                        budget

                    

                  	 
	 	 	 	 	 	 	 	 	 	 	
                    
                      single

                    

                  	 	 	
                    
                      forecast
                        but

                    

                  	 	 	
                    
                      rate
                        drops -

                    

                  	 	 	 	 	 	 	
                    
                      in
                        units

                    

                  	 
	 	 	 	 	 	 	 	 	 	 	
                    
                      heads

                    

                  	 	 	
                    
                      new
                        DCC -

                    

                  	 	 	
                    
                      costs
                        IS2

                    

                  	 	 	
                    
                      $1.6M
                        order

                    

                  	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	
                    
                      market

                    

                  	 	 	
                    
                      dual
                        head

                    

                  	 	 	
                    
                      S470K
                        in

                    

                  	 	 	
                    
                      backlog
                        to

                    

                  	 	 	
                    
                      Prices

                    

                  	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
                    
                      Digital
                        Cardiac

                    

                  	 	 	
                    
                      revenue
                        Without

                    

                  	 	 	
                    
                      start
                        2005

                    

                  	 	 	
                    
                      lower:
                        $175K vs

                    

                  	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
                    
                      Camera
                        is

                    

                  	 	 	
                    
                      exchange

                    

                  	 	 	
                    
                      $10M

                    

                  	 	 	
                    
                      budgeted

                    

                  	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
                    
                      above

                    

                  	 	 	
                    
                      issue

                    

                  	 	 	
                    
                      revenue

                    

                  	 	 	
                    
                      $210K
                        on 37

                    

                  	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
                    forecast

                  	 	 	revenues  	 	 	budgeted 	 	 	
                    units 

                  	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
                    
                       

                    

                  	 	 	
                    
                      could
                        have

                    

                  	 	 	
                    
                      for
                        2005

                    

                  	 	 	
                    
                       

                    

                  	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
                    
                      Dedicated
                        

                      dual
                        heads 

                      taking
                        

                      single
                        head 

                      sales

                    

                  	 	 	
                    
                      been
                        $4.7M, 

                      down
                        5%

                    

                    
                       

                      Competitive
                        

                      CardioMD
                        -

                      affects
                        DCC 

                      and
                        SC sales

                    

                  	 	 	
                    
                       

                    

                  	 	 	
                    

                      Company
                        

                      for
                        sale 

                      entire
                        year - 

                      dealers
                        stall 

                      orders

                    

                  	 

          

          
            

          

          
            
              	
                      1.6.

                    	
                      Core
                        Value Proposition

                    

            

          

          
             

            IS2's
              value proposition to customers is simple:    Best Price,
              Best Specs, Best Reliability.

          

          
            

          

          
            
              	
                      1.7.

                    	
                      Competitive
                        Advantages

                    

            

          

          
            

          

          
            1.7.1.
              Technical Specifications: IS2 cameras have the best specifications in the
              industry:

          

          
            
              	
                       

                    	
                      •

                    	
                      2.9mm
                        Intrinsic Spatial Resolution
                        FWHM

                    

            

          

          
            
              	
                       

                    	
                      •

                    	
                      9%
                        Intrinsic Energy
                        Resolution

                    

            

          

          
            
              	
                       

                    	
                      •

                    	
                      Uniformity
                        +-2.0% Integral +/-1.5%
                        Differential

                    

            

          

          
            
              	
                       

                    	
                      •

                    	
                      Center
                        of rotation better than
                        0.5mm

                    

            

          

          
            Better
              resolution means clearer images and this translates into a better diagnosis
              and
              better patient care.

          

          
            

          

          
            1.7.2.
              Price: Historically, IS2 cameras have represented the best price in each
              class, while
              not
              sacrificing features or function and while representing exceptional
              value.

          

          
            

          

          
            1.7.3.
              Performance / Serviceability: IS2 cameras have proven themselves to be
              highly reliable
              workhorses. A study of 50 cameras yielded an average uptime of all
              units of
              99.94 % and less
              than
              one service related incoming call per month. This best-of-class reliability
              is
              attributed to digital
              architecture, built-in capability for remote faultfinding and corrective
              action
              and robust mechanical
              design. The Company's TeleFixTM program allows for remote diagnostics and in many
cases,
              for remote fixes. Many boards are plug and play, allowing for quick
              swap out and
              increased up-time.

          

          
            

          

          
            	
                    Confidential

                  	
                    March
                      7, 2006

                  
	
                    THIS
                      CIM HAS BEEN DELIVERED SUBJECT TO STRICT OBLIGATIONS OF
                      CONFIDENTIALITY

                  

          

          
            

              
                
                  
                  

                

                
                  Page
                    5

                  
                    

                  

                

                
                  
                  

                

              

            

             

          

          
            1.7.4.
              Ease of Installation: The footprint of the camera is smaller than
              competitive units, allowing it to fit into smaller rooms and through
              standard
              doorways. The camera requires only standard wall outlets (120V, 15A)
              and also
              equipped for European and international power standards. No special
              air
              conditioning, no floor leveling and, typically, no floor reinforcement
              is
              necessary.

          

          
            

          

          
            1.7.5.
              Connectivity: IS2's connectivity package, called Tele-NucsTM, allows for
              remote servicing (Tele-FixTM), remote teaching (Tele-TeachTM) and remote reads
              (Tele-ReadTM). Additionally, IS2's connectivity allows IS2 cameras to interface
              to most other popular brands of cameras and workstations as well as
              to most
              peripheral devices. IS2's connectivity package supports Interfile 3.3
              and DICOM
              formats allowing, data interchange with almost any other medical imaging
              system.

          

          
            

          

          
            1.7.6.
              Ease Of Use: IS2 cameras are designed to be very simple to use. IS2 units
              are WindowsXP based. Users regularly comment on how easy and intuitive
              they are
              to use, with similar comments concerning user
              manuals.

          

          
            

          

          
            1.7.7.
              Field Upgradeable Design: The Company designed its cameras with field
              upgradeability in mind.  For new cardiac clinics where patient volume is
              yet unknown, a single head PulseCDC represents an economical starting
              point. As
              patient volume grows, the unit can be upgraded to a more efficient
              dual head in
              the field, with little or no disruption to the practice. Single-head
              cameras
              share the same philosophy. The SC (circular) can be upgraded in the
              field to an
              SR (rectangular). Both the SC and the SR can be field-upgraded to a
              DCC (a dual
              head cardiac unit).

          

          
            

          

          
            1.7.8.
              ISO Certification/CE Mark: IS2's system has been certified to be compliant
              with ISO 9001:2000, and ISO 13485:1996 (now being upgraded to 13485:2003).
              Audits are performed annually. For Canada, additional certification
              for
              compliance with the CMD/CAS system is also maintained, and for the
              European
              Community, compliance with the Medical Device Directive 93/42/EEC allows
              1S2 to
              CE mark its products. The United States requires that devices be registered
              with
              Food and Drug Administration (FDA) according to 510K procedure, and
              requires
              that the company maintain a quality system in adherence to the Good
              Manufacturing Practices (GMP) standard (no formal certification required
              for the
              latter).

          

          
            

          

          
            
              	
                      1.8.

                    	
                      Investment
                        Considerations

                    

            

          

          
            

          

          
            1.8.1.
              Domain Expertise: The scientific team responsible
              for the design and continued innovation of the
              company's world-class cameras comprise more than 125 years of expertise
              in
              nuclear medicine, physics, mathematics and engineering.  These skill sets
              are not easy to find on an individual basis and it is even more difficult
              to
              assemble a team with the combined skills, expertise and experience
              of the IS2
              workforce.

          

          
            

          

          
            1.8.2.
              Intellectual Property Portfolio: The Company has a number of issued,
              pending and filed patents. The Company also employs trade secrets and
              proprietary know-how in the design and manufacture of its cameras.
              It expects to
              continue to file new patent applications and expand its intellectual
              property
              portfolio.

          

          
            

          

          
            1.8.3.
              Growing Customer base: The Company has more than 125 cameras installed in
              the field, primarily in the United States. The Company recently closed
              a sale of
              a PulseCDC camera to a leading cardiologist in the United Kingdom,
              which
              represents the first cardiac imaging mobile camera installation in
              Europe. The
              Company has a significant and immediate opportunity to build an international
              installed base.

          

          
            

          

          
            	
                    Confidential

                  	
                    March
                      7, 2006

                  
	
                    THIS
                      CIM HAS BEEN DELIVERED SUBJECT TO STRICT OBLIGATIONS OF
                      CONFIDENTIALITY

                  

          

          
            
              
              

            

            
              Page
                6

              
                

              

            

            
              
              

            

          

          
            1.8.4.
              Service Opportunities: The Company currently outsources its service
              agreements to third parties, most of whom are dealer/sales agents for
              the
              Company. Most of these arrangements are for terms of one and two years.
              The
              Company would be able to keep these lucrative service contracts and
              negotiate
              longer-term agreements as part of the sale.

          

          
            

          

          
            1.8.5.
              Opportunity to Improve Gross Margin: Although the Company has recently
              implemented a LEAN manufacturing process and established gross margins
              that it
              believes are competitive with its much larger competitors, the Company
              has an
              opportunity to further improve gross margins by capitalizing on cost
              savings
              from increased volumes and economies of scale.

          

          
            

          

          
            1.8.6.
Entry
              Point into Mobile "Fee for
              Scan" Market; The
              Company's PulseCDC camera
              is FDA 510K cleared for mobile use and its small footprint and other
              related
              specs offer a compelling opportunity to enter into the mobile nuclear
              medicine
              market and offer imaging services on a per diem or per scan basis in
              a manner
              similar to Digirad, opening up a significant segment of the market
              otherwise too
              small to support the outright purchase of a
              camera.

          

          
            

          

          
            1.8.7. Demographics
              Support Strong Market
              Growth: The aging
              baby boomer generation is
              going to increase dramatically the need for healthcare services and
              expenditures
              for diseases and conditions that are more prevalent with aging. The
              combination
              of the aging of the largest segment of the population together with
              the growing
              pervasiveness of obesity and diabetes in the United States will dramatically
              increase the incidence of heart disease and the demand for cardiac
              diagnostic
              services like nuclear medicine. Providers of nuclear medicine services
              are well
              positioned to meet this demand.

          

          
            

          

          
            
              
                	
                        2.    Market
                          Opportunity

                      

              

            

          

          
             

            2.1.  Nuclear
              Imaging

          

          
            

          

          
            Nuclear
              imaging is a form of diagnostic imaging in which depictions of internal
              anatomy
              or physiology are generated through non-invasive means. Diagnostic
              imaging
              facilitates the early diagnosis of diseases and disorders, often minimizing
              the
              scope, cost and amount of care required and reducing the need for more
              invasive
              procedures. Currently, five major types of non-invasive diagnostic
              imaging
              technologies are available: x-ray; magnetic resonance imaging; computerized
              tomography; ultrasound; and nuclear imaging.

          

          
            Nuclear
              imaging measures varying degrees of physiological activity. Physicians
              use the
              images and related clinical information to determine whether to refer
              patients
              to more invasive diagnostic or therapeutic treatments and to follow
              progression
              of disease and response to therapy. Nuclear imaging is provided through
              two
              primary technologies: gamma cameras and positron emission tomography,
              or PET,
              machines. The most widely used imaging acquisition technology utilizing
              gamma
              cameras is single photon emission computed tomography, or
              SPECT.   All of the Company's current cardiac gamma cameras
              employ SPECT (circular and non-circular).

          

          
            According
              to industry sources, despite the improved image quality of PET machines,
              gamma
              cameras continue to be used for a substantial majority of nuclear imaging
              procedures. The Company believes this preference is due to the lower
              purchase
              and maintenance costs, smaller physical footprint and easier service
              logistics
              of gamma cameras.

          

          
            

          

          
            2.2.  Clinical
              Applications for Nuclear Imaging

          

          
            

          

          
            Nuclear
              imaging is used primarily in cardiovascular, oncological and neurological
              applications. Nuclear imaging involves the introduction of very low-level
              radioactive chemicals, called radiopharmaceuticals, into the patient's
              body. The
              radiopharmaceuticals are specially formulated to concentrate temporarily
              in the
              specific part of the body to be studied. A system comprised of a gamma
              camera
              detector and computer is then used to detect the radiation signal emitted
              by the
              chemicals and to convert that signal into an image of the body part
              or organ.
              Nuclear imaging, in contrast to other diagnostic imaging modalities,
              shows not
              only the anatomy or structure of an organ or body part, but also its
              function-including blood flow, organ function, metabolic activity and
              biochemical activity.

          

          
            

          

          
            	
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                      7, 2006

                  
	
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                      CIM HAS BEEN DELIVERED SUBJECT TO STRICT OBLIGATIONS OF
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                  Page
                    7

                  
                    

                  

                

                
                  
                  

                

              

            

             

          

          
            According
              to industry sources, the following nuclear imaging procedures were
              performed
              with gamma cameras in the United States in 2003:

          

          
            
              	
                    	
                      •

                    	
                      Cardiac
                        Applications. Approximately 10.1 million procedures were performed
                        in
                        cardiology to provide diagnostic information concerning the
                        flow of blood
                        to, through and from the heart as well as the condition of
                        the heart
                        muscle.

                    

            

          

          
            
              	
                    	
                      •

                    	
                      Non-Cardiac
                        Applications. Approximately 8.3 million procedures were performed
                        in
                        oncology and organ imaging to provide diagnostic information
                        on
                        tumor location and size or on the condition and function
                        of various
                        organs.

                    

            

          

          
            

          

          
            2.2.1.
              Nuclear Cardiology: Industry sources indicate that nuclear cardiology
              procedures performed annually in the United States with gamma cameras
              generate
              revenue of approximately $10 billion. The Company's target markets
              are primarily
              physician practices and outpatient clinics. According to industry sources
              these
              target markets constitute 25% of the total market, or $2.5B. The market
              for
              gamma camera sales across all care settings in the United States within
              this
              total market is estimated to be approximately $450 million
              annually.

          

          
            According
              to industry sources, nuclear cardiology procedures are expected to
              grow by
              approximately 8% annually through 2005. We believe the growth of these
              procedures will be driven by an expected increase in coronary heart
              disease.
              According to the American Heart Association, this increase in heart
              disease will
              result from the aging of baby boomers and the record rate of obesity
              and
              diabetes in ail age groups.

          

          
            

          

          
            2.2.2.
              Brain Imaging: Nuclear medicine brain scans are currently established
              within the United States for the use principally in the diagnosis of
              stroke/ischemia, dementia, Alzheimer's disease and Parkinson's disease,
              seizures/epilepsy, psychiatric conditions including schizophrenia,
              unipolar,
              bipolar disorders, attention deficit disorder (ADD).  Brain Imaging
              currently represents only a small segment of nuclear medicine studies.
              However,
              with advances in related radiopharmaceuticals there may be potential
              for growth.
              According to industry sources, within 10 years, brain imaging can make
              up 30% to
              40% of all nuclear scans because of the aging baby boomer population
              and
              emerging pharmaceutical treatments for epilepsy, Alzheimer's and stroke
              as key
              factors.

          

          
            As
              the potential for brain imaging has already been considered in its
              design, the
              PulseCDC may represent a low cost development avenue to enter an emerging
              and
              potentially lucrative brain imaging market.

          

          
            

          

          
            2.2.3.
              Breast Imaging: One of the limiting factors in the acceptance of
              scintimammography has been the lack of   a suitable gamma camera.
              Successful scintimammography requires:

          

          
            
              	
                      •

                    	
                      Ultra
                        high resolution in order to be able to see early stage
                        tumors

                    

            

          

          
            
              	
                      •

                    	
                      The
                        ability to image the entire
                        breast

                    

            

          

          
            
              	
                      •

                    	
                      The
                        ability to image that portion of the breast that is closest
                        to the chest
                        wall and to be able to distinguish between breast and chest
                        tissue

                    

            

          

          
            
              	
                      •

                    	
                      The
                        ability to stabilize the breast and prevent movement that
                        would blur an
                        image

                    

            

          

          
            
              	
                      •

                    	
                      Stereotactics
                        (the ability to precisely locate the tumor in three
                        dimensions)

                    

            

          

          
            
              	
                      •

                    	
                      The
                        ability to guide a biopsy needle to the tumor for
                        extraction

                    

            

          

          
            The
              Company has developed a dedicated scintimammography (nuclear breast
              imaging)
              camera performing simultaneous imaging of both breasts with potential
              for
              stereotactic tumor localization and same-day biopsy-like removal that
              has
              potential to fulfill all of these requirements. This camera presents
              a
              compelling offering in the women's health market.

          

          
            

          

          
            2.3.  Intellectual
              Property

          

          
            

          

          
            IS2
              has a number of patents granted, two pending, one office action and
              two filed
              for a total of 16 potential patents. IS2 has filed for protection in
              the USA and
              Canada. Patents generally deal with protection of mechanical and electrical
              concepts that result in either lower cost manufacturing or improved
              image
              quality.

          

          
            

          

          
            	
                    Confidential

                  	
                    March
                      7, 2006

                  
	
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                      CIM HAS BEEN DELIVERED SUBJECT TO STRICT OBLIGATIONS OF
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                  Page
                    8

                  
                    

                  

                

                
                  
                  

                

              

            

          

          
             

            2.4.  Competitive
              Analysis

          

          
            

          

          
            2.4.1.
              Major Players: The gamma camera market is dominated by Siemens, Philips
and
              General Electric.   DigiRad is a fourth player but not nearly as
              dominant as the other three. Mediso
              is a marginal player based in Hungary. Other smaller players exist
              such as
              Trionix, Consolidation
              within the industry has been common. For example, Philips purchased
              ADAC, the previous
              market leader. As reported by Global Industry Analysts, relative market
              shares
              for allclasses
              of gamma cameras (not including PET) in 2000 were:

          

          
            
              	
                      •

                    	
                      Philips

                    	
                      38%

                    

            

          

          
            
              	
                      •

                    	
                      Siemens

                    	
                      27%

                    

            

          

          
            
              	
                      •

                    	
                      General
                        Electric

                    	
                      24%

                    

            

          

          
            
              	
                      •

                    	
                      Other

                    	
                      11%

                    

            

          

          
            Based
              on confidential information, worldwide market shares by 2004 have changed
              with
              Siemens showing growth, largely at the expense of Philips and General
              Electric.
              Relative market shares are believed to be in the range
              of:

          

          
            
              	
                      •

                    	
                      Philips

                    	
                      30%

                    

            

          

          
            
              	
                      •

                    	
                      Siemens

                    	
                      42%

                    

            

          

          
            
              	
                      •

                    	
                      General
                        Electric

                    	
                      18%

                    

            

          

          
            
              	
                      •

                    	
                      DigiRad

                    	
                      9%

                    

            

          

          
            
              	
                      •

                    	
                      Other

                    	
                      1%

                    

            

          

          
            IS2
              does not yet manufacture a variable geometry camera, a configuration
              which Is
              still the most popular type of gamma camera sold, and therefore IS2's
              collective
              market share is negligible.

          

          
            When
              considering only the cardiology market, the market space in which the
              IS2
              PulseCDC competes, in 2004 relative market shares, again based on confidential
              information, are believed to be in the range of:

          

          
            
              	
                      •

                    	
                      Philips

                    	
                      31%

                    

            

          

          
            
              	
                      •

                    	
                      Siemens

                    	
                      40%

                    

            

          

          
            
              	
                      •

                    	
                      General
                        Electric

                    	
                      13%

                    

            

          

          
            
              	
                      •

                    	
                      DigiRad

                    	
                      16%

                    

            

          

          
            
              	
                      •

                    	
                      Other

                    	
                      0%

                    

            

          

          
            The
              above figures are believed to be based on worldwide totals. As IS2
              is only now
              starting to penetrate non-US markets with the PulseCDC, its worldwide
              market
              share is essentially non­existence, representing a very significant
              opportunity for global marketing and sales.

          

          
            In
              the United States, and according to 2004 NEMA (National Electrical
              Manufacturers
              Associations) figures, IS2's market share for cardiac cameras (with
              the
              PulseCDC) is about 5.8%. This was achieved essentially with only two
              sales reps
              (the third was newly hired in 2004 and was not yet producing) and with
              only
              three quarters of sales effort in 2004 (as the PulseCDC was released at the
              end
              of the first quarter), Additionally, both sales professionals were
              based in
              Ottawa and were not in local territories. Placing of sales reps into
              local U.S.
              territories may have great potential to dramatically increase market
              share in
              the cardiology space as the PulseCDC competes very
              well.

          

          
            

          

          
            2.4.2.
              Competitive Analysis - Technical: IS2 has produced an extensive
              technical comparison sheet that compares the PulseCDC to competing
              brands. The
              sheet is available upon request. As a summary, the following compares
              the
              PulseCDC to the Philips CardioMD and the Siemens C.Cam, the major players
              in the
              small-footprint cardiac camera space.

          

          
            To
              date, General Electric has not produced a small footprint cardiac camera.
              They
              compete by offering the Myosight, a version of their variable geometry
              camera
              with the heads locked in a fixed 101° position for
              cardiology.

          

          
            

          

          
            	
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                      7, 2006

                  
	
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              Page
                9

              
                

              

            

            
              
              

            

          

          

          
            

          

          
            
              
                	
                        3.    Potential
                          for
                          Significant
                          Growth

                      

              

            

          

          
             

            3.1.
              Potential for Significant Revenue Growth

          

          
            

          

          
            The
              Company may experience dramatic revenue growth by implementing a large,
              direct
              sales force and a direct service force, thereby capturing a greater
              market
              share, higher margin safes and year over year repeat revenues from
              service
              contracts. IS2 has developed a spreadsheet model outlining potential
              for such
              revenues assuming the development of a competitive variable geometry
              camera. The
              revenue stream is largely dependant on sales from the Pulse, a variable
              geometry
              camera and service contracts. Development of other products is certainly
              possible, such as a PET camera, but these are not yet factored into
              the analysis
              below.

          

          
            The
              model
              shows the following five-year projected revenue
              potential:

          

          

          
            	 	 	
                    
                      2010

                    

                  	 	 	
                    
                      2009

                    

                  	 	 	
                    
                      2008

                    

                  	 	 	
                    
                      2007

                    

                  	 	 	
                    
                      2006

                    

                  	 
	
                    
                      Cardiac
                        Camera

                    

                  	 	$	
                    
                      15,174,384

                    

                  	 	 	$	
                    
                      14,876,847

                    

                  	 	 	$	
                    
                      12,715,254

                    

                  	 	 	$	
                    
                      10,508,475

                    

                  	 	 	$	
                    
                      7,005,650

                    

                  	 
	
                    
                      Variable
                        Geo,

                    

                  	 	$	
                    
                      42,840,000

                    

                  	 	 	$	
                    
                      28,560,000

                    

                  	 	 	$	
                    
                      19,040,000

                    

                  	 	 	$	
                    
                      9,520,000

                    

                  	 	 	$	
                    
                      -

                    

                  	 
	
                    
                      Service
                        (Cardiac)

                    

                  	 	$	
                    
                      4,014,986

                    

                  	 	 	$	
                    
                      3,024,981

                    

                  	 	 	$	
                    
                      2,070,952

                    

                  	 	 	$	
                    
                      1,345,942

                    

                  	 	 	$	
                    
                      490,395

                    

                  	 
	
                    
                      Service
                        (VG)

                    

                  	 	$	
                    
                      6,497,400

                    

                  	 	 	$	
                    
                      3,712,800

                    

                  	 	 	$	
                    
                      1,856,400

                    

                  	 	 	$	
                    
                      -

                    

                  	 	 	$	
                    
                      -

                    

                  	 
	
                    
                      Total

                    

                  	 	$	
                    
                      68,526,771

                    

                  	 	 	$	
                    
                      50,174,628

                    

                  	 	 	$	
                    
                      35,682,607

                    

                  	 	 	$	
                    
                      21,374,417

                    

                  	 	 	$	
                    
                      7,496,045

                    

                  	 

          

          
             

            Revenues
              from domestic and international markets. All figures are estimates
              and do not
              represent guarantees of performance.

          

          
            

          

          
            	
                    Confidential

                  	
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                      7, 2006

                  
	
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                      CIM HAS BEEN DELIVERED SUBJECT TO STRICT OBLIGATIONS OF
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                  Page
                    10

                  
                    

                  

                

                
                  
                  

                

              

            

             

          

          
            Variable
              geometry camera developed in 2006, ready for sale in 2007. Revenues
              from the
              following potential products would be in addition to those shown: Attenuation
              correction for PulseCDC, Pulse Brain Camera, Portable Pulse, PET Camera,
              SR
              (developed), SC (developed), Equine (developed), BCC (prototype developed),
              Whole Body Camera, Prostate Camera, Portable SPECT
              Camera.

          

          
            Development
              and subsequent sale of a variable geometry camera does not take into
              account the
              potential requirement for a CT (x-ray computed tomography) feature.
              A gamma
              camera with CT is referred to as a SPECT/CT unit. The gamma camera
              acquires the
              nuclear physiological image while the CT technology acquires an anatomical
              image
              - both being acquired one after the other on the same patient bed.
              The two
              images are then fused. As an example, a fused SPECT/CT image would
              allow a
              physician to detect a cancerous tumor (from the hot spot generated
              by the
              nuclear image) while also being able to anatomically localize the tumor
              due to
              the CT image. Image fusion does not necessarily require a hybrid SPECT/CT
              camera
              as images from a dedicated SPECT camera can be fused with corresponding
              images
              from the same patient from a CT unit. However, a SPECT/CT unit has
              the advantage
              of imaging the patient with both modalities (one after the other) in
              a single
              procedure which helps ensure that the patient is in the same position
              for both
              studies and this contributes to more accuracy in the fused image. If
              the hybrid
              SPECT/CT units gain market acceptance it may be necessary for IS2 to
              incorporate
              CT technology into its variable geometry camera. Further analysis would
              be
              required to determine whether or not the CT component should be developed
              in-house or purchased from a third party.

          

          
            

          

          
            3.2.
              Potential for Increased Gross Margin

          

          
            

          

          
            In
              2004, gross margins (un-audited) were at 29% for year-end, admittedly
              low. Much
              of the erosion in gross margin was caused by three factors; the exchange
              rate
              (decline of the U.S. dollar), price erosion from competitors for small
              footprint
              cardiac cameras and higher than normal product costs due to new product
              introduction. For 200S year-end, gross margins are conservatively budgeted
              at
              33%. Significant improvements in gross margin performance are possible
              as a
              result of both production and engineering related cost reductions,
              primarily
              aimed at the PulseCDC.

          

          
            Production
              related cost reductions are expected to be relatively simple to secure
              as most
              are related to savings due to increased volumes and efficiencies of
              scale. As
              sales volumes increase, IS2 is able to purchase goods from suppliers
              in larger
              and more predictable volumes, thereby securing discounted pricing.
              Other
              production related savings are expected as a result of out-sourcing
              of specific
              sub-assemblies.

          

          
            Engineered
              cost savings are expected to result from the
              following;

          

          
            
              	
                    	
                      •

                    	
                      MCSS
                        Board Simplification (Motion Control Sub-System board level
                        modification
                        to reduce
                        parts count and number of board required per camera system)
                        (underway)

                    

            

          

          
            
              
                
                  	
                        	
                          •

                        	
                          New
                            collimator design (changes to mounting system, mechanically
                            simpler and
                            less expensive while increasing ease of use for collimator
                            changing)
                            (underway)

                        

                

              

            

          

          
            
              	
                    	
                      •

                    	
                      New
                        detector head electronics (Re-design of detector head electronics
                        to
                        reduce number of boards and incorporate more modem components
                        while
                        improving clinical image quality. Also includes moving the
                        detector head
                        computer out of the camera head and into an external PC,
                        which is more
                        cost effective.)
                        (underway)

                    

            

          

          
            
              	
                    	
                      •

                    	
                      Smaller
                        field of view detector head.   (A proposed change which
                        would reduce crystal size, the number of photomultiplier
                        tubes (PMTs) and
                        involves switching from round to square PMTs. The change
                        would result in a
                        smaller field of view (FOV), however,
                        the

                    

            

          

          
            
              	
                    	
                      •

                    	
                      FOV
                        would foe similar to that of competitive units.   Market
                        feedback is required to determine if the reduced FOV will
                        affect sales. As
                        competing units have a smaller
                        FOV,

                    

            

          

          
            
              	
                    	
                      •

                    	
                      IS2
                        expects market
                        acceptance.

                    

            

          

          
            The
              PulseCDC can be sold in two versions, a dual head and a single head.
              The single
              head version is identical to the dual head in appearance. However,
              internally
              only one set of head electronics is included. Customers purchasing
              a single head
              do so for price reasons or because initial patient volumes are low,
              however, as
              their practice grows these customers are expected to purchase field
              upgrades to
              a dual head. In the first quarter of 2005, on a unit basis, 30% of
              PulseCDC
              sales were for the single head version. Gross margins for the dual
              head and
              single head versions are different, with margins for single heads being
              higher.   With incorporation of the above production and
              engineered cost reduction measures (with the exception of the flat
              bed change),
              then gross margins are expected to be:

          

          
            

          

          
            	
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                      7, 2006

                  
	
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                      CIM HAS BEEN DELIVERED SUBJECT TO STRICT OBLIGATIONS OF
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                  Page
                    11

                  
                    

                  

                

                
                  
                  

                

              

            

             

          

          
            
              	
                    	
                      •

                    	
                      on
                        average, about 38.0% for a dual head version if a dealer
                        based sales
                        strategy is used;

                    

            

          

          
            
              	
                    	
                      •

                    	
                      on
                        average about 47.2% for a single head version if a dealer
                        based sales
                        strategy is used;

                    

            

          

          
            
              	
                    	
                      •

                    	
                      on
                        average about 47.9% for a dual head version if a direct sales
                        strategy is
                        used;

                    

            

          

          
            
              	
                    	
                      •

                    	
                      on
                        average about 56.2% for a single head version if a direct
                        sales strategy
                        is used.

                    

            

          

          
            All
              of the above assume the exchange rate is in the range of 1.21 to 1.25
              ($US to
              $CDN) and that manufacturing remains in the Ottawa plant, in Canada,
              if the US
              dollar improves in value the gross margins would increase. The Company
              has also
              an opportunity to further reduce costs, especially labor, and increase
              gross
              margins by manufacturing in low cost regions, possibly
              Mexico.

          

          
            

          

          
            
              
                
                  	
                          4.    Corporate
                            Operations

                        

                

                 

              

            

          

          
            All
              but one member of the management team have a minimum of 10 years experience
              in
              their related fields of expertise. The production manager has seven
              years of
              experience. The scientific team responsible for the design and continued
              innovation of the company's cameras are world-class and comprise more
              than 125
              years of expertise in nuclear medicine, physics, mathematics and
              engineering.

          

          
            Technical
              and clinical members of the team have a full compliment of skill sets:
              mechanical engineering and biomechanical design, electrical and electronic,
              nuclear and computational physics, high energy physics, software design,
              computer science, networking and IT, occupational health and safety,
              QA and
              regulatory, nuclear medicine, clinical applications   and
              biological science.

          

          
            

          

          
            
              
                	
                        5.    Post
                          Acquisition Projected Financials for 2006 -
                          2010

                      

              

            

          

          
             

            5.1.    Income
              (Loss) Statement ('000s)

          

          

          
            	 	 	 	
                    
                      Post
                        Acquisition Projections

                    

                  	 	 	
                    
                      Actual

                    

                  	 
	 	 	 	
                    
                      2010

                    

                  	 	 	
                    
                      2009

                    

                  	 	 	
                    
                      2008

                    

                  	 	 	
                    
                      2007

                    

                  	 	 	
                    
                      2006

                    

                  	 	 	
                    
                      Beginning
                        

                      of 2006 Adj

                    

                  	 	 	
                    
                      Acquisition

                    

                    
                      Adjustments

                    

                  	 	 	
                    
                      2005

                    

                  	 	 	
                    
                      2004

                    

                  	 	 	
                    
                      2003

                    

                  	 
	
                    
                      Sales

                    

                  	 	 	$	
                    
                      68,527

                    

                  	 	 	$	
                    
                      50,175

                    

                  	 	 	$	
                    
                      35,683

                    

                  	 	 	$	
                    
                      21,374

                    

                  	 	 	$	
                    
                      7,496

                    

                  	 	 	 	 	 	 	 	 	$	
                    
                      7,468

                    

                  	 	 	$	
                    
                      7,235

                    

                  	 	 	$	
                    
                      4,241

                    

                  	 
	
                    
                      COGS

                    

                  	
                    
                      67%  (of
                        Sales)

                    

                  	 	$	
                    
                      45,913

                    

                  	 	 	$	
                    
                      33,617

                    

                  	 	 	$	
                    
                      23,908

                    

                  	 	 	$	
                    
                      14,321

                    

                  	 	 	$	
                    
                      5,022

                    

                  	 	 	 	 	 	 	 	 	$	
                    
                      5,087

                    

                  	 	 	$	
                    
                      5,115

                    

                  	 	 	$	
                    
                      2,945

                    

                  	 
	
                    
                      Gross
                        Contribution

                    

                  	 	 	$	
                    
                      22,614

                    

                  	 	 	$	
                    
                      16,558

                    

                  	 	 	$	
                    
                      11,775

                    

                  	 	 	$	
                    
                      7,053

                    

                  	 	 	$	
                    
                      2,474

                    

                  	 	 	 	 	 	 	 	 	$	
                    
                      2,381

                    

                  	 	 	$	
                    
                      2,120

                    

                  	 	 	$	
                    
                      1,296

                    

                  	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                    
                      Operating
                        Expenses

                    

                  	
                    
                      20%  (Growth)

                    

                  	 	$	
                    
                      5,060

                    

                  	 	 	$	
                    
                      4,216

                    

                  	 	 	$	
                    
                      3,514

                    

                  	 	 	$	
                    
                      2,928

                    

                  	 	 	$	
                    
                      2,440

                    

                  	 	 	 	 	 	 	 	 	$	
                    
                      2,440

                    

                  	 	 	$	
                    
                      3,309

                    

                  	 	 	$	
                    
                      2,496

                    

                  	 
	
                    
                      EBITDA

                    

                  	 	 	$	
                    
                      17,554

                    

                  	 	 	$	
                    
                      12,342

                    

                  	 	 	$	
                    
                      8,261

                    

                  	 	 	$	
                    
                      4,125

                    

                  	 	 	$	
                    
                      34

                    

                  	 	 	 	 	 	 	 	 	$	
                    
                      -59

                    

                  	 	 	$	
                    
                      -1,189

                    

                  	 	 	$	
                    
                      -1,200

                    

                  	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                    
                      Other
                        Expenses

                    

                  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                    
                      Interest

                    

                  	
                    
                      10% (of LT debts)

                    

                  	 	$	
                    
                      14

                    

                  	 	 	$	
                    
                      11

                    

                  	 	 	$	
                    
                      8

                    

                  	 	 	$	
                    
                      5

                    

                  	 	 	$	
                    
                      3

                    

                  	 	 	 	 	 	 	 	 	$	
                    
                      222

                    

                  	 	 	$	
                    
                      45

                    

                  	 	 	$	
                    
                      -25

                    

                  	 
	
                    
                      Depreciation
                        &

                         Amortization

                    

                  	
                    
                      43%  (of
                        Cap. 

                                  Assets)

                    

                  	 	$	
                    
                      156

                    

                  	 	 	$	
                    
                      142

                    

                  	 	 	$	
                    
                      129

                    

                  	 	 	$	
                    
                      117

                    

                  	 	 	$	
                    
                      106

                    

                  	 	 	 	 	 	 	 	 	$	
                    
                      168

                    

                  	 	 	$	
                    
                      156

                    

                  	 	 	$	
                    
                      106

                    

                  	 
	
                    
                      IRAP
                        Royalties

                    

                  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	$	
                    
                      107

                    

                  	 	 	 	 	 	 	 	 	 
	 	 	 	$	
                    
                      170

                    

                  	 	 	$	
                    
                      152

                    

                  	 	 	$	
                    
                      136

                    

                  	 	 	$	
                    
                      122

                    

                  	 	 	$	
                    
                      110

                    

                  	 	 	 	 	 	 	 	 	$	
                    
                      497

                    

                  	 	 	$	
                    
                      201

                    

                  	 	 	$	
                    
                      81

                    

                  	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                    
                      Income
                        (Loss) before Tax

                    

                  	 	 	$	
                    
                      17,384

                    

                  	 	 	$	
                    
                      12,189

                    

                  	 	 	$	
                    
                      8,125

                    

                  	 	 	$	
                    
                      4,003

                    

                  	 	 	$	
                    
                      -76

                    

                  	 	 	$	
                    
                      0

                    

                  	 	 	$	
                    
                      0

                    

                  	 	 	$	
                    
                      -556

                    

                  	 	 	$	
                    
                      -1,390

                    

                  	 	 	$	
                    
                      -1,281

                    

                  	 
	
                    
                      Income
                        Tax Provisions

                    

                  	
                    
                      40% (Tax  
                        

                                 Rate)

                    

                  	 	$	
                    
                      6,234

                    

                  	 	 	$	
                    
                      4,596

                    

                  	 	 	$	
                    
                      2,370

                    

                  	 	 	$	
                    
                      121

                    

                  	 	 	 	
                    
                      50

                    

                  	 	 	$	
                    
                      0

                    

                  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                    
                      Net
                        income (Loss)

                    

                  	 	 	$	
                    
                      11,150

                    

                  	 	 	$	
                    
                      7,593

                    

                  	 	 	$	
                    
                      5,755

                    

                  	 	 	$	
                    
                      3,882

                    

                  	 	 	$	
                    
                      -76

                    

                  	 	 	$	
                    
                      0

                    

                  	 	 	$	
                    
                      0

                    

                  	 	 	$	
                    
                      -556

                    

                  	 	 	$	
                    
                      -1,390

                    

                  	 	 	$	
                    
                      -1,281

                    

                  	 
	
                    
                      Loss
                        carry forward expiration

                    

                  	 	 	$	
                    
                      1,800

                    

                  	 	 	$	
                    
                      700

                    

                  	 	 	$	
                    
                      2,200

                    

                  	 	 	$	
                    
                      3,700

                    

                  	 	 	$	
                    
                      3,500

                    

                  	 	 	$	
                    
                      3,300

                    

                  	 	 	 	 	 	 	$	
                    
                      3,300

                    

                  	 	 	 	 	 	 	 	 	 

          

          
            

          

          
            	
                    Confidential

                  	
                    March
                      7. 2006

                  
	
                    THIS
                      CIM HAS BEEN DELIVERED SUBJECT TO STRICT OBLIGATIONS OF
                      CONFIDENTIALITY

                  

          

          
            

              
                
                  
                  

                

                
                  Page
                    12

                  
                    

                  

                

                
                  
                  

                

              

          

          
            The
              projections are based on the following assumptions:

          

          
            
              
                
                  	
                        	
                          •

                        	
                          Cost
                            Of Goods Sold (COGS) are conservatively expected to be
                            67% of the sales
                            (without additional cost savings that can increase gross
                            margin and are
                            described in section
                            5.2)

                        

                

              

              
                
                  	 	
                          •

                        	
                          Operating
                            Expenses are expected to grow 20%
                            annually

                        

                

              

              
                
                  	 	
                          •

                        	
                          Annual
                            interest rate for Long-Term Debts is
                            10%

                        

                

              

              
                
                  	 	
                          •

                        	
                          Income
                            Tax rate is
                            43%

                        

                

              

            

          

          
             

             

            5.2.    Balance
              Sheet ('000s)

          

          

          
            	 	 	 	
                    
                      Post
                        Acquisition Projections

                    

                  	 	 	
                    
                      Actual

                    

                  	 
	 	 	 	
                    
                      2010

                    

                  	 	 	
                    
                      2009

                    

                  	 	 	
                    
                      2008

                    

                  	 	 	
                    
                      2007

                    

                  	 	 	
                    
                      2006

                    

                  	 	 	
                    
                      Beginning

                    

                    
                      of
                        2006 Adj

                    

                  	 	 	
                    
                      Acquisition
                        Adjustments

                    

                  	 	 	
                    
                      2005

                    

                  	 	 	
                    
                      2004

                    

                  	 	 	
                    
                      2003

                    

                  	 
	
                    
                      Assets

                    

                  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                    
                      Cash

                    

                  	 	 	$	
                    
                      12,899

                    

                  	 	 	$	
                    
                      6,454

                    

                  	 	 	$	
                    
                      2,576

                    

                  	 	 	$	
                    
                      490

                    

                  	 	 	$	
                    
                      166

                    

                  	 	 	$	
                    
                      335

                    

                  	 	 	$	
                    
                      -482

                    

                  	 	 	$	
                    
                      817

                    

                  	 	 	$	
                    
                      971

                    

                  	 	 	$	
                    
                      1,237

                    

                  	 
	
                    
                      Receivables

                    

                  	
                    
                      7%       (of   
                        

                                   
                        Sales)

                    

                  	 	$	
                    
                      4,623

                    

                  	 	 	$	
                    
                      3,385

                    

                  	 	 	$	
                    
                      2,407

                    

                  	 	 	$	
                    
                      1,442

                    

                  	 	 	$	
                    
                      506

                    

                  	 	 	$	
                    
                      168

                    

                  	 	 	 	 	 	 	$	
                    
                      168

                    

                  	 	 	$	
                    
                      647

                    

                  	 	 	$	
                    
                      463

                    

                  	 
	
                    
                      Other current assets

                    

                  	
                    
                      3 
                        9%   
                          (of     

                                       
                        COGS)

                    

                  	 	$	
                    
                      18,244

                    

                  	 	 	$	
                    
                      13,492

                    

                  	 	 	$	
                    
                      9,740

                    

                  	 	 	$	
                    
                      6,035

                    

                  	 	 	$	
                    
                      2,441

                    

                  	 	 	$	
                    
                      2,161

                    

                  	 	 	 	 	 	 	$	
                    
                      2,161

                    

                  	 	 	$	
                    
                      2,555

                    

                  	 	 	$	
                    
                      2,449

                    

                  	 
	 	 	 	$	
                    
                      35,766

                    

                  	 	 	$	
                    
                      23,331

                    

                  	 	 	$	
                    
                      14,723

                    

                  	 	 	$	
                    
                      7,967

                    

                  	 	 	$	
                    
                      3,113

                    

                  	 	 	$	
                    
                      2,664

                    

                  	 	 	$	
                    
                      -482

                    

                  	 	 	$	
                    
                      3,146

                    

                  	 	 	$	
                    
                      4,173

                    

                  	 	 	$	
                    
                      4,149

                    

                  	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	    
                     	
                     

                  
	
                    
                             
                        Capital and    
                        

                                 
                        other assets

                    

                  	
                    
                      1  10%    (Growth)

                    

                  	 	$	
                    
                      401

                    

                  	 	 	$	
                    
                      365

                    

                  	 	 	$	
                    
                      331

                    

                  	 	 	$	
                    
                      301

                    

                  	 	 	$	
                    
                      274

                    

                  	 	 	$	
                    
                      249

                    

                  	 	 	 	 	 	 	$	
                    
                      249

                    

                  	 	 	$	
                    
                      305

                    

                  	 	 	$	
                    
                      452

                    

                  	 
	 	 	 	$	
                    
                      36,167

                    

                  	 	 	$	
                    
                      23,695

                    

                  	 	 	$	
                    
                      15,055

                    

                  	 	 	$	
                    
                      8,268

                    

                  	 	 	$	
                    
                      3,387

                    

                  	 	 	$	
                    
                      2,913

                    

                  	 	 	$	
                    
                      -482

                    

                  	 	 	$	
                    
                      3,395

                    

                  	 	 	$	
                    
                      4,478

                    

                  	 	 	$	
                    
                      4,601

                    

                  	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                    
                      Liabilities

                    

                  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                    
                      Current
                        liabilities

                    

                  	
                    
                      7%       (of  
                        

                                   
                        Sales)

                    

                  	 	$	
                    
                      4,797

                    

                  	 	 	$	
                    
                      3,512

                    

                  	 	 	$	
                    
                      2,498

                    

                  	 	 	$	
                    
                      1,496

                    

                  	 	 	$	
                    
                      525

                    

                  	 	 	$	
                    
                      0

                    

                  	 	 	$	
                    
                      -2,482

                    

                  	 	 	$	
                    
                      2,482

                    

                  	 	 	$	
                    
                      3,008

                    

                  	 	 	$	
                    
                      1,747

                    

                  	 
	
                    
                      Shareholder's
                        loan

                    

                  	 	 	$	
                    
                      2,000

                    

                  	 	 	$	
                    
                      2,000

                    

                  	 	 	$	
                    
                      2,000

                    

                  	 	 	$	
                    
                      2,000

                    

                  	 	 	$	
                    
                      2,000

                    

                  	 	 	$	
                    
                      2,000

                    

                  	 	 	$	
                    
                      2,000

                    

                  	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                        
                      Long-term 

                            
                      debts

                  	 	 	$	
                    161

                  	 	 	$	
                    125

                  	 	 	$	
                    91

                  	 	 	$	
                    61

                  	 	 	$	
                    34

                  	 	 	$	
                    9

                  	 	 	 	 	 	 	$	
                    9

                  	 	 	$	
                    21

                  	 	 	$	33	 
	 	 	 	$	
                    
                      6,958

                    

                  	 	 	$	
                    
                      5,637

                    

                  	 	 	$	
                    
                      4,589

                    

                  	 	 	$	
                    
                      3,557

                    

                  	 	 	$	
                    
                      2,559

                    

                  	 	 	$	
                    
                      2,009

                    

                  	 	 	$	
                    
                      -482

                    

                  	 	 	$	
                    
                      2,491

                    

                  	 	 	$	
                    
                      3,029

                    

                  	 	 	$	
                    
                      1,780

                    

                  	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                    
                      Shareholders'
                        equity

                    

                  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                    
                      Capital
                        stock

                    

                  	 	 	$	
                    
                      14,360

                    

                  	 	 	$	
                    
                      14,360

                    

                  	 	 	$	
                    
                      14,360

                    

                  	 	 	$	
                    
                      14,360

                    

                  	 	 	$	
                    
                      14,360

                    

                  	 	 	$	
                    
                      14,360

                    

                  	 	 	 	 	 	 	$	
                    
                      14,360

                    

                  	 	 	$	
                    
                      14,349

                    

                  	 	 	$	
                    
                      14,331

                    

                  	 
	
                    
                      Retained
                        Earnings (Deficit)

                    

                  	 	 	$	
                    
                      14,849

                    

                  	 	 	$	
                    
                      3,699

                    

                  	 	 	$	
                    
                      -3,895

                    

                  	 	 	$	
                    
                      -9,650

                    

                  	 	 	$	
                    
                      -13,532

                    

                  	 	 	$	
                    
                      -13,456

                    

                  	 	 	 	 	 	 	$	
                    
                      -13,456

                    

                  	 	 	$	
                    
                      -12,900

                    

                  	 	 	$	
                    
                      -11,510

                    

                  	 
	 	 	 	$	
                    
                      29,209

                    

                  	 	 	$	
                    
                      18,059

                    

                  	 	 	$	
                    
                      10,465

                    

                  	 	 	$	
                    
                      4,710

                    

                  	 	 	$	
                    
                      828

                    

                  	 	 	$	
                    
                      904

                    

                  	 	 	$	
                    
                      0

                    

                  	 	 	$	
                    
                      904

                    

                  	 	 	$	
                    
                      1,449

                    

                  	 	 	$	
                    
                      2,821

                    

                  	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	$	
                    
                      36,167

                    

                  	 	 	$	
                    
                      23,695

                    

                  	 	 	$	
                    
                      15,055

                    

                  	 	 	$	
                    
                      8,268

                    

                  	 	 	$	
                    
                      3,387

                    

                  	 	 	$	
                    
                      2,913

                    

                  	 	 	$	
                    
                      -482

                    

                  	 	 	$	
                    
                      3,395

                    

                  	 	 	$	
                    
                      4,478

                    

                  	 	 	$	
                    
                      4,601

                    

                  	 
	 	 	 	 	
                    
                      -

                    

                  	 	 	 	
                    
                      -

                    

                  	 	 	 	
                    
                      -

                    

                  	 	 	 	
                    
                      -

                    

                  	 	 	 	
                    
                      -

                    

                  	 	 	 	
                    
                      -

                    

                  	 	 	 	
                    
                      -

                    

                  	 	 	 	
                    
                      -

                    

                  	 	 	 	
                    
                      -

                    

                  	 	 	 	
                    
                      -

                    

                  	 

          

          
             

            The
              proposed Acquisition transaction includes:

          

          
            
              	
                    	
                      •

                    	
                      The
                        new shareholders lend to IS2 an amount of $2 million and
                        simultaneously
                        buy all current shareholders for a price of
                        $100

                    

            

          

          
            
              	
                    	
                      •

                    	
                      This
                        amount pays off all obligations of IS2 to certain designated
                        debtholders
                        ($1,291,000) and some of the other Current Liabilities
                        ($709,000)

                    

            

          

          
            
              	
                    	
                      •

                    	
                      Cash
                        ($482,000) is used to pay off the remaining Current
                        Liabilities

                    

            

          

          
            The
              Balance Sheet assumptions are as follows;

          

          
            
              	
                    	
                      •

                    	
                      Receivables
                        are projected to be at 7% of
                        Sales

                    

            

          

          
            
              	
                    	
                      •

                    	
                      Other
                        Current Assets are 39% of
                        COGS

                    

            

          

          
            
              	
                    	
                      •

                    	
                      Capital
                        and other assets are projected to grow annually by
                        10%

                    

            

          

          
            
              	
                    	
                      •

                    	
                      Current
                        Liabilities are expected to be at 7% of
                        Sales

                    

            

          

          
            

          

          
            	
                    Confidential

                  	
                    March
                      7, 2006

                  
	
                    THIS
                      CIM HAS BEEN DELIVERED SUBJECT TO STRICT OBLIGATIONS OF
                      CONFIDENTIALITY

                  

          

          
            

              
                
                  
                  

                

                
                  Page
                    13

                  
                    

                  

                

                
                  
                  

                

              

            

             

          

          
            5.3.    Cash
              Flow ('000s)

          

          

          
            
              	 	 	
                      
                        Post
                          Acquisition Projections

                      

                    	 	 	 	 	 	 	 	 	 	 	 	
                      
                        Actual

                      

                    	 
	 	 	
                      
                        2010

                      

                    	 	 	
                      
                        2009

                      

                    	 	 	
                      
                        2008

                      

                    	 	 	
                      
                        2007

                      

                    	 	 	
                      
                        2006

                      

                    	 	 	
                      
                        Beginning
                          of 2006 Adj

                      

                    	 	 	
                      
                        Acquisition
                          Adjustments

                      

                    	 	 	
                      
                        2005

                      

                    	 	 	
                      
                        2004

                      

                    	 	 	
                      
                        2003

                      

                    	 
	
                      
                        Operating
                          Activities

                      

                    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                      
                        Net
                          Income (Loss) for the year

                      

                    	 	$	
                      
                        11,150

                      

                    	 	 	$	
                      
                        7,593

                      

                    	 	 	$	
                      
                        5,755

                      

                    	 	 	$	
                      
                        3,882

                      

                    	 	 	$	
                      
                        -76

                      

                    	 	 	$	
                      
                        -556

                      

                    	 	 	$	
                      
                        0

                      

                    	 	 	$	
                      
                        -556

                      

                    	 	 	$	
                      
                        -1,390

                      

                    	 	 	$	
                      
                        -1,281

                      

                    	 
	
                      
                        Items
                          not affecting cash

                      

                    	 	$	
                      
                        156

                      

                    	 	 	$	
                      
                        142

                      

                    	 	 	$	
                      
                        129

                      

                    	 	 	$	
                      
                        117

                      

                    	 	 	$	
                      
                        106

                      

                    	 	 	$	
                      
                        -1,638

                      

                    	 	 	$	
                      
                        -1,770

                      

                    	 	 	$	
                      
                        132

                      

                    	 	 	$	
                      
                        298

                      

                    	 	 	$	
                      
                        218

                      

                    	 
	
                      
                        Net
                          change in non-cash working capital

                      

                    	 	$	
                      
                        -4,706

                      

                    	 	 	$	
                      
                        -716

                      

                    	 	 	$	
                      
                        -3,669

                      

                    	 	 	$	
                      
                        -3,559

                      

                    	 	 	$	
                      
                        -93

                      

                    	 	 	$	
                      
                        -592

                      

                    	 	 	$	
                      
                        -712

                      

                    	 	 	$	
                      
                        120

                      

                    	 	 	$	
                      
                        213

                      

                    	 	 	$	
                      
                        -118

                      

                    	 
	 	 	$	
                      
                        6,601

                      

                    	 	 	$	
                      
                        4,019

                      

                    	 	 	$	
                      
                        2,215

                      

                    	 	 	$	
                      
                        441

                      

                    	 	 	$	
                      
                        -63

                      

                    	 	 	$	
                      
                        -2,786

                      

                    	 	 	$	
                      
                        -2,482

                      

                    	 	 	$	
                      
                        304

                      

                    	 	 	$	
                      
                        -879

                      

                    	 	 	$	
                      
                        -1,181

                      

                    	 
	
                      
                        Investing
                          activities

                      

                    	 	$	
                      
                        -192

                      

                    	 	 	$	
                      
                        175

                      

                    	 	 	$	
                      
                        159

                      

                    	 	 	$	
                      
                        -144

                      

                    	 	 	$	
                      
                        -131

                      

                    	 	 	$	
                      
                        -32

                      

                    	 	 	 	 	 	 	$	
                      
                        -32

                      

                    	 	 	$	
                      
                        65

                      

                    	 	 	$	
                      
                        -239

                      

                    	 
	
                      
                        Financing
                          activities

                      

                    	 	$	
                      
                        36

                      

                    	 	 	
                      
                        $

                      

                    	
                      33

                    	 	 	$	
                      
                        30

                      

                    	 	 	$	
                      
                        27

                      

                    	 	 	
                      
                        $
                          

                      

                    	
                       
                        25

                    	 	 	$	
                      
                        2,182

                      

                    	 	 	$	
                      
                        2,000

                      

                    	 	 	$	
                      
                        182

                      

                    	 	 	$	
                      
                        678

                      

                    	 	 	$	
                      
                        1,348

                      

                    	 
	
                      Net
                        change in cash and cash   

                      equivalents
                        for the year

                    	 	$	
                      
                        6,445

                      

                    	 	 	$	
                      
                        3,878

                      

                    	 	 	$	
                      
                        2,086

                      

                    	 	 	$	
                      
                        324

                      

                    	 	 	$	
                      
                        -169

                      

                    	 	 	$	
                      
                        -636

                      

                    	 	 	$	
                      
                        -482

                      

                    	 	 	$	
                      
                        .154

                      

                    	 	 	$	
                      
                        -266

                      

                    	 	 	$	
                      
                        -72

                      

                    	 
	
                      
                        Cash
                          and cash equivalents - Beginning of year 

                      

                    	 	$	
                      
                        6,454

                      

                    	 	 	$	
                      
                        2,576

                      

                    	 	 	$	
                      
                        490

                      

                    	 	 	$	
                      
                        166

                      

                    	 	 	$	
                      
                        335

                      

                    	 	 	$	
                      
                        971

                      

                    	 	 	 	 	 	 	$	
                      
                        971

                      

                    	 	 	$	
                      
                        1,237

                      

                    	 	 	$	
                      
                        1,309

                      

                    	 
	
                      Cash
                        and cash equivalents - End of 

                      year

                    	 	$	
                      
                        12,899

                      

                    	 	 	$	
                      
                        6,454

                      

                    	 	 	$	
                      
                        2,576

                      

                    	 	 	$	
                      
                        490

                      

                    	 	 	$	
                      
                        166

                      

                    	 	 	$	
                      
                        335

                      

                    	 	 	$	
                      
                        -482

                      

                    	 	 	$	
                      
                        817

                      

                    	 	 	$	
                      
                        971

                      

                    	 	 	$	
                      
                        1,237

                      

                    	 

            

          

          
            

          

          
            	
                    Confidential

                  	
                    March
                      7, 2006

                  
	
                    THIS
                      CIM HAS BEEN DELIVERED SUBJECT TO STRICT OBLIGATIONS OF
                      CONFIDENTIALITY

                  

          

          
            

              
                
                  
                  

                

                
                  Page
                    14

                  
                    

                  

                

                
                  
                  

                

              

            

             

          

          
            APPENDIX
              1

          

          
            

          

          
            

          

          
            IS2
              Medical Systems Inc.

          

          
            Financial
              Statements

          

          
            February
              28, 2006

          

          
            (Unaudited)

          

          
            

          

          
             

            
 

          

          
            	
                    Prepared
                      By:

                  	
                    Donna
                      Anderson

                  	 	
                    Date:

                  	
                    March
                      8,2006

                  	 
	 	
                    Manager,
                      Finance & Administration

                  	 	 	 	 
	 	
                    IS2
                      Medical Systems Inc.

                  	 	 	 	 

          

          
            

            
              
                
                  
                  

                

                
                  
                  

                  
                    

                  

                

                
                  
                  

                

              

            

             

            
              Appendix
                5

            

            
              

            

            
              	
                      Preliminary
                        Canadian Supplement to Confidential Private Offering
                        Memorandum

                    	
                       Memorandum
                        #              
                        

                    

            

            
              This
                Canadian supplement incorporates a separate U.S. Confidential Private
                Offering
                Memorandum dated December 31, 2005 ("Memorandum"; and together, the
                "Canadian
                Memorandum"). No offer is made in Canada without both this Canadian
                supplement
                and the Memorandum. The Canadian Memorandum constitutes an offering
                of these
                securities only in those jurisdictions and only to those persons
                to whom they
                may be lawfully offered for sale. This Canadian Memorandum is not,
                and under no
                circumstances is it to be construed as, a prospectus or advertisement
                for a
                public offering of the securities referred to herein. The securities
                offered
                hereunder have not been and will not be registered under the United
                States
                Securities Act of 1933, as amended (the "1933 Act"), or the securities
                laws of
                any state or other political subdivision or jurisdiction of the United
                States
                (such laws, "state securities laws"), and are being offered in the
                United States
                pursuant to an exemption from the registration requirements thereunder.
                The
                securities offered hereunder cannot be resold in the United States
                or to U.S.
                persons unless they are registered under the 1933 Act and state securities
                laws
                or unless an exemption from such registration is
                available.

               

            

            
              	
                      New
                        Issue

                    	
                      Dated
                        December 31, 2005

                    

            

            

            
              
                

              

            

            
              The
                first name in PETTM

            

            
              (US)
                $2,200,000

            

            
              400,000
                Units, Consisting of Series G Preferred Stock and
                Warrants

            

            
              

            

            
              
                	
                        Issuer:

                      	
                        Positron
                          Corporation ("Company")

                      

                	 	Address:
                        1304 Langham Creek Drive, Suite 300 Houston, Texas
                        77084

                	 	Telephone:
                        (281) 492-7100   Fax: (281)
                        492-2961   E-mail: contact@positron.com

                	 	Quoted:
                        Company's Common Stock is quoted on the NASDAQ OTC Bulletin
                        Board under
                        the symbol POSC.

                	 	Reporting
                        Issuer: No.   SEDAR filer:
                        No.

              

            

            
               

            

            
              
                	
                        Offering:

                      	
                        In
                          this Canadian Memorandum, unless otherwise specified, all
                          dollar amounts
                          are expressed in United States
                          dollars.

                      

              

            

            
               

            

            
              
                	
                      	
                        Securities
                          offered:

                      	
                        This
                          Offering involves the offer and sale of up to 400,000 Units
                          consisting of
                          shares of Series G Preferred Stock of Positron Corporation
                          and warrants,
                          for a total offering of $2,200,000 (the "Offering"). Each
                          Unit consists of
                          One share of Series G Preferred Stock of Positron Corporation
                          and 50
                          warrants. Each share of Series G Preferred Stock is immediately
                          convertible on a one-for-100 basis into Common Stock of
                          Positron
                          Corporation. Warrants are exercisable for Common Stock
                          of Positron
                          Corporation on the basis of 1 warrant for one Common Share
                          at a price of
                          $0.10 per Common Share for a period of two years from the
                          date of
                          issuance.

                      

              

            

            
              

            

            
              
                	
                      	
                        Price
                          per security:

                      	
                        The
                          number of Units being offered was calculated assuming a
                          (US) $5.50 per
                          Unit price, which is consistent with the closing price
                          of the Company's
                          Common Stock on the Over-the-Counter Bulletin Board as
                          of October 28,
                          2005. The shares of Series G Preferred Shares will be priced
                          in accordance
                          with the trading price of the Company's Common Stock. The
                          maximum offering
                          amount is (US) $2,200,000. The number of Units offered
                          will be determined
                          by dividing the $2.2 million maximum offering amount by
                          the Unit
                          price.

                      

              

            

            
              

            

            
              
                	
                      	
                        Minimum/Maximum
                          Offering:

                      	
                        Minimum:
                          $0. Maximum: $2,200,000. You may be the only purchaser.
                          The Company
                          reserves the right, in its sole discretion, to terminate
                          this Offering
                          after having received subscriptions for fewer than all
                          of the Units
                          offered herein.

                      

              

            

            
              

            

            
              
                	
                      	
                        Minimum
                          subscription

                      	
                        No
                          minimum amount.

                      

              

            

            
              

            

            
              
                	
                      	
                        Payment
                          terms:

                      	
                        On
                          or before the proposed closing
                          date.

                      

              

            

            
              

            

            
              
                	
                      	
                        Proposed
                          closing date:

                      	
                        There
                          is no firm commitment by the parties at this time to purchase
                          or sell any
                          Units. The Offering will continue until: (a) subscriptions
                          for all the
                          Units have been accepted by the Company; or (b) terminated
                          at any time, at
                          the sole discretion of the Company, for any reason. The
                          Company may close
                          sales of units in such amounts and at such times as it
                          determines in its
                          sole discretion. Canadian investors who wish to purchase
                          Units must be
                          "accredited investors" for purposes of applicable securities
                          legislation.

                      

              

            

            
               

            

            
              
                	
                      	
                        Income
                          tax

                        consequences:

                      	
                        There
                          are important tax consequences to these
                          securities.    Prospective investors should carefully
                          read and
                          review this memorandum with their tax, legal, and business
                          advisors before
                          deciding whether to subscribe for Units in the Company.
                          See "Income
                          Tax Consequences and RRSP
                          Eligibility",

                      

              

            

            
               

            

            
              
                	
                      	
                        Selling
                          agent:

                      	
                        These
                          Units may be offered by the Company on a "best efforts"
                          basis through
                          broker/dealers and finders, as allowed by law.   The
                          officers, directors and employees of the Company may also
                          participate in
                          the selling of the Units. See "Compensation Paid to Sellers and
                          Finders".

                      

              

            

            
               

            

            
              
                	
                        Resale
                          
                          Restrictions:

                        

                      	
                        You
                          will be restricted from selling your securities for an
                          indefinite period.
                          However, the terms of the private placement commit Positron
                          to piggy back registration rights for the investors in
                          the herein
                          described private placement. Piggy back registration rights
                          compel the
                          company to add the private placement shares to any registration
                          statement
                          filed by the company for additional public financings.
                          The company
                          currently intends to file such a registration statement
                          in mid- 2006. See
                          "Resale
                          Restrictions".

                      

              

            

            
              
                	
                        Purchaser's
                          
                          Rights:

                        

                      	
                        You
                          have 2 business days to cancel your agreement to purchase
                          these
                          securities, if there is a misrepresentation in this Canadian
Memorandum,
                          you have the right to sue either for damages or to cancel
                          the agreement.
                          See "Purchasers'
                          Rights".

                      

              

            

            
               

              No
                securities regulatory authority has assessed the merits of these
                securities or
                reviewed this Canadian Memorandum. Any representation to the contrary
                is an
                offence. This is a risky investment. See "Risk
                Factors''.

            

            

            
              
                
                  
                  

                

                
                  
                  

                  
                    

                  

                

                
                  
                  

                

              

            

            

            
              CANADIAN
                MEMORANDUM

            

            
              TABLE
                OF CONTENTS

            

            
               

            

            
              	 	
                      
                        page

                      

                    	 	
                      
                        cross-

                      

                    
	 	
                      
                        number

                      

                    	 	
                      
                        reference
                          to

                      

                    
	 	
                      
                        in

                      

                    	 	
                      
                        page

                      

                    
	
                      
                        Heading

                      

                    	
                      
                        Canadian

                      

                    	 	
                      
                        number
                          in

                      

                    
	 	
                      
                        Supplement

                      

                    	 	
                      
                        Memorandum

                      

                    
	
                      
                        GENERAL

                      

                    	
                      
                        1

                      

                    	 	
                      
                        ii

                      

                    
	 	 	 	 
	
                      
                        USE
                          OF PROCEEDS

                      

                    	
                      
                        1

                      

                    	 	
                      
                        16

                      

                    
	
                      
                        Net
                          Proceeds

                      

                    	
                      
                        1

                      

                    	 	 
	
                      
                        Use
                          of Net Proceeds

                      

                    	
                      
                        I

                      

                    	 	 
	
                      
                        Reallocation

                      

                    	
                      
                        2

                      

                    	 	 
	
                      
                        Working
                          Capital Deficiency

                      

                    	
                      
                        2

                      

                    	 	 
	 	 	 	 
	
                      
                        BUSINESS
                          OF COMPANY

                      

                    	
                      
                        2

                      

                    	 	 
	
                      
                        Structure

                      

                    	
                      
                        2

                      

                    	 	
                      
                        1,17

                      

                    
	
                      
                        Our
                          Business

                      

                    	
                      
                        2

                      

                    	 	
                      
                        1-3,
                          17-24

                      

                    
	
                      
                        Development
                          of Business

                      

                    	
                      
                        2

                      

                    	 	
                      
                        1-3,
                          17-21

                      

                    
	
                      
                        Short
                          Term Objectives and How We Intend to Achieve Them

                      

                    	
                      
                        2

                      

                    	 	 
	
                      
                        Insufficient
                          Proceeds

                      

                    	
                      
                        2

                      

                    	 	 
	 	 	 	
                      
                        29-34
                          of

                      

                    
	 	 	 	
                      
                        Appendix
                          F;

                      

                    
	
                      
                        Material
                          Agreements

                      

                    	
                      
                        3

                      

                    	 	
                      
                        49
                          -51, and 55

                      

                    
	 	 	 	
                      
                        of
                          Appendix F

                      

                    
	 	 	 	
                      
                        and
                          17- 19,28

                      

                    
	 	 	 	
                      
                        -
                          29, and 56 -

                      

                    
	 	 	 	
                      
                        57
                          of

                      

                    
	 	 	 	
                      
                        Appendix
                          F

                      

                    
	
                      
                        DIRECTORS,
                          MANAGEMENT, PROMOTERS AND PRINCIPAL HOLDERS

                      

                    	
                      
                        3

                      

                    	 	 
	
                      
                        Compensation
                          and Securities Held

                      

                    	
                      
                        3

                      

                    	 	
                      
                        22-28
                          of

                      

                    
	 	 	 	
                      
                        Appendix
                          F; 5

                      

                    
	 	 	 	
                      
                        -6
                          of Appendix

                      

                    
	 	 	 	
                      
                        G

                      

                    
	
                      
                        Management
                          Experience

                      

                    	
                      
                        3

                      

                    	 	
                      
                        25-26

                      

                    
	
                      
                        Penalties,
                          Sanctions and Bankruptcy

                      

                    	
                      
                        3

                      

                    	 	 
	 	
                      
                        3

                      

                    	 	 
	
                      
                        CAPITAL
                          STRUCTURE

                      

                    	
                      
                        4

                      

                    	 	 
	
                      
                        Share
                          Capital

                      

                    	
                      
                        4

                      

                    	 	
                      
                        27,48-51
                          of

                      

                    
	 	 	 	
                      
                        Appendix
                          F

                      

                    
	 	 	 	
                      
                        5,
                          7-9 and 11-

                      

                    
	
                      
                        Long
                          Term Debt

                      

                    	
                      
                        5

                      

                    	 	
                      
                        12
                          of

                      

                    
	 	 	 	
                      
                        Appendix
                          E;

                      

                    
	 	 	 	
                      
                        18,29,47-48,

                      

                    
	 	 	 	
                      
                        53-54,
                          56-57

                      

                    
	 	 	 	
                      
                        of
                          Appendix F;

                      

                    
	 	 	 	
                      
                        20-21
                          of

                      

                    
	 	 	 	
                      
                        Appendix
                          G

                      

                    
	
                      
                        Prior
                          Sales

                      

                    	
                      
                        5

                      

                    	 	 

            

             

            
              
                
                  
                  

                

                
                  
                  

                  
                    

                  

                

                
                  
                  

                

              

            

             

            
              	
                      
                        SECURITIES
                          OFFERED

                      

                    	
                      
                        5

                      

                    	
                      
                        4-5

                      

                    
	
                      
                        Terms
                          of Securities

                      

                    	
                      
                        5

                      

                    	
                      
                        4-5,
                          31 and

                      

                    
	 	 	
                      
                        Appendix
                          B

                      

                    
	
                      
                        Subscription
                          Procedure

                      

                    	
                      
                        6

                      

                    	
                      
                        34

                      

                    
	 	 	 
	
                      
                        INCOME
                          TAX CONSEQUENCES AND RRSP ELIGIBILITY

                      

                    	
                      
                        7

                      

                    	
                      
                        27-28
                          of

                      

                    
	 	 	
                      
                        Appendix
                          G

                      

                    
	 	 	 
	
                      
                        COMPENSATION
                          PAID TO SELLERS AND FINDERS

                      

                    	
                      
                        7

                      

                    	
                      
                        16;
                          3 of

                      

                    
	 	 	
                      
                        Appendix
                          G

                      

                    
	 	 	 
	
                      
                        RISK
                          FACTORS

                      

                    	
                      
                        7

                      

                    	
                      
                        9-15;
                          6-11 of

                      

                    
	 	 	
                      
                        Appendix
                          F

                      

                    
	 	 	 
	
                      
                        REPORTING
                          OBLIGATIONS

                      

                    	
                      
                        8

                      

                    	
                      
                        36;
                          22 of

                      

                    
	 	 	
                      
                        Appendix
                          F;

                      

                    
	 	 	
                      
                        20
                          of

                      

                    
	 	 	
                      
                        Appendix
                          G

                      

                    
	 	 	 
	
                      
                        RESALE
                          RESTRICTIONS

                      

                    	
                      
                        8

                      

                    	 
	
                      
                        General
                          Statement

                      

                    	
                      
                        8

                      

                    	
                      
                        5-6;3
                          of

                      

                    
	 	 	
                      
                        Appendix
                          B

                      

                    
	
                      
                        Restricted
                          Period

                      

                    	
                      
                        8

                      

                    	
                      
                        35

                      

                    
	
                      
                        Manitoba
                          Resale Restrictions

                      

                    	
                      
                        8

                      

                    	 
	 	 	 
	
                      
                        PURCHASERS'
                          RIGHTS

                      

                    	
                      
                        8

                      

                    	 
	 	 	 
	
                      
                        FINANCIAL
                          STATEMENTS

                      

                    	
                      
                        13

                      

                    	
                      
                        3-12
                          of

                      

                    
	 	 	
                      
                        Appendix
                          E;

                      

                    
	 	 	
                      
                        37-57
                          of

                      

                    
	 	 	
                      
                        Appendix
                          F

                      

                    
	 	 	 
	
                      
                        CERTIFICATE

                      

                    	
                      
                        14

                      

                    	 
	 	 	 
	
                      
                        SCHEDULES

                      

                    	 	 
	 	 	 
	
                      
                        Schedule
                          A - Accredited Investor

                      

                    	 	 
	 	 	 
	
                      
                        Schedule
                          B - Purchaser Questionnaire

                      

                    	 	 
	 	 	 
	
                      
                        Schedule
                          C - Unit Subscription Agreement (Canadian
                          Purchasers)

                      

                    	 	 

            

            

              
                
                  
                  

                

                
                  
                  

                  
                    

                  

                

                
                  
                  

                

              

            

             

            
              GENERAL

            

            
              

            

            
              In
                this
                Canadian Memorandum, the terms “the Company”“we"
“us"
                and “our"
                refer to Positron Corporation.

            

            
              

            

            
              “Memorandum"
                refers to the U.S. Confidential Private Offering Memorandum dated
                October 31,
                2005, including the documents attached thereto as appendices, which
                is
                incorporated into and forms an integral part of this Canadian
                Memorandum.

            

            
              

            

            
              In
                this
                Canadian Memorandum, unless otherwise specified or the context otherwise
                requires, all dollar amounts are expressed in United States dollars.
                In
                addition, unless stated otherwise, the share amounts in this Memorandum
                are
                presented both on a non-split adjusted basis and also as adjusted
                to reflect a 1
                for 100 reverse stock split of the Company's Common Stock anticipated
                to take
                affect on timing as determined by the company's Board of
                Directors.

            

            
              

            

            
              USE
                OF PROCEEDS

            

            
              Please
                refer to page 16 of the Memorandum.

            

            
              

            

            
              Net
                Proceeds

            

            
              	 	 	 	 	 	 	 	 
	 	 	 	
                      
                        Assuming
                          min. Offering

                      

                    	 	 	
                      
                        Assuming
                          max. Offering

                      

                    	 
	
                      
                        A

                      

                    	
                      
                        Amount
                          to be raised by this offering

                      

                    	 	$	
                      
                        0

                      

                    	 	 	$	
                      
                        2,200,000

                      

                    	 
	
                      
                        B

                      

                    	
                      
                        Selling
                          commissions and fees

                      

                    	 	$	
                      
                        0

                      

                    	 	 	$	
                      
                        220,000

                      

                    	 
	
                      
                        C

                      

                    	
                      
                        Estimated
                          offering costs (e.g. legal, accounting, audit)

                      

                    	 	$	
                      
                        100,000

                      

                    	 	 	$	
                      
                        100,000

                      

                    	 
	
                      
                        D

                      

                    	
                      
                        Net
                          proceeds: D= A - (B + C)

                      

                    	 	$	(100,000	)	 	$	
                      
                        1,880,000

                      

                    	 

            

            
              

            

            
              Use
                of Net Proceeds

            

            
              	 	 	 	 	 	 	 
	
                      
                        Description
                          of intended use of net proceeds listed in order of
                          priority

                      

                    	 	
                      
                        Assuming
                          min. Offering

                      

                    	 	 	
                      
                        Assuming
                          max. Offering

                      

                    	 
	
                      
                        Development
                          of new PET technologies

                      

                    	 	$	
                      
                        0

                      

                    	 	 	$	
                      
                        780,000

                      

                    	 
	
                      
                        Implementation
                          of new marketing plan

                      

                    	 	$	
                      
                        0

                      

                    	 	 	$	
                      
                        500,000

                      

                    	 
	
                      
                        Working
                          capital + deficiency

                      

                    	 	$	
                      
                        0

                      

                    	 	 	$	
                      
                        600,000

                      

                    	 
	
                      
                        Net
                          Proceeds

                      

                    	 	$	
                      
                        0

                      

                    	 	 	$	
                      
                        1,880,000

                      

                    	 

            

            
              

                
                  
                    
                    

                  

                  
                    -1-

                    
                      

                    

                  

                  
                    
                    

                  

                

              

               

            

            
              Reallocation

            

            
              

            

            
              We
                intend
                to spend the net proceeds as stated. We will reallocate funds only
                for sound
                business reasons.

            

            
              

            

            
              Working
                Capital Deficiency

            

            
              

            

            
              The
                working capital deficiency of approximately $2.8 million at November
                30, 2005
                will not be eliminated by the offering herein describe, however,
                Positron in
                late 2005 eliminated its Houston manufacturing operations and switched
                production to a joint venture with Neusoft Medical Imaging in Shenyang
                China.
                The investment in the JV was $2 million mainly by Neusoft, which
                does not appear
                on the Positron balance sheet. Also on December 27, 2005, Positron
                and Quantum
                Molecular Pharmaceuticals, Inc, a Canadian corporation entered into
                a separate
                JV in which Quantum agreed to provide Positron $4 million in additional
                financing over the next 18 month period to finance the JV and also
                to supplement
                Positron's need for working capital. Positron believes that these
                two agreements
                plus the funds raised from the herein described private placement
                offering will
                be sufficient to meet their working capital needs.

            

            
              

            

            
              BUSINESS
                OF THE COMPANY

            

            
              

            

            
              Structure

            

            
              

            

            
              Please
                refer to pages 1 and 17 of the Memorandum.

            

            
              

            

            
              Our
                Business

            

            
              

            

            
              Please
                refer to pages 1 to 3, and pages 17 to 24 of the Memorandum.

            

            
              

            

            
              Development
                of Business

            

            
              

            

            
              Please
                refer to pages 17 - 21 of the Memorandum.

            

            
              

            

            
              Short
                Term Objectives and How We Intend to Achieve Them

            

            
               

            

            
              	
                      
                        What
                          we must do and how we will do it

                      

                    	
                      
                        Target
                          completion date or, if not known, number of months to
                          complete

                      

                    	
                      
                        Our
                          cost to complete

                      

                    
	
                      
                        The
                          company has a New Joint Venture agreement with Neusoft
                          Medical Imaging of
                          Shenyang, China. Ail manufacturing of Positron medical
                          products will be
                          developed by Neusoft. Neusoft has contributed (US) $2,000,000
                          as an
                          investment in the JV. These funds have been designated
                          for the purpose of
                          product manufacturing and working capital.

                      

                    	
                      
                        First
                          shipment(s) is projected for 2nd
                          quarter of
                          2006.

                      

                    	
                      
                        Less
                          than $ 2 million which is committed by Neusoft, a substantial
                          Chinese
                          manufacturer of diagnostic imaging equipment

                      

                    
	
                      
                        This
                          offering will fund a New Research team to develop new state-of-the-art
                          PET
                          scanning technology.

                      

                    	
                      
                        Completion
                          scheduled is targeted for me first quarter of 2007.

                      

                    	
                      
                        Less
                          than $ 3 million will be required all of which to be provided
                          by Quantum
                          molecular Pharmaceuticals Inc. of
                          Canada

                      

                    

            

            
              

            

            
              Insufficient
                Proceeds

            

            
              

            

            
              We
                believe that it is possible that we may continue to experience operating
                losses
                and accumulated deficits in the foreseeable future. The proceeds
                of the offering
                may not be sufficient to accomplish all of our proposed objectives
                and
                therefore, we propose no assurance     that alternative
                financing will be available, however as disclosed above the Company
                believes the
                capital provided by Neusoft and separately from Quantum, will be
                more than
                sufficient to meet its ongoing capital requirements.

            

            

            
              
                
                  
                  

                

                
                  -2-

                  
                    

                  

                

                
                  
                  

                

              

            

            

            
              Material
                Agreements

            

            
              

            

            
              For
                a
                list of material agreements to which the Company is a party, please
                refer to
                pages 29 to 34 of Appendix F to the Memorandum - Annual Report on
                Form 10-KSB
                for the fiscal year ended December 31, 2004. For a description of
                material
                agreements with related parties, please refer to (i) pages 7 to 9,
                49 to 51, and
                55 of Appendix E to the Memorandum - Quarterly Report on Form 10-QSB
                for the
                fiscal quarter ended June 30, 2005; and (ii) pages 14 to 19,28 to
                29, and 56 to
                57 of Appendix F to the Memorandum - Annual Report on Form 10-KSB
                for the fiscal
                year ended December 31, 2004.

            

            
              

            

            
              The
                joint
                venture agreement between the Company and Quantum Molecular Pharmaceuticals,
                Inc., a majority owned subsidiary of Imagin Diagnostic Centres, Inc.
                is
                disclosed in this document in all material regards.

            

            
              

            

            
              DIRECTORS,
                MANAGEMENT, PROMOTERS AND PRINCIPAL HOLDERS

            

            
              

            

            
              Compensation
                and Securities Held

            

            
              

            

            

            
              	
                      
                        Name
                          and municipality of principal residence

                      

                    	
                      
                        Positions
                          held and the date of obtaining that
                          position

                      

                    	
                      
                        Compensation
                          paid by issuer in most recently completed financial year
                          and the
                          compensation anticipated to be paid in the current financial
                          year

                      

                    	
                      
                        Number,
                          type and percentage of securities of the issuer held after
                          completion of
                          minimum offering

                      

                    	
                      
                        Number,
                          type and percentage of securities of the issuer held after
                          completion of
                          maximum offering

                      

                    
	
                      
                        Patrick
                          G. Rooney

                      

                      
                        Oak
                          Brook, Illinois

                      

                    	
                      
                        Chairman
                          of the Board July 26, 2004

                      

                    	
                      
                        2005
                          -$0

                      

                      
                        2006-$0

                      

                    	
                      
                        25,000
                          Options(1)

                      

                    	
                      
                        25,000
                          Options(1)

                      

                    
	
                      
                        J.
                          David Wilson

                      

                      
                        Oakville.
                          Ontario

                      

                    	
                      
                        Chief
                          Executive Officer October 27, 2005

                      

                    	
                      
                        2005-
                          $ 0

                      

                      
                        2006-
                          $ 0

                      

                    	
                      
                        0

                      

                    	
                      
                        0

                      

                    
	
                      
                        Joseph
                          Oliverio

                      

                      
                        New
                          York, Niagara

                      

                    	
                      
                        President
                          December 21, 2005

                      

                    	
                      
                        2005
                          - $0

                      

                      
                        2006-$100,000

                      

                    	
                      
                        7,500,000
                          Options(2)

                      

                    	
                      
                        7,500,000
                          Options (2)

                      

                    
	
                      
                        Griffith
                          Miller 

                        Houston,
                          Texas

                      

                    	
                      
                        Executive
                          Vice President Software & Information Technologies December 21,
                          2005

                      

                    	
                      
                        2005-$97,500

                      

                      
                        2006
                          -$100,000

                      

                    	
                      
                        90,000
                          Options (3)

                      

                    	
                      
                        90,000
                          Options (3)

                      

                    
	
                      
                        Corey
                          N. Conn Oak

                      

                      
                        Brook,
                          Illinois

                      

                    	
                      
                        CFO
                          & EVP Operations October 27, 2005

                      

                    	
                      
                        2005
                          - $0

                      

                      
                        2006-$100,000

                      

                    	
                      
                        0

                      

                    	
                      
                        0

                      

                    
	
                      
                        Sachio
                          Okamura San

                      

                      
                        Jose,
                          California

                      

                    	
                      
                        Director
                          April 1, 2001

                      

                    	
                      
                        2005
                          -$ 0

                      

                      
                        2006-$
                          0

                      

                    	
                      
                        75,000
                          Options (4)

                      

                    	
                      
                        75,000
                          Options (4)

                      

                    
	
                      
                        Dr.
                          Anthony (Tony) C. Nicholls

                      

                      
                        London,
                          England

                      

                    	
                      
                        Director
                          August 23, 2005

                      

                    	
                      
                        2005-$
                          0

                      

                      
                        2006-$
                          0

                      

                    	
                      
                        0

                      

                    	
                      
                        0

                      

                    
	
                      
                        IMAGIN
                          Diagnostic Centres, Inc.

                      

                      
                        Toronto,
                          Ontario

                      

                    	
                      
                        Principal
                          Holder

                      

                    	
                      
                        2005
                          -$0

                      

                      
                        2006-$
                          0

                      

                    	
                      
                        1,571,750
                          post split shares of Common Stock (68% of issued and outstanding
                          Common Stock)

                      

                    	
                      
                        1,571,750
                          post split shares of Common Stock (68% of issued and outstanding
                          Common Stock)

                      

                    

            

            
              

            

            
              Notes:

            

            
              

            

            
              
                	
                      	
                        (l)

                      	
                        25,000
                          options with an exercise price $ 0.12 per share expiring
                          on July 26,
                          2014.

                      

              

            

            
              
                	
                      	
                        (2)

                      	
                        7,500,000
                          options with an exercise price $ 0.05 per share expiring
                          on
                          12/27/10

                      

              

            

            
              
                	
                      	
                        (3)

                      	
                        40,000
                          options with an exercise price $ 0.03 per share expiring
                          on April 30, 2013
                          and 50,000 options with an exercise price $ 0.05 per share
                          expiring on May
                          21, 2014

                      

              

            

            
              
                	
                      	
                        (4)

                      	
                        75,000
                          options with an average exercise price $ 0.07 per share
                          expiring on
                          January 2, 2012.

                      

              

            

            

            
              
                
                  
                  

                

                
                  -3-

                  
                    

                  

                

                
                  
                  

                

              

            

            

            
              Please
                refer to pages 22 to 28 of Appendix F to the Memorandum - Annual
                Report on Form
                10-KSB for the fiscal year ended December 31, 2004, and pages 5 to
                6 of Appendix
                G to the Memorandum ~ Proxy Statement for 2005 Annual Meeting of
                Shareholders.

            

            
              

            

            
              Promoters

            

            
              

            

            
              Both
                Quantum Molecular Pharmaceuticals and Imagin Molecular Corporation
                could be
                deemed to be promoters of Positron Corporation because of the potential
                ownership of more than 50% of Positron equity after the completion
                of the JV
                financing herein described however:

            

            
              

            

            
              
                	
                      	
                        1.

                      	
                        Positron
                          Corporation was founded in 1983 and has been a USA public
                          traded company
                          since 1986.

                      

              

            

            
              

            

            
              
                	
                      	
                        2.

                      	
                        The
                          CEO and founding shareholders of Quantum and Imagin Molecular
                          Corporation
                          are J. David Wilson and Patrick G. Rooney both members
                          of the Positron
                          Board of Directors, who's biographies are contained in
                          this
                          document.

                      

              

            

            
              

            

            
              Management
                Experience

            

            
              

            

            
              Please
                refer to pages 25 to 26 of the Memorandum.

            

            
              

            

            
              Penalties,
                Sanctions and Bankruptcy

            

            
              

            

            
              There
                have been no penalties, sanctions or bankruptcies with respect to
                directors,
                executive officers or the issuer,

            

            
              

            

            
              CAPITAL
                STRUCTURE

            

            
              

            

            
              Share
                Capital

            

            
              

            

            
              The
                following table set forth our capitalization as of October 31, 2005,
                unadjusted
                pre-reverse split and adjusted to give effect to the issuance of
                400,000 Units
                in this Offering, and to reflect the anticipated 1 for 100 reverse
                stock split
                of common stock. The information set forth in these tables should
                be read in
                conjunction with, and are qualified in their entirety by, the financial
                statements and notes thereto included in our Quarterly Report on
                Form 10-QSB for
                the fiscal quarter ended June 30, 2005.

            

            
              

            

            
              	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	
                      Pre
                        Split

                    	 	 	
                      Post
                        Split

                    	 	 	
                      Pre
                        Split

                    	 	 	
                      Post
                        Split (6)

                    	 
	 	 	
                      Authorized

                    	 	 	
                      Issued
                        and

                    	 	 	
                      Issued
                        and

                    	 	 	
                      Fully-Diluted

                    	 	 	
                      Fully-Diluted

                    	 
	 	 	 	 	 	
                      Outstanding

                    	 	 	
                      Outstanding

                    	 	 	
                      Common
                        Stock

                    	 	 	
                      Common
                        Stock

                    	 
	
                      Preferred
                        Stock

                    	 	 	
                      10,000,000

                    	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                      Series
                        A Preferred Stock

                    	 	 	
                      5,450,000

                    	 	 	 	
                      464,319

                    	 	 	 	
                      464,319

                    	 	 	 	
                      1,492,300

                    	 	 	 	
                      14,923

                    	 
	
                      Series
                        C Preferred Stock

                    	 	 	
                      840,000

                    	 	 	 	
                      770,000

                    	 	 	 	
                      770,000

                    	 	 	 	
                      38,500,000

                    	 	 	 	
                      385,000

                    	 
	
                      Series
                        D Preferred Stock

                    	 	 	
                      1,560,000

                    	 	 	 	
                      0

                    	 	 	 	
                      0

                    	 	 	 	29,000,000	(2)	 	 	290,000	(2)
	
                      Series
                        E Preferred Stock

                    	 	 	
                      1,200,000

                    	 	 	 	
                      0

                    	 	 	 	
                      0

                    	 	 	 	22,000,000	(3)	 	 	220,000	(3)
	
                      Series
                        F Preferred Stock

                    	 	 	
                      600,000

                    	 	 	 	
                      0

                    	 	 	 	
                      0

                    	 	 	 	20,000,000	(4)	 	 	200,000	(4)
	
                      Series
                        G Preferred Stock

                    	 	 	
                      400,000

                    	 	 	 	
                      400,000

                    	 	 	 	
                      400,000

                    	 	 	 	
                      40,000,000

                    	 	 	 	
                      400,000

                    	 
	
                      10%
                        Secured

                    	 	 	
                      --

                    	 	 	 	 	 	 	 	
                      -

                    	 	 	 	
                      40,000,000

                    	 	 	 	
                      400,000

                    	 
	
                      Convertible
                        Notes

                    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                      Common
                        Stock

                    	 	 	
                      100,000,000

                    	 	 	 	76,485,200	(1)	 	 	
                      764,852

                    	 	 	 	
                      76,485,200

                    	 	 	 	
                      764,852

                    	 
	
                      TOTAL

                    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	267,477,500	(5)	 	 	2,674,775	(5)

            

            
              

                
                  
                    
                    

                  

                  
                    -4-

                    
                      

                    

                  

                  
                    
                    

                  

                

              

               

            

            
              
                	
                      	
                        (1)

                      	
                        Represents
                          290,000 post split shares issuable upon conversion of outstanding
                          10%
                          secured convertible notes into Series D Preferred Stock
                          which is in turn
                          convertible into Common
                          Stock.

                      

              

            

            
              

            

            
              
                	
                      	
                        (2)

                      	
                        Represents
                          respectively 29,000,000 pre split or 290,000 post split
                          shares issuable
                          upon conversion of outstanding 10% secured convertible
                          notes into Series D
                          Preferred Stock which is in turn convertible into Common
                          Stock.

                      

              

            

            
              

            

            
              
                	
                      	
                        (3)

                      	
                        Represents
                          respectively 22,000,000 pre split or 220,000 post split
                          shares issuable
                          upon conversion of outstanding 10% secured convertible
                          notes into Series E
                          Preferred Stock which is in turn convertible into Common
                          Stock.

                      

              

            

            
              

            

            
              
                	
                      	
                        (4)

                      	
                        Represents
                          respectively 20,000,000 pre split or 200,000 post split
                          shares issuable
                          upon conversion of outstanding 10% secured convertible
                          notes into Series F
                          Preferred Stock which is in turn convertible into Common
                          Stock.

                      

              

            

            
              

            

            
              
                	
                      	
                        (5)

                      	
                        Does
                          not include an aggregate of 195,119 post split shares issuable
                          upon the
                          exercise of outstanding options and warrants. Also, does
                          not include the
                          warrants behind the conversion of the Series G preferred
                          shares which
                          would create an additional 100,000,000 pre split common
                          shares and
                          generate $10 million of additional paid in
                          capital.

                      

              

            

            
              

            

            
              
                	
                      	
                        (6)

                      	
                        Approved
                          by majority of common shareholders, however, timing and
                          finality at the
                          sole discretion of the Board of
                          Directors.

                      

              

            

            
              

            

            
              The
                above
                table does not include the 2,000,000 Class G Preferred Shares which
                would be
                issued to Quantum when, as and if Quantum acquired these shares in
                order to
                allow the Company to finance the research and development efforts
                anticipated in
                the QMT joint venture.

            

            
              

            

            
              The
                Company will infuse funds into the QMT joint venture as debt due
                back into the
                Company out of the cash flow generated in the JV if successful. The
                Quantum
                financing effort, if successful would potentially cause the issuance
                of
                2,000,000 common shares on a post reverse split basis.

            

            
              

            

            
              Long
                Term Debt

            

            
               

            

            
              	
                      
                        Description
                          of long terra debt (including whether
                          secured)

                      

                    	
                      
                        Interest
                          rate

                      

                    	
                      
                        Repayment
                          terms

                      

                    	
                      
                        Amount
                          outstanding at October 31, 2005

                      

                    
	
                      
                        None

                      

                    	 	 	
                      
                        None

                      

                    

            

            
              

            

            
              Please
                refer to: (i) pages 7 - 9 of Appendix E to the Memorandum - Quarterly
                Report on
                Form I0-QSB for the fiscal quarter ended June 30, 2005; and (ii)
                pages 18, 29,
                47 to 48, 53 to 54, and 56 to 57 of Appendix F to the Memorandum
                - Annual Report
                on Form 10-KSB for the fiscal year ended December 31, 2004, and pages
                20 to 21
                of Appendix G to the Memorandum - Proxy Statement for 2005 Annual
                Meeting of
                Shareholders.

            

            
              

            

            
              Prior
                Sales

            

            
              

            

            
              There
                have been no issuances of Units consisting of Series G Preferred
                Stock and
                Warrants by the Company within the last 12 months.

            

            

            
              
                
                  
                  

                

                
                  -5-

                  
                    

                  

                

                
                  
                  

                

              

            

            

            
              SECURITIES
                OFFERED

            

            
              Terms
                of Securities

            

            
              

            

            
              Please
                refer to page 31 of the Memorandum.

            

            
              

            

            
              Subscription
                Procedure for Canadian Residents

            

            
              

            

            
              Please
                refer to page 34 of the Memorandum.

            

            
              

            

            
              Each
                person intending to purchase the Units offered hereby must deliver
                the items set
                forth   in accordance with the instructions stated
                below:

            

            
              

            

            
              
                	
                      	
                        a)

                      	
                        A
                          cheque in the amount of (USD) $5.50 or the negotiated offering
                          price,
                          multiplied by the number of Units subscribed for, made
                          payable to Zak
                          Muscovitch in Trust.

                      

              

            

            
              

            

            
              
                	
                      	
                        b)

                      	
                        A
                          completed and signed "Accredited Investor Questionnaire"
                          required for
                          Canadian Securities law purposes, a copy of which is attached
                          to this
                          Canadian Supplement as Schedule
                          A,

                      

              

            

            
              

            

            
              
                	
                      	
                        c)

                      	
                        A
                          completed and signed "Purchasers Questionnaire" required
                          for US securities
                          law purposes, a copy of which is attached to this Canadian
                          Securities
                          Supplement as Schedule B, and

                      

              

            

            
              

            

            
              
                	
                      	
                        d)

                      	
                        A
                          completed and signed "Unit Subscription Agreement (Canadian
                          Purchasers)" a
                          copy of which is attached this Canadian Supplement as Schedule
                          C, with the
                          number of Units desired indicated
                          thereon.

                      

              

            

            
              

            

            
              These
                items should be delivered to Positron Corporation at the following
                address: 5160
                Yonge Street, Suite 300, Toronto, Ontario  M2N 6L9 or alternatively,
                the funds may be sent by wire transfer to:

            

            
              

            

            
              Muscovitch
                & Associates US Trust Account

            

            
              The
                Bank
                of Nova Scotia

            

            
              19
                Bloor
                Street West

            

            
              Toronto,
                Ontario Canada M4W 1A3

            

            
              

            

            
              Institution
                Code: 002

            

            
              Branch
                Number: 91132

            

            
              Account
                Number #: 91132 002 02810 18

            

            
              ABA
                Routing #: 026002532

            

            
              SWIFT
                CODE: NOSCCATT

            

            
              

            

            
              Zak
                Muscovitch

            

            
              Muscovitch
                & Associates

            

            
              Barristers
                & Solicitors

            

            
              TEL:    (416)924-5084
                

              FAX:   (416)920-6306

            

            
              

            

            
              Upon
                acceptance by the Company of a subscription, confirmation of such
                acceptance
                will be sent to the subscriber. Series G Preferred Share(s) certificates
                and
                original warrants will be sent to subscribers upon closing.

            

            

            
              
                
                  
                  

                

                
                  -6-

                  
                    

                  

                

                
                  
                  

                

              

            

            

            
              Each
                person who wishes to purchase Units must complete, execute, acknowledge
                and
                deliver to the Company a Canadian Purchaser Questionnaire, Unit Subscription
                Agreement (Canadian Purchaser) and other documents in the forms attached
                hereto.
                Subject to the two day cancellation right referred to under "Purchasers'
                Rights"
                below, by executing the Unit Subscription Agreement (Canadian Purchaser),
                each
                subscriber is agreeing that, if the Company accepts the Unit Subscription
                Agreement (Canadian Purchaser), he or she will become a shareholder
                of the
                Company. The Company, in its sole discretion, may reject a prospective
                purchaser's Unit Subscription Agreement (Canadian Purchaser). If
                the Offering is
                oversubscribed, the Company may either reject the subscriptions of
                prospective
                purchasers of its choosing, reduce each prospective purchasers subscription
                pro
                rata or some combination of the foregoing.

            

            
              

            

            
              The
                aforementioned cash amounts, Unit Subscription Agreements (Canadian
                Purchasers)
                and other documents will be held in trust and released upon closing.
                Where
                required pursuant to NI45-106 the subscription amount will be held
                in trust
                until midnight on the second day after the investor signs a Unit
                Subscription
                Agreement (Canadian Purchasers)

            

            
              

            

            
              INCOME
                TAX CONSEQUENCES AND RRSP ELIGIBILITY

            

            
              

            

            
              Please
                refer to page 27-28 of Appendix G of the Memorandum - Proxy Statement
                for 2005
                Annual Meeting of Shareholders.

            

            
              

            

            
              It
                is
                recommended that all potential subscribers consult their own professional
                advisers to obtain advice on the income tax consequences that specifically
                apply
                to them as an individual.

            

            
              

            

            
              The
                Units
                are securities of a non-Canadian issuer and may constitute "foreign
                property"
                for the purposes of the foreign property limitations under the Income Tax
                Act (Canada). Not all securities are eligible for investment in
                a
                registered retirement savings plan (RRSP). You should consult your
                own
                professional advisers to obtain advice on the RRSP eligibility of
                these
                securities.

            

            
              

            

            
              COMPENSATION
                PAID TO SELLERS AND FINDERS

            

            
              

            

            
              The
                company will pay a cash fee of 10% calculated on the gross proceeds
                to agents
                and/or finders only as in compliance with provincial securities laws.
                No Brokers
                or Agents warrants are anticipated to be paid in the herein described
                offering.

            

            
               

              RISK
                FACTORS

            

            
              

            

            
              Please
                refer to pages 9 to 13 of the Memorandum.

            

            
              

            

            
              Offers
                and sales of securities of U.S. issuers outside of the United States
                to persons
                other than "U.S. persons" (as defined by the United States Securities
                Act of
                1933, as amended ("1933 Act")) are subject to complex restrictions
                imposed by
                the 1933 Act. The Units are offered outside of the United States
                to persons
                other than U.S. persons pursuant to the exemption from registration
                provided by
                Regulation S under the 1933 Act. You may be restricted from reselling
                the Units
                in the absence of registration pursuant to applicable securities
                laws or
                exemption there from. You should consult your own professional advisers
                to
                obtain advice regarding the application of U.S. securities legislation
                to this
                offering. Please refer to page 35 of the Memorandum.

            

            
              

            

            
              Although
                the Company intends to comply with all relevant requirements of Canadian
                securities legislation, the Company exists under the laws of the
                State of Texas
                with its principal office located in Houston, Texas and many of the
                directors
                and officers of the Company reside outside of Canada and substantially
                all of
                their assets and those of the Company are located there. It may not
                be possible
                for you to effect service of process within Canada on the Company
                or upon
                directors and officers who reside outside of Canada.   It may
                also not be possible to enforce judgments obtained in Canadian courts
                predicated
                on the civil liability provisions of provincial securities laws against
                the
                Company or its directors and officers who reside outside of
                Canada.

            

            

            
              
                
                  
                  

                

                
                  -7-

                  
                    

                  

                

                
                  
                  

                

              

            

            

            
              REPORTING
                OBLIGATIONS

            

            
              

            

            
              Please
                refer to page 36 and page 22 of Appendix F to the Memorandum - Annual
                Report on
                Form 10-KSB for the fiscal year ended December 31, 2004 and page
                3 of Appendix B
                - Unit Subscription Agreement of the Memorandum.

            

            
              

            

            
              RESALE
                RESTRICTIONS

            

            
              

            

            
              Please
                refer to pages 5 to 6 and page 3 of Appendix B - Unit Subscription
                Agreement of
                the Memorandum.

            

            
              

            

            
              General
                Statement

            

            
              

            

            
              These
                securities will be subject to a number of resale restrictions, including
                a
                restriction on trading. Until the restriction on trading expires,
                you will not
                be able to trade the securities unless you comply with an exemption
                from the
                prospectus and registration requirements under securities
                legislation.

            

            
              

            

            
              Restricted
                Period

            

            
              

            

            
              Unless
                permitted under securities legislation, you cannot trade the securities
                before
                the date that is 4 months and a day after the date Positron Corporation
                becomes
                a reporting issuer in any province or territory of Canada. Trading
                of the
                securities in the USA is outlined in the U.S. Confidential Private
                Offering
                Memorandum. (See page 32 "Market For Common Stock" and page 35 "Restrictions
                On Transfer" in the (USA) private placement
                memorandum.

            

            
              

            

            
              Manitoba
                Resale Restrictions

            

            
              

            

            
              Unless
                permitted under securities legislation, you must not trade the securities
                without the prior written consent of the regulator in Manitoba unless
                (a)
                Positron Corporation has filed a prospectus with the regulator in
                Manitoba with
                respect to the securities you have purchased and the regulator in
                Manitoba has
                issued a receipt for that prospectus, or (b) you have held the securities
                for at
                least 12 months. The regulator in Manitoba will consent to your trade
                if the
                regulator is of the opinion that to do so is not prejudicial to the
                public
                interest.

            

            
              

            

            
              PURCHASERS'
                RIGHTS

            

            
              

            

            
              Securities
                legislation in certain of the Provinces of Canada requires investors
                to be
                provided with a remedy for rescission or damages, or both, in addition
                to any
                other right that they may have at law, where an offering memorandum
                and any
                amendment to it contains a misrepresentation. These remedies must
                be exercised
                by the investor within the time limits prescribed by the applicable
                securities
                legislation. Investors should refer to the applicable provisions
                of the
                securities legislation for the complete text of these rights or consult
                with a
                legal adviser.

            

            
              

            

            
              The
                applicable contractual and statutory rights are summarized below
                and such
                contractual rights will be embodied in the Unit Subscription Agreement
                (Canadian
                Purchasers) to be executed and delivered by each Canadian investor
                to the
                Company prior to the issuance of Units. By its execution of the Unit
                Subscription Agreement (Canadian Purchasers), the Company will be
                deemed to have
                granted these rights to the particular investor.

            

            

            
              
                
                  
                  

                

                
                  -8-

                  
                    

                  

                

                
                  
                  

                

              

            

            

            
              The
                applicable statutory rights are available to an investor whether
                or not the
                investor relied on the misrepresentation. However, there are various
                defences
                available to the persons an investor has a right to sue, including
                if the
                investor knew of the misrepresentation when the investor purchased
                the
                securities.

            

            
              

            

            
              The
                following summaries are subject to the express provisions of the
                securities laws
                of the applicable Province and reference is made thereto for the
                complete text
                of such provisions. The rights of action described below are in addition
                to and
                without derogation from any right or remedy available at law to the
                investor and
                are intended to correspond to the provisions of the relevant securities
                legislation and are subject to the defences contained
                therein.

            

            
              

            

            
              Two
                Day Cancellation Right for All Investors

            

            
              

            

            
              You
                can
                cancel your agreement to purchase these securities. To do so, you
                must send a
                notice to the Company by midnight on the second business day after
                you sign the
                agreement to buy the securities.

            

            
              

            

            
              Rights
                for Investors in British Columbia and Alberta

            

            
              

            

            
              Securities
                legislation in British Columbia provides that every investor in securities
                pursuant to this Offering Memorandum shall have, in addition to any
                other rights
                they may have at law, a right of action for damages or rescission,
                against the
                Company and every person who signs the Offering Memorandum or any
                amendment
                thereto, in the event that the Offering Memorandum or any amendment
                thereto
                contains a misrepresentation. However, such rights must be exercised
                within
                prescribed time limits. Investors should refer to the applicable
                provisions of
                the British Columbia or Alberta securities legislation for particulars
                of those
                rights or consult with a lawyer. For these purposes, a "misrepresentation"
                means
                an untrue statement of a material fact or an omission to state a
                material fact
                that is required to be stated, or necessary to prevent a statement
                that is made
                from being false or misleading in the circumstances in which it was
                made. A
                "material fact" means any fact that significantly affects or could
                reasonably be
                expected to significantly affect the market price or the value of
                the
                Units.

            

            
              

            

            
              In
                British Columbia or Alberta, no action shall be commenced to enforce
                a statutory
                right of action unless the right is exercised:

            

            
              

            

            
              
                	
                      	
                        (a)

                      	
                        in
                          the case of rescission, on notice to the Company not later
                          than 180 days
                          from the day of the transaction that gave rise to the cause
                          of action,
                          or

                      

              

            

            
              

            

            
              
                	
                      	
                        (b)

                      	
                        in
                          the case of damages, on notice given to the Company not
                          later
                          than

                      

              

            

            
              

            

            
              
                	
                      	
                        (i)

                      	
                        180
                          days from the day the investor first had knowledge of the
                          facts giving
                          rise to the cause of action,
                          or

                      

              

            

            
              

            

            
              
                	
                      	(ii)	three
                        years from the day of the transaction that gave rise to the
                        cause of
                        action.

              

               

            

            
              Reference
                is made to the Securities Act (British Columbia) and the Securities
                Act (Alberta) for the complete text of the provisions under which
                these
                rights are conferred and this summary is subject to the express provisions
                of
                the Securities Act (British Columbia) or the Securities Act
(Alberta), as applicable.

            

            
              

            

            
              Rights
                for Investors in Saskatchewan

            

            
              

            

            
              The
                Securities Act, 1988 (Saskatchewan), as amended, provides that, subject to
                certain limitations, where this Offering Memorandum contains a misrepresentation
                (as defined in The Securities Act, 1988 (Saskatchewan)), an
                investor who purchases a security covered by this Offering Memorandum,
                has a
                right of action for damages against the issuer of the security, the
                promoters
                and directors of the issuer, every person or company whose consent
                has been
                filed with the Offering Memorandum (but only with respect to reports,
                opinions
                or statements that have been made by them), every person who signed
                the Offering
                Memorandum and every person who or company that sells the securities
                on behalf
                of the issuer under the Offering Memorandum.

            

            

            
              
                
                  
                  

                

                
                  -9-

                  
                    

                  

                

                
                  
                  

                

              

            

            

            
              Alternatively,
                where the investor purchased the security from the issuer, the investor
                may
                elect to exercise a right of rescission against the issuer.

            

            
              

            

            
              In
                addition, subject to certain limitations, where an individual makes
                a verbal
                statement to a prospective investor that contains a misrepresentation
                relating
                to the security purchased and the verbal statement is made either
                before or
                contemporaneously with the purchase of the security, the investor
                has a right of
                action for damages against the individual who made the verbal
                statement.

            

            
              

            

            
              No
                action
                may be commenced to enforce any of the foregoing rights;

            

            
              

            

            
              
                	
                      	
                        (a)

                      	
                        in
                          the case of rescission, more than 180 days after the date
                          of the
                          transaction that gave rise to the cause of action;
                          and

                      

              

            

            
              

            

            
              
                	
                      	
                        (b)

                      	
                        in
                          the case of any other action, other than an action for
                          rescission, more
                          than the earlier of (i) one year after the investor first
                          had knowledge of
                          the facts giving rise to the cause of action, or (ii) six
                          years after the
                          date of the transaction that gave rise to the cause of
                          action.

                      

              

            

            
              

            

            
              

            

            
              Rights
                for Investors in Ontario

            

            
               

            

            
              Section
                130.1 of the Securities Act (Ontario) provides that in the event that
                this Offering Memorandum, together with any amendments thereto, is
                delivered to
                an investor of Units resident in Ontario and contains an untrue statement
                of a
                material fact or omits to state a material fact that is required
                to be stated or
                that is necessary to make a statement not misleading in light of
                the
                circumstances in which it was made, the investor will have a right
                of action
                against the Company for damages or rescission as follows:

            

            
              

            

            
              
                	
                      	
                        (a)

                      	
                        the
                          right of action for rescission or damages will be exercisable
                          by an
                          investor resident in Ontario only if the investor gives
                          written notice to
                          the Company, not later than 180 days after the date on
                          which payment was
                          made for the securities (or after the initial payment was
                          made for the
                          securities, where payments subsequent to the initial payment
                          are made
                          pursuant to a contractual commitment assumed prior to or
                          concurrently with
                          the initial payment), that the investor is exercising this
                          right, or
                          alternatively, in an action for damages, the right of action
                          will be
                          exercisable by an investor only if the investor gives notice
                          to the
                          Company not later than the earlier
                          of:

                      

              

            

            
              

            

            
              
                	
                      	
                        (i)

                      	
                        180
                          days after the investor first had knowledge of the facts
                          giving rise to
                          the cause
                          of action; or

                      

              

            

            
               

            

            
              
                	
                      	
                        (ii) 

                      	
                        three
                          years after the date of the transaction giving rise to
                          the cause of
                          action.

                      

              

            

            
              

            

            
              
                	
                      	
                        (b)

                      	
                        the
                          Company will not be liable if it proves that the investor
                          purchased the
                          securities with knowledge of the
                          misrepresentation;

                      

              

            

            
              

            

            
              
                	
                      	
                        (c)

                      	
                        in
                          the case of an action for damages, the Company will not
                          be liable for all
                          or any portion of such damages that it proves do not represent
                          the
                          depreciation in value of the securities as a result of
                          the
                          misrepresentation relied
                          upon;

                      

              

            

            

            
              
                
                  
                  

                

                
                  -10-

                  
                    

                  

                

                
                  
                  

                

              

            

            

            
              
                	
                      	
                        (d)

                      	
                        in
                          no case will the amount recoverable in any action exceed
                          the price at
                          which the securities were sold to the investor;
                          and

                      

              

            

            
              

            

            
              
                	
                      	
                        (e)

                      	
                        the
                          rights of action for rescission or damages are in addition
                          to and without
                          derogation from any other right the investor may have at
                          law.

                      

              

            

            
              

            

            
              Rights
                for Investors in Nova Scotia

            

            
              

            

            
              Section
                65 of The Securities Act (Nova Scotia) (the "NS Act") requires the
                Company to notify investors purchasing Units pursuant to this Offering
                Memorandum in the Province of Nova Scotia that they may have the
                following
                rights of rescission or damages.

            

            
              

            

            
              In
                the
                event that the Offering Memorandum, together with any amendments
                thereto, or any
                "advertising or sales literature" (as defined in the NS Act) delivered
                to an
                investor, contains any untrue statement of material fact or omits
                to state a
                material fact necessary in order to make any statement not misleading
                in light
                of circumstances in which it was made (herein called a "Misrepresentation")
                and
                it is a Misrepresentation on the date of investment, an investor
                to whom the
                Offering Memorandum and any amendment thereto, or any "advertising
                or sales
                literature" (as defined in the NS Act), has been delivered on behalf
                of the
                Company and who purchases Units shall be deemed to have relied on
                such
                Misrepresentation and such investor shall have a right of action
                against the
                Company for damages, or so long as such investor is the owner of
                such Units at
                his, her or its election, for rescission.

            

            
              

            

            
              For
                investors this right is exercisable if an action is commenced to
                enforce this
                right within 120 days after the date on which payment was made for the
                Units by the investors or after the date on which the initial payment
                for the
                Units was made by the investor where payments subsequent to the initial
                payment
                are made by the investor pursuant to a contractual commitment assumed
                prior to,
                or concurrently with, the initial payment.

            

            
              

            

            
              These
                rights are intended to correspond with the rights against a seller
                of securities
                provided in Section 138 of the NS Act and the Rules thereto and are
                subject to
                defences contained therein such that:

            

            
              

            

            
              
                	
                      	
                        (a)

                      	
                        the
                          Company will not be held liable if the investor purchased
                          the Units with
                          knowledge of the
                          Misrepresentation;

                      

              

            

            
              

            

            
              
                	
                      	
                        (b)

                      	
                        in
                          an action for damages, the Company will not be liable for
                          all or any
                          portion of such damages that it proves do not represent
                          the depreciation
                          in value of the Units as a result of the Misrepresentation
                          relied upon;
                          and

                      

              

            

            
              

            

            
              
                	
                      	
                        (c)

                      	
                        in
                          no case will the amount recoverable by an Investor exceed
                          the price at
                          which the Units were sold to the
                          investor.

                      

              

            

            
              

            

            
              Rights
                for Investors in New Brunswick

            

            
              

            

            
              If
                this
                Offering Memorandum, together with any amendments thereto, is delivered
                to a
                prospective investor of Units in connection with a trade made in
                reliance on MB
                Rule 45-501, and this Offering Memorandum contains a "misrepresentation"
                which
                was a misrepresentation at the time of the purchase of the Units,
                the investor
                will have a right of action against the Company for damages, or while
                still the
                owner of the Units, for rescission, in which case, if the investor
                elects to
                exercise the right of rescission, the investor will have no right
                of action for
                damages. However, such rights must be exercised within prescribed
                time limits.
                Investors should refer to the applicable provisions of the New Brunswick
                securities legislation for particulars of those rights or consult
                with a lawyer.
                For these purposes, a "misrepresentation" means an untrue statement
                of a
                material fact or an omission to state a material fact that is required
                to be
                stated, or necessary to prevent a statement that is made from being
                misleading
                in the circumstances in which it was made. A "material fact" means
                any fact that
                would reasonably be expected to have a significant effect on the
                market price or
                the value of the Units.

            

            

            
              
                
                  
                  

                

                
                  -11-

                  
                    

                  

                

                
                  
                  

                

              

            

            

            
              The
                Company will not be liable if it proves that the investor purchased
                the
                securities with knowledge of the misrepresentation. In the case of
                an action for
                damages, the Company will not be liable for all or any portion of
                such damages
                that it proves do not represent the depreciation in value of the
                securities as a
                result of the misrepresentation relied upon and in no case will the
                amount
                recoverable in any action exceed the price at which the securities
                were sold to
                the investor.

            

            
              

            

            
              No
                action
                may be commenced to enforce any of the foregoing rights:

            

            
              

            

            
              
                	
                      	
                        (a)

                      	
                        in
                          the case of rescission, more than 180 days after the date
                          of the
                          transaction that gave rise to the cause of action;
                          or

                      

              

            

            
              

            

            
              
                	
                      	
                        (b)

                      	
                        in
                          the case of any other action, other than an action for
                          rescission, the
                          earlier of (i) one year after the investor first had knowledge
                          of the
                          facts giving rise to the cause of action, and (ii) six
                          years after the
                          date of the transaction that gave rise to the cause of
                          action.

                      

              

            

            
              

            

            
              The
                right
                of action for rescission or damages is in addition to and without
                derogation
                from any other right the investor may have at law.

            

            
              

            

            
              Rights
                for Investors in Newfoundland & Labrador

            

            
              

            

            
              If
                this
                Offering Memorandum, together with any amendments thereto delivered
                to an
                investor resident in Newfoundland & Labrador before the issue of Units to
                such investor, contains an untrue statement of material fact or omits
                to state a
                material fact that is required to be stated or that is necessary
                in order make
                any statement in it not misleading in light of the circumstances
                in which it was
                made (a "Misrepresentation") and it was a Misrepresentation at the
                time of the
                purchase of the Units, an investor to whom this Offering Memorandum,
                or any
                amendment hereto, was delivered and who purchases Units shall have,
                subject as
                hereinafter provided, a right of action against the Company either
                for damages
                or, alternatively, while still the owner of the Units purchased by
                the investor,
                for rescission, in which case, if the investor elects to exercise
                the right of
                rescission, the investor will have no right of action for damages
                against the
                Company, provided that:

            

            
              

            

            
              
                	
                      	
                        (a)

                      	
                        the
                          right of action for rescission or damages will be exercisable
                          only if the
                          investor gives notice to the Company not later than 90
                          days after the date
                          on which the payment is made for the Units that the investor
                          is exercising
                          this right;

                      

              

            

            
              

            

            
              
                	
                      	
                        (b)

                      	
                        the
                          Company will not be liable if it proved that the investor
                          purchased the
                          Units with knowledge of the
                          Misrepresentation;

                      

              

            

            
              

            

            
              
                	
                      	
                        (c)

                      	
                        in
                          the case of an action for damages, the Company will not
                          be liable for all
                          or any portion of those damages that it proves does not
                          represent the
                          depreciation in value of the Units as a result of the Misrepresentations
                          relied upon; and

                      

              

            

            
              

            

            
              
                	
                      	
                        (d)

                      	
                        in
                          no case will the amount recoverable in any action exceed
                          the price at
                          which the Units were sold to the investor plus accrued
                          interest.

                      

              

            

            
              

            

            
              Contractual
                Rights of Action for Investors in Manitoba, Quebec, Prince Edward
                Island,
                Northwest Territories and Nunavut

            

            

            
              
                
                  
                  

                

                
                  -12-

                  
                    

                  

                

                
                  
                  

                

              

            

            

            
              If
                there
                is a misrepresentation in the Offering Memorandum, investors resident
                in
                Manitoba, Québec,
                Prince Edward
                Island, Northwest Territories or Nunavut will have, in addition to
                any statutory
                rights that may be available to them, a contractual right to sue
                the
                Company:

            

            
              

            

            
              
                	
                      	
                        (a)

                      	
                        to
                          cancel the investors' agreement to buy the Units;
                          or

                      

              

            

            
              

            

            
              
                	
                      	
                        (b)

                      	
                        for
                          damages.

                      

              

            

            
              

            

            
              This
                contractual right to sue is available to the investor whether or
                not the
                investor relied on the misrepresentation.

            

            
              

            

            
              However,
                in an action for damages, the amount the investor may recover will
                not exceed
                the price that it paid for its securities and will not include any
                part of the
                damages that the Company proves does not represent the depreciation
                in value of
                the securities resulting from the misrepresentation. The Company
                has a defence
                if it proves that the investor knew of the misrepresentation when
                the investor
                purchased the securities.

            

            
              

            

            
              If
                an
                investor intends to rely on the rights described in (a) or (b) above,
                it must do
                so within strict time limitations.

            

            
              

            

            
              An
                investor must commence its action to cancel the agreement within
                180 days after
                it signed the agreement to purchase the securities. The investor
                must commence
                its action for damages within the earlier of 180 days after learning
                of the
                misrepresentation and 3 years after it signed the agreement to purchase
                the
                securities.

            

            
              

            

            
              FINANCIAL
                STATEMENTS

            

            
              

            

            
              Please
                refer to the audited financial statements of the Company for the
                years ended
                December 31, 2004 and 2003 found at pages 37 - 57 of Appendix F to
                the
                Memorandum - Annual Report on Form 10-KSB for the fiscal year ended
                December 31,
                2004, and the unaudited financial statements of the Company for the
                six months
                ended June 30, 2005 found at pages 3 to 12 of Appendix E to the Memorandum
                -Quarterly Report on Form 10-QSB for the fiscal quarter ended June
                30,
                2005.

            

            

            
              
                
                  
                  

                

                
                  -13-

                  
                    

                  

                

                
                  
                  

                

              

            

            
               

            

            
              	
                      CERTIFICATE

                    
	
                      This
                        Memorandum does not contain a misrepresentation.

                    
	
                      DATED
                        this 31st day of December, 2005.

                    
	 	 	 
	 	 	 
	
                      J.
                        David Wilson: Chief Executive Officer

                    	 	
                      Patrick
                        G. Rooney: Chairman of the Board

                    
	 	 	 
	 	 	 
	 	 	 
	
                      
                        Corey
                          N. Conn: Chief Financial Officer and Executive Vice President
                          of
                          Operations

                      

                    	 	
                      
                        Sachio
                          Okamura: Director

                      

                    
	 	 	 
	 	 	 
	 	 	 
	
                      Dr.
                        Anthony (Tony) C. Nicholls: Director

                    	 	
                      
                        Joseph
                          Oliverio: President

                      

                    
	 	 	 
	 	 	 
	 	 	 
	
                      Griffith
                        Miller: EVP Software & IT Technology

                    	 	 
	 	 	 
	 	 	 

            

            
              

                
                  
                    
                    

                  

                  
                    -14-

                    
                      

                    

                  

                  
                    
                    

                  

                

              

               

            

            
              SCHEDULE
                A

               

            

            
              ACCREDITED
                INVESTOR QUESTIONAIRE

            

            
              (relating
                to Canadian securities laws)

            

            

            
              
                
                  
                  

                

                
                  
                  

                  
                    

                  

                

                
                  
                  

                

              

            

            

            
              ACCREDITED
                INVESTOR CERTIFICATE

               

            

            
              
                	
                        TO:

                      	
                        POSITRON
                          CORPORATION (the “issuer”)

                      

              

            

            
              

            

            
              In
                connection with the proposed issuance of securities by the issuer
                to the
                undersigned, the undersigned hereby certifies as follows with the
                intention that
                the issuer may rely on this certification in issuing such
                securities:

            

            
              

            

            
              
                	
                         

                      	
                        1.

                      	
                        Representations
                          as to “Accredited Investor” Status
                          The undersigned has read the definition of “accredited
                          investor” from National Instrument 45-106 (“NI
                          45-106”), attached as Exhibit
                          “A” to this certificate,
                          and hereby
                          certifies that the undersigned: (i) is an “accredited
                          investor” as defined in NI 45-106 for the reason
                          indicated below (please check one); and (ii) is purchasing
                          the securities
                          as principal.

                      

              

            

            
              

            

            
              PLEASE
                CHECK THE APPROPRIATE BOX BELOW (NOTE: PLEASE REFER TO CERTAIN
                DEFINITIONS ATTACHED AS EXHIBIT "A" TO THIS CERTIFICATE BEFORE CHECKING
                THE
                APPROPRIATE BOX.):

            

            
              

            

            
              
                	
                        o

                      	
                        (a)       The
                          undersigned is an individual who, either alone or with
                          a spouse,
                          beneficially owns, directly
                          or indirectly, financial assets having an aggregate realizable
                          value that
                          before taxes, but net of any related liabilities, exceeds
                          $1,000,000.

                      

              

            

            
              

            

            
              
                	
                        o

                      	
                        (b)       The
                          undersigned is an individual whose net income before taxes
                          exceeded
                          $200,000 in each
                          of the two most recent calendar years or whose net income
                          before taxes
                          combined with that of a spouse exceeded $300,000 in each
                          of the two most
                          recent calendar years and who, in either case, reasonably
                          expects to
                          exceed that net income level in the current calendar
                          year.

                      

              

            

            
              

            

            
              
                	
                        o

                      	
                        (c)       The
                          undersigned is an individual who, either alone or with
                          a spouse, has net
                          assets of at least
                          $5,000,000.

                      

              

            

            
              

            

            
              
                	
                        o

                      	
                        (d)       The
                          undersigned is a person1,
                          other than
                          an individual or investment fund, that has net assets of
                          at least
                          $5,000,000 as shown on its most recently prepared financial
                          statements.

                      

              

            

            
              

            

            
              
                	
                        o

                      	
                        (e)       The
                          undersigned is a person or company in respect of which
                          all of the owners
                          of interests, direct
                          or indirect, except the voting securities required by law
                          to be owned by
                          directors, are persons that are accredited
                          investors.

                      

              

            

            
              

            

            
              
                	
                        o

                      	
                        (f)        The
                          undersigned falls within another category listed in the
                          definition of
                          “accredited investor” in NI 45-106 and
                          has circled and initialed such section as it appears on
                          Exhibit
                          “A” to this
                          certificate.

                      

              

            

            
              

            

            
              
                	
                         

                      	
                        2.

                      	
                        Truth
                          and Accuracy of this Certificate  The foregoing
                          certification is true and accurate as of the date below
                          and shall be true
                          and accurate on the date of issuance of the securities.
                          If in any respect
                          such representation shall not be true and accurate prior
                          to such date, the
                          undersigned shall give immediate notice of such fact to
                          the President of
                          the Corporation, with a copy to the issuer's Canadian legal
                          counsel:
                          Muscovitch and Associates by facsimile at 416
                          920-6306.

                      

              

            

            
              

            

            
              	
                      DATED                       ,
                        2006.

                    	 	 	 
	
                      Print
                        Name of Investor:

                    	 	 	 
	
                      Signature
                        of or on behalf of the Investor:

                    	 	 	 
	
                      Name
                        of Person Signing:

                    	 	 	 
	
                      Title
                        of Person Signing:

                    	 	 	 

            

            
              
                 

                
                  

                

              

            

            
              1
                “person” includes

            

            
              
                	
                      	
                        (a)

                      	
                        an
                          individual,

                      

              

            

            
              
                	
                      	
                        (b)

                      	
                        a
                          corporation,

                      

              

            

            
              
                	
                      	
                        (c)

                      	
                        a
                          partnership, trust, fund and an association, syndicate,
                          organization or
                          other organized group of persons, whether incorporated
                          or not,
                          and

                      

              

            

            
              
                	
                      	
                        (d)

                      	
                        an
                          individual or other person in that person's capacity as
                          a trustee,
                          executor, administrator or personal or other legal
                          representative;

                      

              

            

            

            
              
                
                  
                  

                

                
                  -
                    2 -

                  
                    

                  

                

                
                  
                  

                

              

            

            

            
              Exhibit
                “A”

            

            
              Definitions

            

            
              

            

            
              “accredited
                investor” means

            

            
              

            

            
              
                	
                      	
                        (a)

                      	
                        a
                          Canadian financial institution, or a Schedule III bank
                          listed in Schedule
                          I or II of Canada incorporated under the Bank of Canada Act
                          (Canada);

                      

              

            

            
              

            

            
              
                	
                      	
                        (c)

                      	
                        a
                          subsidiary of any person referred to in paragraphs (a)
                          or (b), if the
                          person owns all of the voting securities of the subsidiary,
                          except the
                          voting securities required by law to be owned by directors
                          of that
                          subsidiary;

                      

              

            

            
              

            

            
              
                	
                      	
                        (d)

                      	
                        a
                          person registered under the securities legislation of a
                          jurisdiction of
                          Canada as an adviser or dealer, other than a person registered
                          solely as a
                          limited market dealer under one or both of the Securities Act
                          (Ontario) or the Securities Act (Newfoundland and
                          Labrador);

                      

              

            

            
              

            

            
              
                	
                      	
                        (e)

                      	
                        an
                          individual registered or formerly registered under the
                          securities
                          legislation of a jurisdiction of Canada as a representative
                          of a person
                          referred to in paragraph (d);

                      

              

            

            
              

            

            
              
                	
                      	
                        (f)

                      	
                        the
                          Government of Canada or of any jurisdiction of Canada,
                          or any crown
                          corporation, agency or wholly owned entity of the Government
                          of Canada or
                          a jurisdiction of Canada;

                      

              

            

            
              

            

            
              
                	
                      	
                        (g)

                      	
                        a
                          municipality, public board or commission in Canada and
                          a metropolitan
                          community, school board, the Comité
                          de gestion
                          de la taxe scolaire de l'île
                          de
                          Montréal
                          or an
                          intermunicipal management board in Québec;

                      

              

            

            
              

            

            
              
                	
                      	
                        (h)

                      	
                        any
                          national, federal, state, provincial, territorial or municipal
                          government
                          of or in any foreign jurisdiction, or any agency of that
                          government;

                      

              

            

            
              

            

            
              
                	
                      	
                        (k)

                      	
                        a
                          pension fund that is regulated by either the Office of
                          the Superintendent
                          of Financial Institutions (Canada) or a pension commission
                          or similar
                          regulatory authority of a jurisdiction of
                          Canada;

                      

              

            

            
              

            

            
              
                	
                      	
                        (j)

                      	
                        an
                          individual who, either alone or with a spouse, beneficially
                          owns, directly
                          or indirectly, financial assets having an aggregate realizable
                          value that
                          before taxes, but net of any related liabilities, exceeds
                          $1,000,000;

                      

              

            

            
              

            

            
              
                	
                      	
                        (n)

                      	
                        an
                          individual whose net income before taxes exceeded $200,000
                          in each of
                          the two most recent calendar years or whose net income
                          before
                          taxes combined with that of a spouse exceeded $300,000
                          in each of the two
                          most recent calendar years and who, in either case, reasonably
                          expects
                          that net income level in the current calendar
                          year;

                      

              

            

            
              

            

            
              
                	
                      	
                        (1)

                      	
                        an
                          individual who, either alone or with a spouse, has net
                          assets of at least
                          $5,000,000;

                      

              

            

            
              

            

            
              
                	
                      	
                        (m)

                      	
                        a
                          person, other than an individual or investment fund, that
                          has net assets
                          of at least $5,000,000 as shown on its most recently prepared
                          financial
                          statements;

                      

              

            

            
              

            

            
              
                	
                      	
                        (n)

                      	
                        an
                          investment fund mat distributes or has distributed its
                          securities only
                          to

                      

              

            

            
              

            

            
              
                	
                      	
                        i)

                      	
                        a
                          person that is or was an accredited investor at the time
                          of the
                          distribution

                      

              

            

            
              

            

            
              
                	
                      	
                        ii)

                      	
                        a
                          person that acquires or acquired securities in the circumstances
                          referred
                          to in sections 2.10 [Minimum amount invested], and 2.19
                          [Additional investment in investment funds],
                          or

                      

              

            

            
              

            

            
              
                	
                      	
                        iii)

                      	
                        a
                          person described in paragraph (i) or (ii) that acquires
                          or acquired
                          securities under section 2.18 [Investment fund
                          reinvestment]

                      

              

            

            
              

            

            
              
                	
                      	
                        (o)

                      	
                        an
                          investment fund that distributes or has distributed securities
                          under a
                          prospectus in a jurisdiction of Canada for which the regulator
                          or, in
                          Québec,
                          the securities regulatory authority, has issued a
                          receipt;

                      

              

            

            
              

            

            
              
                	
                      	
                        (p)

                      	
                        a
                          trust company or trust corporation registered or authorized
                          to carry on
                          business under the Trust and Loan Companies Act (Canada) or under
                          comparable legislation in a jurisdiction of Canada or a
                          foreign
                          jurisdiction, action on behalf of a fully managed account
                          managed by the
                          trust company or trust corporation, as the case may
                          be;

                      

              

            

            

            
              
                
                  
                  

                

                
                  -
                    i
                    -

                  
                    

                  

                

                
                  
                  

                

              

            

            

            
              
                	
                      	
                        (q)

                      	
                        a
                          person acting on behalf of a fully managed account managed
                          by that person,
                          if that person

                      

              

            

            
              

            

            
              
                	
                      	
                        i)

                      	
                        is
                          registered or authorized to carry on business as an adviser
                          or the
                          equivalent under the securities legislation or a jurisdiction
                          of Canada or
                          a foreign jurisdiction, and

                      

              

            

            
              

            

            
              
                	
                      	
                        ii)

                      	
                        in
                          Ontario, is purchasing a security that is not a security
                          or an investment
                          fund;

                      

              

            

            
              

            

            
              
                	
                      	
                        (r)

                      	
                        a
                          registered charity under the Income Tax Act (Canada) that, in
                          regard to the trade, has obtained advice from an eligibility
                          adviser or an
                          advisor registered under the securities legislation of
                          the jurisdiction of
                          the registered charity to give advice on the securities
                          being
                          traded;

                      

              

            

            
              

            

            
              
                	
                      	
                        (s)

                      	
                        an
                          entity organized in a foreign jurisdiction that is analogous
                          to any of the
                          entities referred to in paragraphs (a) to (d) or paragraph
                          (i) in form and
                          function;

                      

              

            

            
              

            

            
              
                	
                      	
                        (t)

                      	
                        a
                          person in respect of which all of the owners of interest,
                          direct, indirect
                          or beneficial, except the voting securities required by
                          law to be owned by
                          directors, are persons that are accredited
                          investors;

                      

              

            

            
              

            

            
              
                	
                      	
                        (u)

                      	
                        an
                          investment fund that is advised by a person registered
                          as an adviser or a
                          person that is exempt from registration as an advisor;
                          or

                      

              

            

            
              

            

            
              
                	
                      	
                        (v)

                      	
                        a
                          person that is recognized or designated by the securities
                          regulatory
                          authority or, except in Ontario and Québec,
                          the
                          regulator as

                      

              

            

            
              

            

            
              
                	
                      	
                        i)

                      	
                        an
                          accredited investor, or

                      

              

            

            
              

            

            
              
                	
                      	
                        ii)

                      	
                        an
                          exempt purchaser in Alberta or British Columbia after this
                          Instrument
                          comes into force;

                      

              

            

            
               

              “entity”
                means a company, syndicate, partnership, trust or unincorporated
                organization;

            

            
              

            

            
              “financial
                assets” means cash, securities, or any contract of insurance or
                deposit
                or evidence thereof that is not a security for the purposes of the
                Securities
                Act (Ontario);

            

            
              

            

            
              “fully
                managed account” means an investment portfolio account of a client
                established in writing with a portfolio adviser who makes investment
                decisions
                for the account and has full discretion to trade in securities of
                the account
                without requiring the client's express consent to a
                transaction

            

            
              

            

            
              “portfolio
                adviser” means (a) a portfolio manager; or (b) a broker or investment
                dealer exempted from registration as an adviser under subsection
                148(1) of the
                Regulation made under the Securities Act (Ontario) if that broker
                or investment
                dealer is not exempt from the by-laws or regulations of The Toronto
                Stock
                Exchange or the Investment Dealers' Association of Canada referred
                to in that
                subsection;

            

            
              

            

            
              “promoter”
                means,

            

            
              

            

            
              
                	
                      	
                        (a)

                      	
                        person
                          or company who, acting alone or in conjunction with one
                          or more other
                          persons, companies or a combination thereof, directly or
                          indirectly, takes
                          the initiative in founding, organizing or substantially
                          reorganizing the
                          business of an issuer, or

                      

              

            

            
              

            

            
              
                	
                      	
                        (b)

                      	
                        a
                          person or company who, in connection with the founding,
                          organizing or
                          substantial reorganizing of the business of an issuer,
                          directly or
                          indirectly, receives in consideration of services or property,
                          or both
                          services and property, 10 per cent or more of any class
                          of securities of
                          the issuer or 10 per cent or more of the proceeds from
                          the sale of any
                          class of securities of a particular issue, but a person
                          or company who
                          receives such securities or proceeds either solely as underwriting
                          commissions or solely in consideration of property shall
                          not be deemed a
                          promoter within the meaning of this definition if such
                          person or company
                          does not otherwise take part in founding, organizing, or
                          substantially
                          reorganizing the business;

                      

              

            

            
              

            

            
              “related
                liabilities” means liabilities incurred or assumed for the purpose of
                financing the acquisition or ownership of financial assets and liabilities
                that
                are secured by financial assets; and  

               

              “spouse”,
                in relation to an individual, means another individual to
                whom that
                individual is married, or another individual of the opposite sex
                or the same sex
                with whom that individual is living in a conjugal relationship outside
                marriage.

            

            

            
              
                
                  
                  

                

                
                  -
                    ii
                    -

                  
                    

                  

                

                
                  
                  

                

              

            

            

            
              Interpretation

               

            

            
              
                	
                        
                          1.

                        

                      	
                        In
                          NI 45-106, a person or company is considered to be an affiliated
                          entity of
                          another person or company if one is a subsidiary of the
                          other, or if each
                          of them is controlled by the same
                          person.

                      

              

            

            
              

            

            
              
                	
                        2.

                      	
                        In
                          NI 45-106, a control person has the same meaning as in
                          securities
                          legislation except in Manitoba, Newfoundland and Labrador,
                          Northwest
                          Territories, Nova Scotia, Nunavut, Ontario, Prince Edward
                          Island and
                          Quebec where control person means any person that holds
                          or is one of a
                          combination of persons that holds

                      

              

               

            

            
              
                	
                      	
                        (a)

                      	
                        a
                          sufficient number of any of the securities of an issuer
                          so as to affect
                          materially the control of the issuer,
                          or

                      

              

            

            
              

            

            
              
                	
                      	
                        (b)

                      	
                        more
                          than 20% of the outstanding voting securities of an issuer
                          except where
                          there is evidence showing that the holding of those securities
                          does not
                          affect materially the control of the
                          issuer.

                      

              

            

            
               

            

            
              
                	
                        3.

                      	
                        In
                          NI 45-106, a person or company is considered to be a subsidiary
                          entity of
                          another person or company if the issuer that is controlled
                          directly or
                          indirectly by another issuer and includes a subsidiary
                          of that
                          subsidiary.

                      

              

            

            

            
              
                
                  
                  

                

                
                  -
                    iii
                    -

                  
                    

                  

                

                
                  
                  

                

              

            

            

            
              SCHEDULE
                B

               

            

            
              PURCHASERS
                QUESTIONNAIRE

            

            
              (relating
                to U.S. securities laws)

            

            

            
              
                
                  
                  

                

                
                  
                  

                  
                    

                  

                

                
                  
                  

                

              

            

            

            
              TO
                BE
                FILLED OUT AND RETURNED WITH UNIT SUBSCRIPTION AGREEMENT

            

            
              

            

            
              Confidential
                — Please Print

              
                

              

            

            
              

            

            
              PURCHASER
                QUESTIONNAIRE

            

            
              POSITRON
                CORPORATION

            

            
              

            

            
              This
                Questionnaire is being sent to each person or entity who has subscribed
                to
                purchase Units consisting of one share of Positron Corporation's
                ("Issuer") Series G Preferred Stock and 50 warrants (the
"Units"). The purpose of this Questionnaire
                is to assure the
                Issuer that each investor meets the standards imposed by the Securities
                Act of
                1933, as amended (the "Securities Act") and Regulation D
                promulgated thereunder, as well as other applicable state securities
                laws. In
                particular, the questions in Part B are relevant in determining whether
                you are
                an "Accredited Investor" as defined in Rule 501(a) of Regulation
                D and in
                determining whether you otherwise satisfy the requisite suitability
                standards
                required by the Issuer and by federal or state securities
                laws.

            

            
              

            

            
              All
                Subscribers should complete the questions in Parts A and B and sign
                and date the
                last page of this Questionnaire. If the answer to any question is
                "None" or "Not
                Applicable," please so state.

            

            
              

            

            
              If
                Units
                are to be purchased by a Subscriber in a fiduciary capacity, this
                Questionnaire
                must be completed by each beneficial owner of the Units as if such
                beneficial
                owner were the Subscriber. If Units are to be purchased by a Subscriber
                that is
                an entity that qualifies as an Accredited Investor solely because
                all of its
                equity owners are Accredited Investors, the Issuer may, in its sole
                discretion,
                require that such Subscriber or its equity owners enter into side
                letters in
                substantially the form attached hereto as Exhibits I and 2,
                respectively.

            

            
              

            

            
              Your
                answers will at all times be kept strictly confidential. However,
                by signing
                this Questionnaire, you agree that the Issuer may present this Questionnaire
                to
                the Issuer's attorneys, accountants and such other parties as the
                Issuer deems
                appropriate. If you have any questions about any of the items in
                this
                Questionnaire, please contact Dylan Olinoski at 1-866-284-7510, Ext.
                2103.

            

            
              

            

            
              	
                      Name

                    	 
	 
	
                      
                        Principal
                          Residence Address (or Principal Office Address if purchaser
                          is not a
                          natural person)

                      

                    
	 

            

            
               

            

            
              	
                      Telephone
                        Number

                    	 

            

             

            
              	
                      Occupation

                    	 	
                      Social
                        Security Number

                    	 

            

            
              

            

            
              	
                      Business
                        Address

                    	 

            

            
              

            

            
              	
                      Telephone
                        Number

                    	 
	 	 

            

            
              
                	
                        Facsimile
                          Number

                      	 

            

            
              	
                      E-mail
                        Address

                    	 

            

            
              

                
                  
                    
                    

                  

                  
                    
                    

                    
                      

                    

                  

                  
                    
                    

                  

                

              

               

            

            
              Part
                A – Residence

            

            
              

            

            
              (1)           Set
                forth in the space provided below the state(s) in which you have
                maintained your
                principal residence (or principal office if purchaser is not a natural
                person)
                during the past two years and the dates during which you resided
                in each state
                (or maintained your principal office in each state).

               

            

            
              
                
                  

                

            

            
              (2)           In
                which
                state, if any, do you pay income taxes?______________________

            

            
              

            

            
              (3)           In
                which state, if any, do you hold a driver's license?
                State                              
   

            

            
              Driver's
                License
                No.                                   
 

            

            
              

            

            
              Part
                B - Investor Status

               

            

            
              Only
                persons who qualify as Accredited Investors under applicable federal
                securities
                laws are eligible to participate in the proposed offering of Units.
                The
                Subscriber hereby certifies that such Subscriber is an Accredited
                Investor
                because (initial one or more of the following that apply):

            

            
              

            

            
              (1)                Subscriber
                is a natural person whose individual net worth, or joint net worth,
                with that
                person's spouse, exceeds $1,000,000 at the time of such Subscriber's
                purchase of
                Units.

            

            
              

            

            
              (2)
                               Subscriber
                is a natural person who had an individual income in excess of $200,000
                in each
                of the two most recent years or joint income with that person's spouse
                in excess
                of $300,000 in each of those years and has a reasonable expectation
                of reaching
                the same income level in the current year.

            

            
              

            

            
              (Please
                note that "income" does not necessarily refer simply to gross income
                or total
                revenues. For instance, under certain circumstances, operating expenses
                or costs
                of revenues should be deducted from total income. Income for a particular
                year
                may be calculated by adding to adjusted gross income as calculated
                for Federal
                income tax purposes any deduction for long term capital gains, any
                deduction for
                depletion allowance, any exclusion for tax exempt interest and any
                losses of a
                partnership allocated to you as a partner. Please also note that prospective
                Subscribers are not to construe this paragraph or any of the other
                contents of
                this Subscription Agreement as legal, tax or investment advice. Each
                prospective
                Subscriber should consult such Subscriber's own legal counsel, accountant
                or
                investment adviser as to legal, tax and related matters concerning
                such
                Subscriber's participation in the proposed offering of
                Units.

            

            
              

            

            
              (3)
                               Subscriber
                is an organization described in Section 501(c)(3) of the Internal
Revenue
                Code, corporation, Massachusetts or similar business trust, limited
                liability
                company, or partnership, not formed for the specific purpose of acquiring
                the
                securities offered, with total assets in excess of
                $5,000,000.

            

            
              

            

            
              (4)
                               Subscriber
                is a bank as defined in Section 3(a)(2) of the Securities Act, or
                any savings
                and loan association or other institution as defined in Section 3(a)(5)(A)
                of
                the Securities Act whether acting in its individual or fiduciary
                capacity.

            

            
              

            

            
              (5)
                               Subscriber
                is a broker or dealer registered pursuant to Section 15 of the Securities
                Exchange Act of 1934.

            

            

            
              
                
                  
                  

                

                
                  
                  

                  
                    

                  

                

                
                  
                  

                

              

            

            

            
              (6)
                               Subscriber
                is an insurance company as defined in Section 2 (13) of the Securities
                Act.

            

            
              

            

            
              (7)
                               Subscriber
                is an investment company registered under the Investment Company
                Act of 1940 or
                a business development company as defined in Section 2(a)(48) of
                that
                Act.

            

            
              

            

            
              (8)
                               Subscriber
                is a Business Investment Company licensed by the U.S. Small Business
                Administration under Section 301(c) or (d) of the Small Business
                Investment Act
                of 1958.

            

            
              

            

            
              (9)
                               Subscriber
                is a plan established and maintained by a state, its political subdivisions,
                or
                any agency or instrumentality of a state or its political subdivisions,
                for the
                benefit of its employees, and such plan has total assets in excess
                of
                $5,000,000.

            

            
              

            

            
              (10)
                               Subscriber
                is an employee benefit plan within the meaning of the Employee Retirement
                Income
                Security Act of 1974 ("ERISA") and the investment decisions by
                such plan are made by a plan fiduciary, as defined in Section 3(21)
                of ERISA,
                which is either a bank, savings and loan association, insurance company,
                or
                registered investment adviser, or if the employee benefit plan has
                total assets
                in excess of $5,000,000 or, if a self-directed plan, with investment
                decisions
                made solely by persons that are Accredited Investors.

            

            
              

            

            
              (11)
                               Subscriber
                is a private business development company as defined in Section 202(a)(22)
                of
                the Investment Advisers Act of 1940.

            

            
              

            

            
              (12)
                               Subscriber
                is a trust, with total assets in excess of $5,000,000, not formed
                for the
                specific purpose of acquiring the securities offered, whose purchase
                is directed
                by a person who has such knowledge and experience in financial and
                business
                matters that such person is capable of evaluating the merits and
                risks of the
                prospective investment.

            

            
              

            

            
              (13)
                               Subscriber
                is an entity in which all of the equity owners are Accredited Investors
                as
                defined by one or more of the descriptions in (1) through (12) above
                (if so,
                this questionnaire must be completed by ail of the equity owners
                of that
                entity). Please note that the Issuer may, in its sole discretion,
                require that
                Subscribers that qualify as Accredited Investors solely pursuant
                to this
                paragraph 13 or their equity owners enter into side letters in substantially
                the
                forms attached hereto as Exhibits 1 and 2, respectively.

            

            
              

            

            
              Part
                C - Professional Advisors

            

            
              

            

            
              I
                have
                relied upon the following professional advisors in determining to
                make an
                investment in the Fund:

            

            
              

            

            
              	
                      Name:

                    	 	
                         (if
                        none, so indicate by writing "none")

                    	 

            

            

            
              
                
                  
                  

                

                
                  
                  

                  
                    

                  

                

                
                  
                  

                

              

            

            

            
              THE
                FOLLOWING MUST BE COMPLETED BY ALL SUBSCRIBERS:

            

            
              

            

            
              I
                declare
                under penalty of perjury that all information I have supplied to
                the Issuer,
                including the foregoing information, is true and correct as of the
                date hereof
                and shall be true and correct as of any date on which I purchase
                Units. I
                understand that the Issuer will rely on the information supplied
                herein to
                determine my suitability to invest in the Issuer.

            

            
              

            

            
              	
                      Executed
                        this

                    	 	
                      day
                        of

                    	 	
                      ,
                        2006, at

                    	
                       

                    

            

            

            
              	 	 	 
	
                      Please
                        Print Name

                    	 	
                      Signature
                        of Subscriber

                    
	
                       

                    	 	 
	 	 	 
	
                      Social
                        Security No. or

                    	 	
                      Title
                        (If signed on behalf of an organization)

                    
	
                      Taxpayer
                        Identification No.

                    	 	 

            

            
              

            

            
              Note:
                This form is not intended as an offer to purchase or sell by the
                Subscriber or
                the Issuer. Offers are made and investments are accepted only after
                written
                acceptance of a Unit Subscription Agreement by the Issuer.

            

            

            
              
                
                  
                  

                

                
                  
                  

                  
                    

                  

                

                
                  
                  

                

              

            

            

            
              EXHIBIT
                I

            

            
              

            

            
              The
                undersigned is purchasing units ("Units") of Positron
                Corporation (the "Issuer") pursuant to a Unit Subscription
                Agreement (the "Subscription Agreement") between the Issuer and
                the undersigned dated as
                of                        ,
                2006.  Reference is made to the Confidential Private Offering Memorandum
                dated as of December 31, 2005 relating to the offer and sale of Units
                of the
                Issuer prepared by the Issuer and provided to the
                undersigned.

            

            
              

            

            
              The
                undersigned hereby makes the following representations and warranties
                to the
                Issuer as of the date hereof and as of any date on which it purchases
                any Units
                pursuant to the Subscription Agreement:

            

            
              

            

            
              (a)           Each
                of the undersigned's equity owners is an "Accredited Investor" (as
                defined in
                Rule 501(a) of Regulation D promulgated under the Securities Act
                of 1933, as
                amended).

            

            
              

            

            
              (b)           The
                undersigned has provided the Issuer with (i) the identity of each
                of its actual
                and prospective equity owners and such background information with
                respect to
                each such actual and prospective equity owner as the Issuer has reasonably
                requested and (ii) copies of its formation documents, including,
                but not limited
                to, its articles of organization, certificate of formation, operating
                agreement
                and/ or bylaws, as applicable, as currently in effect.

            

            
              

            

            
              	 	 
	
                      
                        Print
                          Name of Entity

                      

                    	 
	
                       

                       

                    	 
	
                      
                        Signature
                          of Person Authorized to Sign for Entity

                      

                    	 
	
                       

                       

                    	 
	
                      
                        Print
                          Name and Position of Person

                      

                    	 
	
                      
                        Authorized
                          to Sign

                      

                    	 

            

            
              

                
                  
                    
                    

                  

                  
                    
                    

                    
                      

                    

                  

                  
                    
                    

                  

                

              

            

            
              

            

            
              EXHIBIT
                2

            

            
              

            

            
              The
                undersigned is
                a                            of                            ,
                a                            
(the "Subscriber"), and the Subscriber is purchasing Units
                (the "Units") of Positron Corporation, a Texas corporation (the
                "Issuer) pursuant to a Unit Subscription Agreement (the
                "Subscription Agreement") between the Issuer and the Subscriber
                dated as
                of                            ,
                2006. Reference is made to the Confidential Private Offering Memorandum
                dated as
                of December 31, 2005 relating to the offer and sale of Units (the
                "Memorandum") prepared by the Issuer and provided to the
                Subscriber.

            

            
              

            

            
              The
                undersigned hereby makes the following representations and warranties
                to the
                Issuer as of the date hereof and as of any date on which the Subscriber
                purchases any Units from the Issuer pursuant to the Subscription
                Agreement:

            

            
              

            

            
              The
                undersigned is an "Accredited Investor" as defined in Rule 501(a)
                of Regulation
                D promulgated under the Securities Act of 1933, as amended. The undersigned
                hereby certifies that it is an Accredited Investor because (initial
                one or more
                of the following that apply):

            

            
              

            

            
              (1)                             Undersigned
                is a natural person whose individual net worth, or joint net worth,
                with that
                person's spouse, exceeds $1,000,000 at the time of such undersigned's
                purchase
                of Membership Interests.

            

            
              

            

            
              (2)                             Undersigned
                is a natural person who had an individual income in excess of $200,000
                in each
                of the two most recent years or joint income with that person's spouse
                in excess
                of $300,000 in each of those years and has a reasonable expectation
                of reaching
                the same income level in the current year.

            

            
              

            

            
              (Please
                note that "income" does not necessarily refer simply to gross income
                or total
                revenues. For instance, under certain circumstances, operating expenses
                or costs
                of revenues should be deducted from total income. Income for a particular
                year
                may be calculated by adding to adjusted gross income as calculated
                for Federal
                income tax purposes any deduction for long term capital gains, any
                deduction for
                depletion allowance, any exclusion for tax exempt interest and any
                losses of a
                partnership allocated to you as a partner. Please also note that the
                undersigned is not to construe this paragraph as legal, tax or investment
                advice.)

            

            
              

            

            
              (3)                             Undersigned
                is a trust, with total assets in excess of $5,000,000, not formed
                for the
                specific purpose of acquiring the securities offered, whose purchase
                is directed
                by a person who has such knowledge and experience in financial and
                business
                matters that such person is capable of evaluating the merits and
                risks of the
                prospective investment.

            

            
              

            

            
              The
                undersigned has not received directly from the Issuer any information
                regarding
                the Issuer or the Units, and the undersigned's investment in the
                Subscriber was
                not made in reliance on any information received directly from the
                Issuer.

            

            
              

            

            
              The
                purchase of Units by the Subscriber pursuant to the Subscription
                Agreement and
                the Memorandum has been approved by the undersigned.

            

            
              

            

            
              	 	 	 
	
                      Signature

                    	 	
                      Signature
                        of Spouse, if any

                    
	 	 	 
	
                      Print
                        Name

                    	 	
                      Print
                        Name of Spouse

                    

            

            

            
              
                
                  
                  

                

                
                  
                  

                  
                    

                  

                

                
                  
                  

                

              

            

            

            
              SCHEDULE
                C

               

            

            
              UNIT
                SUBSCRIPTION AGREEMENT (CANADIAN PURCHASERS)

            

            

            
              
                
                  
                  

                

                
                  
                  

                  
                    

                  

                

                
                  
                  

                

              

            

            

            
              UNIT
                SUBSCRIPTION AGREEMENT

            

            
              (Canadian
                Purchasers)

            

            
              

            

            
              THIS
                UNIT
                SUBSCRIPTION AGREEMENT ("Agreement") is entered into by and
                between Positron Corporation, a Texas corporation ("Issuer"),
and the subscriber set forth on the attached signature
                page (the
"Subscriber"), as of the date this Agreement is ascribed to
                such terms in the Canadian Memorandum (defined below) unless otherwise
                defined
                herein.

            

            
              

            

            
              RECITALS:

            

            
              

            

            
              WHEREAS,
                Issuer has informed Subscriber that it is allowing qualified investors
                to
                subscribe for Units consisting of one share of its Series G Preferred
                Stock and
                50 warrants (the "Units") pursuant to the terms of a Canadian
                Supplement dated December 31, 2005 (the "Canadian Supplement")
and a U.S. Confidential Private Offering Memorandum
                dated December 31,
                2005 (the "Memorandum"; together with the Canadian Supplement,
                the "Canadian Memorandum");

            

            
              

            

            
              WHEREAS,
                Each share of Series G Preferred Stock is immediately convertible
                on a
                one-for-100 basis into Common Stock of Positron Corporation and warrants
                are
                exercisable for Common Stock of Positron Corporation on the basis
                of one warrant
                for one Common Share at a price of $0.10 per Common Share for a period
                of two
                years from the date of issuance;

            

            
              

            

            
              WHEREAS,
                Subscriber desires to purchase the Units on the terms and conditions
                set forth
                herein;

            

            
              

            

            
              WHEREAS,
                Subscriber's purchase of the Units is subject to Issuer's acceptance
                of such
                purchase, to be evidenced by countersigning the attached signature
                page;

            

            
              

            

            
              WHEREAS,
                the share and dollar amounts (all of which are in U.S. Dollars) set
                forth in
                this Agreement are adjusted to reflect the anticipated 1 for 100
                reverse stock
                split of the Issuer's Common Stock expected to occur on timing as
                determined by
                the Company's Board of Directors.

            

            
              

            

            
              NOW,
                THEREFORE, in consideration of the mutual covenants and agreements,
                the Issuer
                and Subscriber hereby agree as follows:

               

            

            
              AGREEMENT:

            

            
              

            

            
              1.            
                Subscription. Subject to the terms and conditions hereof, Subscriber
                hereby subscribes for
                        Units
                (the "Subscription Amount"). The full Subscription Amount shall
                be due upon Subscriber's submission to Issuer of this Agreement.
                Subscriber
                agrees to pay the Subscription Amount set forth above Subscriber's
                signature on
                this Agreement to the Issuer in accordance with the terms set forth
                in the
                Memorandum. Subscription for the Units is irrevocable and shall be
                made by
                delivery of this Agreement to the Issuer at the address noted in
                the Memorandum.
                All subscription documents will be returned to Subscriber if this
                Agreement is
                not accepted by the Issuer. Subscriber will have no rights with respect
                to the
                Units unless and until Subscriber's Agreement is accepted. Payment
                of the
                Subscription Amount shall be due upon acceptance of this Subscription.
                No
                personal checks will be accepted as payment of the Subscription
                Amount.

            

            
              

            

            
              2.           
                 Acceptance of
                Agreement. Issuer
                shall have the right to reject this Agreement (a) if it believes
that Subscriber
                is not, for U.S.
                securities law purposes, an "Accredited Investor" as defined in Rule
                501(a) of
                Regulation D promulgated under the Securities Act of 1933, as amended
                (the
"Securities
                Act")
and
                is
not, for Canadian securities law purposes, an "accredited
                investor" as
                defined in National Instrument 45-106 ("NI45-106"), (b) if
                Subscriber is not a resident of a province in which the Issuer has
                determined
                that it will offer Units, (c) if Subscriber otherwise fails to meet
                the
                suitability standards for investment in the Units established by
                the Issuer, or
                (d) for any other reason in its sole and absolute discretion. Acceptance
                is
                evidenced only by execution and delivery by the Issuer of a countersigned
                copy
                of this Subscription Agreement. The closing of the purchase and sale
                of Units
                shall take effect upon Issuer's acceptance of this Agreement and
                receipt of
                payment for the Units (the "Closing"). Promptly after the
                Closing, Issuer will deliver to Subscriber, pursuant to Subscriber's
                delivery
                instructions, certificates and warrant agreements representing the
                Units
                purchased by Subscriber from Issuer.

            

            

            
              
                
                  
                  

                

                
                  -1-

                  
                    

                  

                

                
                  
                  

                

              

            

            

            
              3.           
                 Restriction on Transfer of Securities.

            

            
              

            

            
              3.1           Restrictions.
                Subscriber is aware that the Units have not been registered under
                the Securities
                Act by reason of their issuance in a transaction exempt from the
                registration
                and prospectus delivery requirements of the Securities Act pursuant
                to Section
                4(2), Regulation D, and/or Regulation S thereof, as well as being
                exempt from
                the prospectus and registration requirements of all applicable Canadian
                securities legislation and policies, and that they must be held by
                Subscriber
                indefinitely, and Subscriber must therefore bear the economic risk
                of such
                investment indefinitely unless a subsequent disposition thereof is
                registered
                under the Securities Act or is exempt from registration.

            

            
              

            

            
              3.2           Canadian
                Legend. Each certificate and warrant agreement issued connection with
                the
                sale of Units will be endorsed with the following Canadian securities
                legend:

            

            
              

            

            
              "UNLESS
                PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY
                MUST NOT
                TRADE THE SECURITY BEFORE THE DATE THAT IS 4 MONTHS AND A DAY AFTER
                THE LATER OF
                (I) [insert date of issuance], AND (II) THE DATE THE ISSUER BECAME
                A REPORTING
                ISSUER IN ANY PROVINCE OR TERRITORY."

            

            
              

            

            
              3.3           Stop
                Transfer Order. A stop transfer order shall be placed with the Issuer's
                transfer agent preventing transfer of any of the Units pending compliance
                with
                the conditions set forth in any such legend.

            

            
              

            

            
              4.            
                Representations and Warranties by Issuer. Issuer represents and warrants
                to Subscriber that:

            

            
              

            

            
              4.1           Organization,
                Standing, Power. Issuer is a corporation duly organized, validly existing
                and in good standing under the laws of the State of Texas and has
                the requisite
                corporate power and authority to own its properties and to carry
                on its business
                in all material respects as it is now being conducted. Issuer has,
                or at the
                Closing will have, the requisite corporate power and authority to
                issue the
                Units, and to otherwise perform its obligations under this
                Agreement.

            

            
              

            

            
              4.2           Units.
                The Units and securities issuable upon conversion or exercise thereof,
                when
                issued and paid for pursuant to the terms of this Agreement, will
                be duly
                authorized, validly issued and outstanding, fully paid, nonassessable
                and free
                and clear of all pledges, liens, encumbrances and
                restrictions.

            

            
              

            

            
              5.           
                 Representations and Warranties of Subscriber. Subscriber represents
                and warrants that:

            

            
              

            

            
              5.1           Investment
                Intent. The
                Units being acquired hereunder
                are being purchased for Subscriber's own account and not with the
                view to, or
                for resale in connection with, any distribution or public offering
                thereof
                within the meaning of the Securities Act. Subscriber understands
                that the Units
have not been registered under the Securities Act or any applicable
                state
                or provincial laws by reason of their issuance or contemplated issuance
                in a
                transaction exempt from the registration and prospectus delivery
                requirements of
                the Securities Act and such laws and that the reliance of Issuer
                and others upon
                this exemption is predicated in part upon this representation and
                warranty.

            

            

            
              
                
                  
                  

                

                
                  -2-

                  
                    

                  

                

                
                  
                  

                

              

            

            

            
              5.2           Accredited
                Investor. The place in which Subscriber's principal office or residence
                is
                located is set forth in Subscriber's address noted in this Agreement.
                Subscriber
                qualifies as an "accredited investor" within the meaning of Rule
                501 under the
                Securities Act and within the meaning of NI45-106. Subscriber has
                such knowledge
                and experience in financial and business matters that Subscriber
                is capable of
                evaluating the merits and risks of the investment to be made hereunder
                by
                Subscriber. Issuer believes it has received all the information it
                has requested
                from Issuer it considers necessary or appropriate for deciding whether
                to obtain
                the Units and has had the opportunity to discuss Issuer's business,
                management,
                and financial affairs with Issuer's management.

            

            
              

            

            
              5.3           Acts
                and Proceedings. This Agreement has been duly authorized by all necessary
                action on the part of Subscriber, has been duly executed and delivered
                by
                Subscriber, and is a valid and binding agreement upon the part of
                Subscriber.

            

            
              

            

            
              6.            
                Representations and Warranties for Subscribers who are Non-U.S.
                persons.
                Subscribers who are

            

            
              Non-U.S.
                persons hereby represent and warrant to Issuer as follows:

            

            
               

              (a)         This
                Agreement is made by Issuer with such Subscriber who is a Non-U.S.
                person in
                reliance upon such Subscriber's representations, warranties and covenants
                made
                in this Section 6.

            

            
              

            

            
              (b)         Subscriber
                has been advised and acknowledges that:

            

            
               

              (i)            
                the Units and securities issuable upon conversion or exercise thereof
                have not
                been, and when issued, will not be registered under the Securities
                Act, the
                securities laws of any state of the United States or the securities
                laws of any
                other country;

            

            
               

              (ii)           
                in issuing and selling the Units and securities issuable upon conversion
                or
                exercise thereof to Subscriber pursuant hereto, Issuer is relying
                upon the "safe
                harbor" provided by Regulation S and/or on Section 4(2) under the
                Securities
                Act;

            

            
               

              (iii)            it
                is a condition to the availability of the Regulation S "safe harbor"
                that the
                Units and securities issuable upon conversion or exercise thereof
                not be offered
                or sold in the United States or to a U.S. person until the expiration
                of a
                period of one year following the date of issuance to Subscriber;
                and

            

            
               

              (iv)           notwithstanding
                the foregoing, prior to the expiration of one year after issuance
                to Subscriber
                (the "Restricted Period"), the Units and securities issuable
                upon conversion or exercise thereof may be offered and sold by the
                holder
                thereof only if such offer and sale is made in compliance with the
                terms of this Agreement and either: (a) if the offer or sale is within
                the
                United States or to or for the account of a U.S. person, the securities
                are
                offered and sold pursuant to an effective registration statement
                or pursuant to
                Rule 144 under the Securities Act or pursuant to an exemption from
                the
                registration requirements of the Securities Act; or (b) the offer
                and sale is
                outside the United States and to other than a U.S.
                person.

            

            
              

            

            
              (c)          As
                used herein, the term "United States" means and includes the United
                States of
                America, its territories and possessions, any State of the United
                States, and
                the District of Columbia, and the term "U.S. person" (as defined
                in Regulation
                S) means:

            

            

            
              
                
                  
                  

                

                
                  -3-

                  
                    

                  

                

                
                  
                  

                

              

            

            
               

              (i)        
                    a natural person resident in the United
                States;

            

            
              
(ii)            any
                partnership or corporation organized or incorporated under the laws
                of the
                United States;

            

             

            
              (iii)           any
                estate of which any executor or administrator is a U.S.
                person;

            

            
              

            

            
              (iv)           any
                trust of which any trustee is a U.S. person;

            

            
              

            

            
              (v)           
                any agency or branch of a foreign entity located in the United
                States;

            

            
               

              (vi)           any
                nondiscretionary account or similar account (other than an estate
                or trust) held
                by a dealer or other fiduciary for the benefit or account of a U.S.
                person;

            

            
               

              (vii)          any
                discretionary account or similar account (other than an estate or
                trust) held by
                a dealer or other fiduciary organized, incorporated and (if an individual)
                resident in the United States; and

            

            
              

            

            
              (d)          a
                corporation or partnership organized under the laws of any foreign
                jurisdiction
                and formed by a U.S. person principally for the purpose of investing
                in
                securities not registered under the Securities Act, unless it is
                organized or
                incorporated, and owned, by accredited investors (as defined in Rule
                501(a)
                under the Securities Act) who are not natural persons, estates or
                trusts.

            

            
              

            

            
              As
                used
                herein, the term "Non-U.S. person" means any person who is not a
                U.S. person or
                is deemed not to be a U.S. person under Rule 902(k)(2) of the Securities
                Act.

            

            
              

            

            
              (e)          Subscriber
                agrees that with respect to the Units and securities issuable upon
                conversion or
                exercise thereof, and until the expiration of the Restricted
                Period:

            

            
              

            

            
              (i) 
                            Subscriber,
                its agents or its representatives have not and will not solicit offers
                to buy,
                offer for sale or sell any of the Units and securities issuable upon
                conversion
                or exercise thereof, or any beneficial interest therein in the United
                States or
                to or for the account of a U.S. person during the Restricted
                Period;

            

            
              

            

            
              (ii)            
                Notwithstanding the foregoing, prior to the expiration of the Restricted
                Period,
                the Units and securities issuable upon conversion or exercise thereof,
                may be
                offered and sold by the holder thereof only if such offer and sale
                is made in
                compliance with the terms of this Agreement and either: (a) if the
                offer or sale
                is within the United States or to or for the account of a U.S. person
                (as such
                terms are defined in Regulation S), the securities are offered and
                sold pursuant
                to an effective registration statement or pursuant to Rule 144 under
                the
                Securities Act or pursuant to an exemption from the registration
                requirements of
                the Securities Act; or (b) the offer and sale is outside the United
                States and
                to other than a U.S. person; and

            

            
              

            

            
              (iii)            Subscriber
                shall not engage in hedging transactions with regard to the Units
                and securities
                issuable upon conversion or exercise thereof unless in compliance
                with the
                Securities Act.

            

            
              

            

            
              (iv)            The
                foregoing restrictions are binding upon subsequent transferees of
                the Units and
                securities issuable upon conversion or exercise thereof, except for
                transferees
                pursuant to an effective registration statement. Subscriber agrees
                that after
                the Restricted Period, the Units and securities issuable upon conversion
                or
                exercise thereof may be offered or sold within the United States
                or to or for
                the account of a U.S. person only pursuant to applicable securities
                laws.

            

            

            
              
                
                  
                  

                

                
                  -4-

                  
                    

                  

                

                
                  
                  

                

              

            

            

            
              

            

            
              (f)           Subscriber
                has not engaged, nor is it aware that any party has engaged, and
                Subscriber will
                not engage or cause any third party to engage, in any directed selling
                efforts
                (as such term is defined in Regulation S) in the United States with
                respect to
                the Units and securities issuable upon conversion or exercise
                thereof.

            

            
              

            

            
              (g)          Subscriber:
                (i) is domiciled and has its principal place of business outside
                the United
                States; (ii) certifies it is not an Subscriber and is not acquiring
                the Units
                and securities issuable upon conversion or exercise thereof for the
                account or
                benefit of any U.S. person; and (iii) at the time of the Closing,
                the Subscriber
                or persons acting on Subscriber's behalf in connection therewith
                will be located
                outside the United States.

            

            
              

            

            
              (h)          At
                the time of offering to the Subscriber and communication of Subscriber's
                order
                to purchase the Units and securities issuable upon conversion or
                exercise
                thereof and at the time of the Subscriber's execution of this Agreement,
                the
                Subscriber or persons acting on Subscriber's behalf in connection
                therewith were
                located outside the United States.

            

            
              

            

            
              (i)           Subscriber
                is not a "distributor" (as defined in Regulation S) or a "dealer"
                (as defined in
                the Securities Act).

            

            
              

            

            
              (j)           Subscriber
                acknowledges that that Issuer shall refuse to instruct its transfer
                agent to
                register any transfer of any Units and securities issuable upon conversion
                or
                exercise thereof not made in accordance with the provisions of Regulation
                S,
                pursuant to registration under the Securities Act or pursuant to
                an available
                exemption from registration.

            

            
              

            

            
              (k)          Subscriber
                is satisfied as to the full observance of the laws of its jurisdiction
                in
                connection with any invitation to purchase the Units and securities
                issuable
                upon conversion or exercise thereof or any use of the Agreements,
                including (i)
                the legal requirements within its jurisdiction for the purchase of
                such Units
                and securities issuable upon conversion or exercise thereof, (ii)
                any foreign
                exchange restrictions applicable to such purchase, (iii) any governmental
                or
                other consents that may need to be obtained and (iv) the income tax
                and other
                tax consequences, if any, that may be relevant to the purchase, holding,
                redemption, sale or transfer of such Units and securities issuable
                upon
                conversion or exercise thereof. The Subscriber's payment for, and
                the
                Subscriber's continued beneficial ownership of, Units and securities
                issuable
                upon conversion or exercise thereof will not violate any applicable
                laws of such
                Subscriber's jurisdiction.

            

            
              

            

            
              (1)          The
                Subscriber understands and agrees that each certificate held by Subscriber
                representing Units and securities issuable upon conversion or exercise
                thereof,
                or any other securities issued in respect of Units and securities
                issuable upon
                conversion or exercise thereof upon any stock split, stock dividend,
                recapitalization, merger, consolidation or similar event, shall bear
                the following legend (in addition to any legend required under
                applicable state securities laws):

            

            
              

            

            
              "THE
                SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
                SECURITIES ACT
                OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE SOLD,
                TRANSFERRED,
                ASSIGNED, PLEDGED OR HYPOTHECATED EXCEPT IN ACCORDANCE WITH THE PROVISIONS
                OF
                REGULATION S PROMULGATED UNDER THE
                SECURITIES ACT, PURSUANT TO REGISTRATION UNDER THE SECURITIES ACT
                OR PURSUANT TO
                AN AVAILABLE EXEMPTION FROM REGISTRATION."

            

            

            
              
                
                  
                  

                

                
                  -5-

                  
                    

                  

                

                
                  
                  

                

              

            

             

            
              (m)         the
                Subscriber is a resident of a Canadian province or territory and
                meets one or
                more of the definitions of "accredited investor" set forth in the
                Accredited
                Investor Questionnaire attached as Schedule A to the Canadian Memorandum
                which
                the Subscriber has completed and executed, and the contents of which
                are
                incorporated herein by reference as express representations and warranties
                of
                the Subscriber;

            

            
              

            

            
              (n)          the
                Subscriber is not a non-Canadian within the meaning of the Investment Canada
                Act (Canada);

            

            
              

            

            
              (o)          the
                Subscriber has not taken, and agrees that it will not take, any action
                that
                would cause the Issuer to become liable to any claim or demand for
                a brokerage
                commission, finder's fee or other similar payment;

            

            
              

            

            
              (p)          the
                Subscriber understands that the securities are being offered for
                sale only on a
                "private placement" basis and that the sale and delivery of the securities
                is
                conditional upon such sale being exempt from the requirements as
                to the
filing of a prospectus or upon the issuance of such orders,
                consents or
                approvals as may be required to permit such sale without the requirement
                of
                filing a prospectus, and if required by applicable securities legislation,
                regulations, rules, policies or orders or by any securities commission,
                stock
                exchange or other regulatory authority, the Subscriber will execute,
                deliver,
                file and otherwise assist the Issuer filing, such reports, undertakings
                and
                other documents with respect to the issue of the securities as may
                be
                required;

            

            
              

            

            
              (q)          the
                Subscriber understands and acknowledges that (i) the Issuer is a
                private company
                within the meaning of Canadian securities laws, (ii) an investment
                in the
                securities is an illiquid investment, (iii) the Subscriber must bear
                the
                economic risk of investment in the securities for an indefinite period
                of time
                because the securities have not been offered and sold under a prospectus
                receipted by any Canadian provincial securities commission or registered
                under
                either the US Act or any U.S. state securities laws, (iv) that any
                sale of the
                securities is subject to restrictions under securities laws and that
                the
                Subscriber will sell such securities only in compliance with such
                restrictions,
                and (v) all certificates representing the securities and all certificates
                issued
                in exchange therefor or in substitution thereof, shall bear on the
                face of such
                certificates, in such legend or legends required by applicable laws
                or
                otherwise;

            

            
              

            

            
              (r)           none
                of the funds the Subscriber is using to purchase the securities are,
                to the
                knowledge of the Subscriber, proceeds obtained or derived, directly
                or
                indirectly, as a result of illegal activities;

            

            
              

            

            
              (s)          other
                than the Canadian Memorandum, it has relied solely upon publicly
                available
                information relating to the Issuer and not upon any verbal or written
                representation as to fact or otherwise made by or on behalf of the
                Issuer, and
                it has not received or been provided with, nor has it requested,
                nor does it
have any need to receive, any offering memorandum, any
                prospectus, sales or
                advertising literature or any other document (other than financial
                statements,
                interim financial statements or any other document, which may have
                been provided
                to the Subscriber by the Issuer as prescribed by statute or regulation)
                describing the business and affairs of the Issuer which has been
                prepared for
                delivery to, and review by, prospective subscribers in order to assist
                them in
                making an investment decision in respect of the securities.

            

            

            
              
                
                  
                  

                

                
                  -6-

                  
                    

                  

                

                
                  
                  

                

              

            

            

            
              (t)          the
                Subscriber is acting independently and it has been independently
                advised as to
                restrictions with respect to trading in the securities imposed by
                applicable
                securities legislation, confirms that no representation has been
                made to it by
                or on behalf of the Issuer with respect thereto other than as set
                forth in this
                Agreement and the Canadian Memorandum, acknowledges that it is aware
                of the
                characteristics of the securities, the risks relating to an investment
                therein
                and of the fact that it may not be able to resell the securities
                except in
                accordance with limited exemptions under applicable securities legislation
                and
                regulatory policy until expiry of the applicable hold period and
                compliance with
                the other requirements of applicable law, and that it is the responsibility
                of
                the Subscriber to find out what the restrictions on resale are and
                to comply
                with them before selling the securities; and

            

            
              

            

            
              (u)        
                the Subscriber acknowledges that it has been encouraged to and should
                obtain
                independent legal, income tax and investment advice with respect
                to its
                subscription for these securities and accordingly, has been independently
                advised as to the meanings of all terms contained herein relevant
                to the
                Subscriber for purposes of giving representations, warranties and
                covenants
                under this Agreement.

            

            
              

            

            
              7.            Registration.

            

            
              

            

            
              7.1           Piggy-Back
                Registration. If at any time Issuer shall determine to register under the
                Securities Act, any shares of its capital stock pursuant to a registration
                statement (other than a registration relating solely to the sale
                of securities
                to participants in a company employee benefits plan), Issuer will
                (i) promptly
                give written notice to Subscriber of its intention to file such registration
                statement and (ii) at Issuer's expense (which shall include, without
                limitation,
                all registration and filing fees, printing expenses, fees and disbursements
                of
                counsel and independent accountants for Issuer, and fees and expenses
                incident
                to compliance with state securities law, but shall not include fees
                and
                disbursements of counsel for Subscriber) include among the securities
                covered by
                the registration statement such portions of the Units and the securities
                issuable upon conversion on exercise thereof (the "Registrable
                Securities") then held by Subscriber as shall be specified in a written
                request to Issuer within thirty (30) days after the date on which
                Issuer gave
                the notice described in (i) above. Upon receipt of such written request
                (any
                shareholder requesting registration being individually called a "Selling
                Shareholder"), Issuer shall (i) use its reasonable best efforts to
                effect the registration, qualification or compliance of the Registrable
                Securities under the Securities Act and under any other applicable
                federal law
                and any applicable securities or blue sky laws of jurisdictions within
                the
                United States; (ii) furnish each Selling Shareholder such number
                of copies of
                the prospectus contained in the registration statement filed under
                the
                Securities Act (including preliminary prospectus) in conformity with
                the
                requirements of the Securities Act, and such other documents as the
                Selling
                Shareholder may reasonably request in order to facilitate the disposition
                of the
                Registrable Securities covered by the registration statement; and
                (iii) notify
                each Selling Shareholders, at any time when a prospectus relating
                to the
                Registrable Securities covered by such registration statement is
                required to be
                delivered under the Securities Act, of the happening of any event
                as a result of
                which the prospectus forming a part of such registration statement,
                as then in
                effect, includes an untrue statement of a material fact or omits
                to state any
                material fact required to be stated therein or necessary to make
                the statements
                therein not misleading, and (iv) at the request of the Selling Shareholders
                prepare and furnish to the Selling Shareholders any reasonable number
                of copies
                of any supplement to or amendment of such prospectus as may be necessary
                so
                that, as thereafter delivered to Subscribers of the Registrable Securities,
                such
                prospectus shall not include an untrue statement of a material fact
                or omit to
                state a material fact required to be stated therein or necessary
                to make the
                statements therein not misleading.

            

            

            
              
                
                  
                  

                

                
                  -7-

                  
                    

                  

                

                
                  
                  

                

              

            

            

            
              7.2           Registration
                of Underwritten Offering. If the offering of securities to be registered by
                Issuer is underwritten, each Selling shareholder shall sell the Registrable
                Securities to or through the underwriter(s) of the securities being
                registered
                for the account of Issuer or others upon the same terms applicable
                to Issuer or
                others, and if the managing underwriter(s) reasonably determine that
                all or any
                portion of the shares of Registrable Securities held by the Selling
                Shareholders
                should not be included in the registration statement, then notwithstanding
                anything to the contrary in this Section, the determination of such
                underwriter(s) shall be conclusive; provided, however, that if such
                underwriter(s) determine that some but not all of the Registrable
                Securities of
                the Selling Shareholders shall be included in the registration statement,
                the
                number of shares of Registrable Securities owned by each Selling
                Shareholder to
                be included in the registration statement will be proportionately
                reduced in
                accordance with the respective written requests given as provided
                above.

            

            
              

            

            
              7.3           Indemnification.
                In the event that Registrable Securities required pursuant to this
                Agreement are
                included in a registration statement under this Section 7, Issuer
                will indemnify
                and hold harmless each Selling Shareholder and each other person,
                if any, who
                controls such Selling shareholder within the meaning of the Securities
                Act,
                against any losses, claims, damages or liabilities, joint or several,
                to which
                such Selling Shareholder or controlling person may become subject
                under the
                Securities Act or otherwise, insofar as such losses, claims, damages
                or
                liabilities (or actions in respect thereof) arise out of are based
                upon any
                untrue statement or alleged untrue statement of any material fact
                contained, on
                the effective date thereof, in any registration statement pursuant
                to which the
                Registrable Securities were registered under the Securities Act,
                any preliminary
                prospectus or final prospectus contained therein, or any amendment
                or supplement
                thereto, or arise out of or are based upon the omission or alleged
                omission to
                state therein a material fact required to be stated therein or necessary
                to make
                the statements therein not misleading, or arise out of or are based
                upon the
                failure by Issuer to file any amendment or supplement thereto that
                was required
                to be filed under the Securities Act, and will reimburse such Selling
                Shareholder and each such controlling person for any legal or any
                other expenses
                reasonably incurred by them in connection with investigating or defending
                any
                such loss, claim, damage, liability or action. Notwithstanding the
                foregoing,
                Issuer will not be liable in any such case to the extent that any
                such loss,
                claim, damage, or liability arises out of or is based upon an untrue
                statement
                or omission made in such registration statement, preliminary prospectus,
                final
                prospectus or amendment or supplement in reliance upon and in conformity
                with
                written information furnished to Issuer through an instrument duly
                executed by
                or on behalf of any Selling Shareholder specifically for use in the
                preparation
                of such registration statement, preliminary prospectus, final prospectus,
                or
                amendment or supplement.

            

            
              

            

            
              It
                shall
                be a condition precedent to the obligation of Issuer to take any
                action pursuant
                to this Section that Issuer shall have received an undertaking satisfactory
                to
                it from each Selling Shareholder to indemnify and hold harmless Issuer
                (in the
                same manner and to the same extent as set forth in this Section),
                each director
                of Issuer, each officer who shall sign such registration statement,
                and any
                persons who control Issuer within the meaning of the Securities Act,
                with
                respect to any statement or omission from such registration statement,
                preliminary prospectus, or any final prospectus contained therein,
                or any
                amendment or supplement thereto, if such statement or omission was
                made in
                reliance upon and in conformity with written information furnished
                to Issuer
                through an instrument duly executed by the indemnifying party specifically
                for
                use in the preparation of such registration statement, preliminary
                prospectus,
                final prospectus, or amendment or supplement.

            

            
              

            

            
              Promptly
                following receipt by an
                indemnified party of notice of the commencement of any action involving
                a claim referred to
                above in this Section 7.3, such indemnified party will, if a claim
                in
respect thereof
                is
to be
                made against an indemnifying party,
                give written notice to the latter of the commencement of such action. In
                case any such action is brought against an indemnified party, the
                indemnifying
                party will be entitled to participate in and to assume the defense
                thereof,
                jointly with any other indemnifying party similarly notified, to
                the extent that
                it may wish, with counsel reasonably satisfactory to such indemnified
                party, and
                after notice from the indemnifying party to such indemnified party
                of its
                election to assume the defense thereof, the indemnifying party will
                not be
                liable to such indemnified party for any legal or other expenses
                subsequently
                incurred by the latter in connection with the defense
                thereof.

            

            

            
              
                
                  
                  

                

                
                  -8-

                  
                    

                  

                

                
                  
                  

                

              

            

            

            
              8.           Miscellaneous.

            

            
              

            

            
              8.1           Remedies
                Cumulative, and not Waived. (a) No right, power or remedy conferred upon any
                party shall be exclusive, and each such right, power or remedy shall
                be
                cumulative and in addition to every other right, power or remedy,
                whether
                conferred hereby or by any such security or now or hereafter available
                at law or
                in equity or by statute or otherwise, (b) No course of dealing between
                the
                parties or the holder of any Units purchased pursuant to this Agreement,
                and no
                delay in exercising any right, power or remedy conferred hereby or
                by any such
                security or now or hereafter existing at law or in equity or by statute
                or
                otherwise, shall operate as a waiver of or otherwise prejudice any
                such right,
                power or remedy; provided, however, that this Section 8.1 shall not
                be construed
                or applied so as to negate the provisions and intent of any statute
                which is
                otherwise applicable.

            

            
              

            

            
              8.2           Changes,
                Waivers, etc. Neither this Agreement nor any provision hereof may be
                changed, waived, discharged or terminated orally, but only by a statement
                in
                writing signed by the party against which enforcement of the change,
                waiver,
                discharge or termination is sought.

            

            
              

            

            
              8.3           Notices.
                All communications hereunder shall be in writing and if sent to the
                Subscriber,
                shall be sufficient in all respects if personally delivered, sent
                by registered
                mail, or by telecopy and confirmed to the Subscriber at the address
                set forth on
                the Signature Page, or if sent to Issuer, shall be personally delivered,
                sent by
                registered mail, or by telecopy and confirmed to Issuer as
                follows:

            

            
              

            

            
              	 	
                      Positron
                        Corporation

                    	 
	 	
                      1304
                        Langham Creek Drive, Suite 310

                    	 
	 	
                      Houston,
                        Texas 77084

                    	 
	 	
                      Telephone:
                        (281)492-7100

                    	 
	 	
                      Facsimile:    (281)492-2961

                    	 

            

            
              

            

            
              8.4           Survival
                of Representations and Warranties, etc. All representations and warranties
                contained herein shall survive the execution and delivery of this
                Agreement, any
                investigation at any time made by Subscriber or on its behalf, and
                the sale and
                purchase of the Units. All statements contained in any certificate,
                instrument
                or other writing delivered by or on behalf of Issuer pursuant hereto
                or in
                connection with or contemplation of the transactions herein contemplated
                (other
                than legal opinions) shall constitute representations and warranties
                by Issuer
                hereunder and not by the individual officer who signed the certificate,
                instrument or writing by or on behalf of Issuer.

            

            
              

            

            
              8.5            Parties
                in Interest. All the terms and provisions of this Agreement shall be binding
                upon and inure to the benefit of and be enforceable by the respective
                successors
                and assigns of the parties hereto, whether so expressed or not, and,
                in
                particular, shall inure to the benefit of and be enforceable by the
                current
                holder or holders of any of the Units.

            

            
              

            

            
              8.6           Headings.
                The headings of the Sections and paragraphs of this Agreement have
                been inserted
                for convenience of reference only and do not constitute a part of
                this
                Agreement.

            

            

            
              
                
                  
                  

                

                
                  -9-

                  
                    

                  

                

                
                  
                  

                

              

            

            

            
              8.7           Governing
                Law.  This Agreement shall be governed by and construed in accordance
                with the laws of the State of California, without regard to principles
                of
                conflicts of law.

            

            
              

            

            
              8.8           Counterparts.
                This Agreement may be executed concurrently in two or more counterparts,
                each of
                which shall be deemed an original, but all of which together shall
                constitute
                one and the same instrument.

            

            
              

            

            
              8.9           Entire
                Agreement. This Assignment contains and constitutes the entire agreement
                between the parties hereto with respect to the subject matter hereof,
                and
                supersedes all prior understandings, if any, with respect
                thereto.

            

            
              

            

            
              8.10         Severability.
                In the event that any part of this Agreement is determined by a court
                of
                competent jurisdiction to be unenforceable, the balance of the Agreement
                shall
                remain in full force and effect.

            

            
              

            

            
              8.11         Acceptance.
                Execution of this Agreement and tender of the payment for the Units
                above shall
                constitute an irrevocable offer which the Issuer may accept or reject;
                acceptance by the Issuer shall be evidenced by the Issuer's execution
                and
                delivery to such Subscriber of the Issuer's Acceptance on the signature
                of this
                Agreement.

            

            
              

            

            
              [Remainder
                of page intentionally left blank]

            

            

            
              
                
                  
                  

                

                
                  -10-

                  
                    

                  

                

                
                  
                  

                

              

            

            

            
              PLEASE
                SPECIFY THE TYPE OF OWNERSHIP FOR THE UNITS -
CHECK ONE*

            

            
              

            

            
              	 	
                      Individual
                        Ownership

                    	 	 	
                      Partnership

                    	 	 	
                      Joint
                        Tenants with Right

                       of
                        Survivorship (both parties must sign)

                    
	 	 	 	 	 	 	 	 
	 	
                      Corporation

                    	 	 	
                      Trust
                        or Pension Plan

                    	 	 	
                      Community
                        Property 

                      (Spouse's
                        signature required)

                    
	 	 	 	 	 	 	 	 
	 	
                      Tenants-in-common
                        

                      (both
                        parties must sign)

                    	 	 	
                      Individual
                        

                      Retirement
                        Account

                    	 	 	
                      Limited
                        Liability Company

                    

            

            
              

            

            
              

            

            
              

            

            
              

            

            
              

            

            
              
                
                  

                

              

            

            
              *    Where
                the
                purchase is being made by an entity, a copy of Articles of Incorporation,
                Bylaws
                and Corporate Resolution, Partnership Agreement, Trust Agreement
                or LLC
                Agreement, as applicable, must be attached.

            

            

            
              
                
                  
                  

                

                
                  -11-

                  
                    

                  

                

                
                  
                  

                

              

            

            

            
              I
                have
                executed this Unit Subscription Agreement
                on                                         ,
                2006, after receiving and carefully reading and reviewing the Canadian
                Memorandum and schedules and appendices thereto.

            

            
              

            

            
              Subscription
                Amount
                $                                         

            

            
              

            

            
              FOR
                INDIVIDUAL SUBSCRIBERS

               

            

            
              	 	 	 
	
                      Signature
                        of Subscriber

                    	 	Signature
                      of Witness 
	 	 	 
	
                      
                        Printed
                          Name of Subscriber

                      

                    	 	
                      
                        Printed
                          Name of Witness

                      

                    
	 	 	 
	
                      
                        Subscriber's
                          Social Insurance Number (SIN#).

                      

                    	 	 
	 	 	 
	
                      
                        Principal
                          Residence Address (not P.O. Box)

                      

                    	 	
                      
                        Mailing
                          Address (if different)

                      

                    
	 	 	 
	
                      
                        City                  Province               Postal
                          Code

                      

                    	 	
                      
                        
                          City                   Province               Postal
                            Code

                        

                      

                    

            

            
              

            

            
              	
                      Witness:

                    	 	 
	 	 	 
	
                      Print
                        Name:

                    	 	 
	 	 	 
	
                      Date:.

                    	 	 

            

            
              

            

            
              FOR
                CORPORATE. PARTNERSHIP. TRUST OR LIMITED LIABILITY COMPANY
                SUBSCRIBERS

            

            
              

            

            
              	 	 	 
	
                      Print
                        Name of Subscriber

                    	 	
                      Taxpayer
                        ID of Subscriber

                    
	 	 	 
	
                      Signature
                        of Person Authorized to Sign for Subscriber

                    	 	
                      Principal
                        Office Address

                    
	 	 	 
	
                      Printed
                        Name and Position of Person Authorized to Sign

                    	 	
                       City      State       Zip

                    

            

            
              

            

            
              	
                      Witness:

                    	 	 
	 	 	 
	
                      Print
                        Name:

                    	 	 
	 	 	 
	
                      Date:

                    	 	 

            

            
              

                
                  
                    
                    

                  

                  
                    -12-

                    
                      

                    

                  

                  
                    
                    

                  

                

            

            
              ISSUER
                ACCEPTANCE

            

            
              

            

            
              Positron
                Corporation, a Texas corporation, hereby accepts the foregoing Unit
                Subscription
Agreement
                as
                of                                        ,
                2006.

            

            
              

            

            
              	 	
                      POSITRON
                        CORPORATION,

                      a
                        Texas corporation 

                    

            

            

            
              	 	
                      By:

                    	 
	 	
                      Name:

                    	 
	 	
                      Its:

                    	 

            

             

             

            -13-Unassociated Document

    
      

    

    
      SUBSCRIPTION
        FORM

       

    

    
      To:  IMAGING
        PET TECHNOLOGIES, INC.

    

    
      (Hereinafter
        referred to as the "Company")

      
         

      

    

    
      And
        to:
THE DIRECTORS THEREOF

    

    
      

    

    
      All
        capitalized terms used in this subscription form have the meanings provided
        in
        the Confidential Information Memorandum dated March 2006 of the Company (the
        “Memorandum”).

    

    
      

    

    
      
        	
                1.

              	
                The
                  undersigned hereby irrevocably subscribes for_____ units in
                  the capital of the Company (the “Subscribed
                  Units”)
                  for a subscription price of $50,000 per Subscribed Unit on the
                  terms and
                  conditions described in the
                  Memorandum.

              

      

    

    
      

    

    
      
        	
                2.

              	
                The
                  undersigned hereby irrevocably agrees to pay the subscription price
                  of
                  $50,000 for each Subscribed Unit and encloses a cheque for good
                  funds
                  payable to Imaging PET Technologies, Inc., or to Zak Muscovitch
                  in trust
                  for Imaging PET Technologies, Inc. if a wire transfer, in the amount
                  of
                  $50,000 times_____ Subscribed Units for a total subscription price
                  of
                  $_____.

              

      

    

    
      

    

    
      
        	
                3.

              	
                This
                  subscription may be accepted in whole or in part and will be binding
                  on
                  the undersigned only if the Company has accepted it. The undersigned
                  acknowledges that participation in the Company's offering of convertible
                  units of the Company pursuant to the Memorandum is subject to acceptance
                  of this subscription by the Company and to certain other conditions
                  set
                  forth in the Memorandum.

              

      

    

    
      

    

    
      
        	
                4.

              	
                The
                  undersigned subscriber represents, warrants, covenants and agrees
                  that the
                  undersigned:

              

      

    

     

    
      
        	
              	
                (a)

              	
                is
                  purchasing the Subscribed as
                  principal;

              

      

    

    
      

    

    
      
        	
              	
                (b)

              	
                is
                  an “accredited investor” within the
                  meaning of applicable harmonized rules of National Instrument 45-106
                  for
                  all Provinces and Territories of Canada attached hereto as
                  Exhibit “A”;

              

      

    

    
      

    

    
      
        	
              	
                (c)

              	
                is
                  purchasing the Subscribed Units for investment purposes and not
                  with a
                  view to their resale or
                  distribution;

              

      

    

    
      

    

    
      
        	
              	
                (d)

              	
                is
                  a resident of  ̈
                  Alberta,  ̈
                  British Columbia,
                   ̈
                  Ontario,
                   ̈
                  Saskatchewan,  ̈
                  Manitoba,  ̈
                  Nova Scotia,
                   ̈
                  Prince
                  Edward Island,  ̈
                  Newfoundland or
                   ̈
                  Northwest
                  Territories for purposes of applicable securities
                  laws;

              

      

    

    
      

    

    
      
        	
              	
                (e)

              	
                if
                  the subscriber is a corporation, the subscriber is a valid and
                  subsisting
                  corporation, has the necessary corporate capacity and authority
                  to execute
                  and deliver this subscription form and to observe and perform its
                  covenants and obligations hereunder and has taken all necessary
                  corporate
                  action in respect thereof. If the subscriber is a partnership,
                  syndicate
                  or other form of unincorporated organization, the subscriber has
                  the
                  necessary legal capacity and authority to execute and deliver this
                  subscription form and to observe and perform its covenants and
                  obligations
                  hereunder and has obtained all necessary approvals in respect thereof.
                  If
                  the subscriber is a natural person, he or she has obtained the
                  age of
                  majority and is legally competent to execute this subscription
                  form and to
                  take all actions required pursuant
                  thereto.

              

      

    

    
      

    

    
      
        	
              	
                (f)

              	
                is
                  not a “non-Canadian”
                  as that
                  expression is defined in the Investment Canada Act
                  (Canada) or a “non-resident”
                  as that
                  expression is defined in the Income Tax Act
                  (Canada)

              

      

    

    
      

    

    
      In
        addition, the undersigned:

    

    
      

    

    
      
        	
              	
                (a)

              	
                acknowledges
                  that he or she is an investor who, by virtue of his or her net
                  worth and
                  investment experience is able to evaluate an investment in the
                  Subscribed
                  Units on the basis of the information contained in the
                  Memorandum;

              

      

    

    
      

    

    
      
        
          
            
              
                	
                      	
                        (b)

                      	
                        acknowledges
                          that the common units offered pursuant to the Memorandum
                          are being sold
                          pursuant to certain private placement exemptions and will
                          therefore be
                          subject to certain resale restrictions (including “restricted
                          and seasoning periods”)
                          under
                          applicable securities legislation. The subscriber further
                          acknowledges that he, she or it understands that the Company
                          is
                          not currently a “reporting
                          issuer”
                          under the securities laws of any Province in Canada, that
                          there is no public market for the Subscribed Units and
                          that holders of Subscribed Units may not be able to sell
                          such securities
                          for an indefinite period of time without a prospectus being
                          filed and a
                          receipt obtained therefor. The subscriber also acknowledges
                          having been advised to consult its own legal advisors with
                          respect to
                          applicable resale restrictions and that it is solely responsible
                          for
                          complying with such restrictions (and the Company is not
                          in any manner
                          responsible for ensuring compliance by the subscriber with
                          such resale
                          restrictions). The subscriber also acknowledges that the
                          share
                          certificates evidencing the Subscribed Units will have
                          the following
                          legend:

                      

              

            

          

        

      

    

    
      

        
          
            
            

          

          
            1

            
              

            

          

          
            
            

          

        

      

       

    

    
      “Unless
        permitted
        under securities legislation, the holder of the securities shall not trade
        the
        securities before the earlier of (i) the date that is 12 months and a day
        after
        the date the issuer first became a reporting issuer in any of Alberta, British
        Columbia, Manitoba, Nova Scotia, Ontario, Quebec, PEI, Newfoundland and
        Saskatchewan, if the issuer is a SEDAR filer; and (ii) the date that is 12
        months and a day after the later of (A) the distribution date, and (B) the
        date
        the issuer became a reporting issuer in the local jurisdiction of the purchaser
        of the securities that are the subject of the trade.”

    

    
       

      
        	
              	
                (c)

              	
                agrees
                  to comply with all applicable securities legislation
                  in connection with the purchase, holding and resale of any Subscribed
                  Units purchased pursuant to the
                  Memorandum;

              

      

    

    
       

      
        	
              	
                (d)

              	
                agrees
                  to execute all necessary documents;
                  and

              

      

    

    
       

    

    
      
        	
              	
                (e)

              	
                acknowledges,
                  represents, warrants and certifies that he, she or it has considered
                  and
                  understands the contents of the certificate contained in Exhibit
                  "B" to
                  this Subscription Form and that the information contained in the
                  duly
                  executed certificate is true, complete
                  and accurate, and may be relied upon by the
                  Company.

              

      

    

     

    
      
        	
                5.

              	
                The
                  undersigned, desiring to subscribe for and purchase the Subscribed
                  Units
                  and to become a shareholder in the Company, hereby acknowledges
                  that
                  (a) the undersigned has received, reviewed and fully understands the
                  Memorandum; (b) other than the Memorandum, he, she or it has not
                  received,
                  nor has he, she or it requested or agreed to receive, any document
                  purporting to describe the business and affairs of the company
                  that was
                  prepared primarily for delivery and to review by prospective purchasers
                  of
                  common units so as to assist them in making an investment decision
                  in
                  respect of the Subscribed Units; (c) his, her or its decision in
                  respect
                  of the Subscribed Units has not been based upon any verbal or written
                  representations as to fact or otherwise, other than those
                  contained in the Memorandum, made by or on behalf of the Company,
                  and his,
                  her or its decision is based entirely upon publicly available information
                  concerning the Company and the Memorandum; (d) the sale of the
                  Subscribed
                  Units was not accompanied by any general solicitation or general
                  advertisement in printed media or over radio or television; and
                  (e) the
                  Subscribed Units are otherwise subject to the terms and conditions
                  contained in the articles of the
                  Company.

              

      

    

    
       

      
        	
                6.

              	
                The
                  undersigned agrees to maintain in strictest confidence and not
                  to
                  disseminate the Memorandum or any other information provided to
                  the
                  undersigned by or on behalf of the Company (except where necessary
                  to
                  the undersigned's advisors from whom the undersigned
                  shall in turn require the same commitment) and not to make use
                  of the same
                  other than for the purpose of deciding whether or not to subscribe
                  for
                  common units of the Company.

              

      

    

    
       

      
        	
                7.

              	
                This
                  subscription form and the subscription for the Subscribed Units
                  are
                  governed by the laws of the Province of
                  Ontario.

              

      

    

    
       

      
        	
                8.

              	
                The
                  Company provided to the Subscriber the Information Statement attached
                  as
                  Exhibit C hereto at least 4 days prior to the acceptance of this
                  subscription as evidenced on the signature page of this
                  agreement.

              

      

    

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    
      	
              
                SIGNED,
                  SEALED AND DELIVERED ________________________________at
                  in the Province of ______________ 

              

            
	
            	 	 
	 	 	 
	
              this_________day
                of__________, 2006.

            	 
	 	 	 
	 	 	 
	 	 	 
	
              WITNESS

            	
               

            	SUBSCRIBER
              (IF AN INDIVIDUAL)
	 	 	 
	 	 	 
	 	
               

            	NAME
	 	 	 
	 	
               

            	ADDRESS
	 	 	 
	 	
               

            	PHONE
              NUMBER
	 	 	 
	 	
               

            	CORPORATE
              NAME OF SUBSCRIBER (IF A CORPORATION)
	 	 	 
	
              This
                subscription is hereby accepted by the company on the____ day of_______,
                2006. 

            
	 	 	 
	 	
               

            	
              IMAGING
                PET TECHNOLOGIES, INC.

            
	 	 	 
	 	
               

            	
              Per:

            
	 	
               

            	
              AUTHORIZED
                SIGNATORY

            

    

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    
       

    

    
      EXHIBIT
        "A"

    

    
      TO

    

    
      IMAGING
        PET TECHNOLOGIES, INC.

    

    
      SUBSCRIPTION
        AGREEMENT

    

    
      

    

    
      NATIONAL
        INSTRUMENT 45-106 PROSPECTUS AND REGISTRATION EXEMPTIONS TO INCLUDE ONTARIO
        45-501 CAPITAL RAISING EXEMPTIONS

    

    
      

    

    
      DEFINITION
        OF "ACCREDITED INVESTOR"- SECTION 1.1

    

    
      

    

    
      “accredited
        investor”
means:

    

    
      

    

    
      (a)    a
        Canadian financial institution, or a Schedule III bank,

    

    
      

    

    
      (b)    the
        Business Development Bank of Canada incorporated under the Business
        Development Bank of Canada Act (Canada),

    

    
      

    

    
      (c)    a
        subsidiary of any person referred to in paragraphs (a) or (b),if the person
        owns
        all of the voting securities of the subsidiary, except the voting securities
        required by law to be owned by directors of that subsidiary,

    

    
      
      

      

      (d)    a
        person
        registered under the securities legislation of a jurisdiction of Canada as
        an
        advisor or dealer, other than a person registered solely as a limited market
        dealer under one or both of the Securities Act (Ontario) or the
Securities Act (Newfoundland and Labrador),

    

    
      

    

    
      (e)    an
        individual registered or formerly registered under the securities legislation
        of
        a jurisdiction of Canada as a representative of a person referred to in
        paragraph (d),

    

    
      

    

    
      (f)            
        the
        Government of Canada or a jurisdiction of Canada, or any crown corporation,
        agency or wholly owned entity of the Government of Canada or a jurisdiction
        of
        Canada,

    

    
      

    

    
      (g)           
        a
        municipality, public board or commission in Canada and a metropolitan community,
        school board, the Comite de gestion de la taxe scolaire de File de Montreal
        or
        an intermunicipal management board in Quebec,

    

    
      

    

    
      (h)  
any
        national, federal, state, provincial, territorial or municipal government
        of or
        any foreign jurisdiction, or any agency of that government,

    

    
      

    

    
      (i)    a
        pension
        fund that is regulated by either the Office
        of the Superintendent of Financial Institutions (Canada) or
        a pension commission or similar regulatory authority of a jurisdiction of
        Canada,

    

    
      

    

    
      (j)    an
        individual who, either alone or with a spouse, beneficially owns, directly
        or
        indirectly, financial assets having an aggregate value that before taxes,
        but
        net of any related liabilities, exceeds $1,000,000,

    

    
      

    

    
      (k)    an
        individual whose net income before taxes exceeded $200,000 in each of the
        2 most
        recent calendar years or whose net income before taxes combined with that
        of a
        spouse exceeded $300,000 in each of the 2 most recent calendar years and
        who, in
        either case, reasonably expects to exceed that net income level in the current
        calendar year,

    

    
      

    

    
      (l)    an
        individual who, either alone or with a spouse, has net assets of at least
        $5,000,000,

    

    
      

    

    
      (m)           a
        person,
        other than an individual or investment fund, that has net assets of at least
        $5,000,000 as shown on its most recently prepared financial
        statements,

    

    
      

    

    
      (n)    an
        investment fund that distributes or has distributed its securities only
        to,

    

    
      

    

    
      
        	
              	
                i.

              	
                a
                  person that is or was an accredited investor at the time of the
                  distribution,

              

      

    

    
      

    

    
      
        	
              	
                ii.

              	
                a
                  person that acquires or acquired securities in the circumstances
                  referred
                  to in sections 2.10 [Minimum amount investment], and
                  2.19 [Additional investment in investment funds],
                  or

              

      

    

    
      

    

    
      
        	
              	
                iii.

              	
                a
                  person described in paragraph (i) or (ii) that acquires or acquired
                  securities under section 2.18 [Investment fund
                  reinvestment],

              

      

    

    
      

    

    
      (o)    an
        investment fund that distributes or has distributed securities under a
        prospectus in a jurisdiction of Canada for which the regulator or, in Quebec,
        the securities regulatory authority, has issued a receipt,

    

    
      

    

    
      (p)    a
        trust
        company or trust corporation registered or authorized to carry on business
        under
        the Trust and Loan Companies Act (Canada) or under
        comparable legislation in a jurisdiction of Canada or a foreign jurisdiction,
        acting on behalf of a fully managed account managed by the trust company
        or
        trust corporation, as the case may be,

    

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    
      (q)    a
        person
        acting on behalf of a fully managed account managed by that person, if that
        person,

    

    
       

      
        	
              	
                i.

              	
                is
                  registered or authorized to carry on business as an adviser or
                  the
                  equivalent under the securities legislation of a jurisdiction of
                  Canada or
                  a foreign jurisdiction, and

              

      

    

    
       

      
        	
              	
                ii.

              	
                in
                  Ontario, is purchasing a security that is not a security of an
                  investment
                  fund;

              

      

    

    
       

      (r)             a
        registered charity under the Income Tax Act (Canada) that, in regard to
        the trade, has obtained advice from an eligibility adviser or an adviser
        registered under the securities legislation of the jurisdiction of the
        registered charity to give advice on the securities being
        traded,

    

    
       

      (s)    an entity
        organized in a foreign jurisdiction that is analogous to any of the entities
        referred to in paragraphs (a) to (d) or paragraph (i) in form and
        function,

    

    
       

      (t)            
        a
        person
        in respect of which all of the owners of interests., direct, indirect or
        beneficial, except the voting securities required by law to be owned by
        directors, are persons that are accredited investors,

    

    
       

      (u)    an
        investment fund that is advised by a person registered as an adviser or a
        person
        that is exempt from registration as an adviser,

    

    
       

      (v)    a
        person
        that is recognized or designated by the securities regulatory authority or,
        except in Ontario and Quebec, the regulator as,

    

    
       

      
        	
              	
                i.

              	
                an
                  accredited investor, or

              

      

    

    
      

      
        	
              	
                ii.

              	
                an
                  exempt purchaser in Alberta or British Columbia after this instrument
                  comes into force;

              

      

    

    
       

      “financial
        assets”
means

       

    

    
      
        	
              	
                (a)

              	
                cash,

              

      

    

    
      
      

      

      
        	
              	
                (b)

              	
                securities,
                  or

              

      

    

    
       

      
        	
              	
                (c)

              	
                a
                  contract of insurance, a deposit or evidence of a deposit that
                  is not a
                  security for the purposes of securities
                  legislation;

              

      

    

    
       

      “mutual
        fund” includes
        an issuer of securities that entitle the holder to receive on demand, or
        within
        a specified period after demand, an amount computed by reference to the value
        of
        a proportionate interest in the whole or in part of the net assets, including
        a
        separate fund or trust account, of the issuer of the
        securities;

    

    
       

      “non-redeemable
        investment fund”
means
        an issuer

    

    
       

      (a)    whose
        primary purpose is to invest money provided by its security
        holders;

    

    
       

      (b)    that
        does
        not invest for the purpose of exercising effective control, seeking to exercise
        effective control, or being actively involved in the management of the issuers
        in which it invests, other than other mutual funds or non-redeemable investment
        funds; and

    

    
       

    

    
      “related
        liabilities”
means

    

    
       

    

    
      
        	
              	
                (a)

              	
                liabilities
                  incurred or assumed for the purpose of financing the acquisition
                  or
                  ownership of financial assets,
                  or

              

      

    

    
       

      
        	
              	
                (b)

              	
                liabilities
                  that are secured by financial
                  assets;

              

      

    

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    
      EXHIBIT
        “B”

    

    
      TO

    

    
      IMAGING
        PET TECHNOLOGIES, INC.

    

    
      SUBSCRIPTION
        AGREEMENT

    

    
      

    

    
      SUBSCRIBER
        CERTIFICATE

    

    
      

    

    
      The
        undersigned has considered the requirements of the harmonized rules of National
        Instrument 45-106 Prospectus and Registration Exemption annexed to this
        subscription as Exhibit “A”
        (the “Rules”)
        and the
        definitions of the term “accredited
        investor”contained
        therein. Having regard to all of the circumstances of the
        undersigned and the requirements of the Rules, the undersigned hereby
        represents, warrants, acknowledges and certifies that the undersigned is
        an
"accredited investor" within the meaning of the Rules
        applicable to the jurisdiction of the residence/domicile of the undersigned
        and
        that the undersigned has indicated, by checking the appropriate boxes below,
        all
        of the specific categories of “accredited
        investor”applicable
        to the undersigned.

    

    
      

    

    
      The
        undersigned certifies that the undersigned is:

       

    

    
      
        	
                 ̈

              	
                (a)    a
                  Canadian financial institution, or a Schedule, III
                  bank,

              
	 	 	 
	
                 ̈

              	
                (b)    the
                  Business Development Bank of Canada incorporated under the Business
                  Development Bank of Canada Act (Canada),

              
	 	 	 
	
                 ̈

              	
                (c)    a
                  subsidiary of any person referred to in paragraphs
                  {a) or (b), if the person owns all of the voting securities of
                  the
                  subsidiary, except the voting securities required by law to be
                  owned by
                  directors of that subsidiary,

              
	 	 	 
	
                 ̈

              	
                (d)           a
                  person registered under the securities legislation of a jurisdiction
                  of
                  Canada as an advisor or dealer, other than a person registered
                  solely as a
                  limited market dealer under one or both of the Securities Act
                  (Ontario) or the Securities Act (Newfoundland and
                  Labrador),

              
	 	 	 
	
                 ̈

              	
                (e)    an
                  individual registered or formerly registered under the securities
                  legislation of a jurisdiction of Canada as a representative of
                  a person
                  referred to in paragraph (d),

              
	 	 	 
	
                 ̈

              	
                (f)    the
                  Government of Canada or a jurisdiction of Canada, or any crown
                  corporation, agency or wholly owned entity of the Government of
                  Canada or
                  a jurisdiction of Canada,

              
	 	 	 
	
                 ̈

              	
                (g)           a
                  municipality, public board or commission in Canada and a metropolitan
                  community, school board, the Comite de gestion de la taxe scolaire
                  de File
                  de Montreal or an intermunicipal management board in
                  Quebec,

              
	 	 	 
	
                 ̈

              	
                (h)           any
                  national, federal, state, provincial, territorial or municipal
                  government
                  of or any foreign jurisdiction, or any agency of that
                  government,

              
	 	 	 
	
                 ̈

              	
                (i)    a
                  pension fund that is regulated by either the Office of the Superintendent
                  of Financial Institutions (Canada) or a pension commission or similar
                  regulatory authority of a jurisdiction of Canada,

              
	 	 	 
	
                 ̈

              	
                (j)            
                  an individual who, either alone or with a spouse, beneficially
                  owns,
                  directly or indirectly, financial assets having an aggregate value
                  that
                  before taxes, but net of any related liabilities, exceeds
                  $1,000,000,

              
	 	 	 
	
                 ̈

              	
                (k)           
                  an individual whose net income before taxes exceeded $200,000 in
                  each of
                  the 2 most recent calendar years or whose net income before taxes
                  combined
                  with that of a spouse exceeded $300,000 in each of the 2 most recent
                  calendar years and who, in either case, reasonably expects to exceed
                  that
                  net income level in the current calendar year,

              
	 	 	 
	
                 ̈

              	
                (l)            
                  an individual who, either alone or with a spouse, has net assets
                  of at
                  least $5,000,000,

              
	 	 	 
	
                 ̈

              	
                (m)          
                  a person, other than an individual or investment fund, that has
                  net assets
                  of at least $5,000,000 as shown on its most recently prepared financial
                  statements,

              
	 	 	 
	
                 ̈

              	
                (n)          
                  an investment fund that distributes or has distributed its securities
                  only
                  to,

              
	 	 	 
	 	
                i.

              	
                a
                  person that is or was an accredited investor at the time of the
                  distribution,

              
	 	 	 
	 	
                ii.

              	
                a
                  person that acquires or acquired securities in the circumstances
                  referred
                  to in sections 2.10  [Minimum amount
                  investment],  and 2.19 [Additional investment in
                  investment funds], or

              

      

    

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    
       

      
        	 	
                iii.

              	
                a
                  person described in paragraph (i) or (ii) that acquires or acquired
                  securities under section 2.18 [Investment fund
                  reinvestment],

              
	 	 	 
	
                 ̈

              	
                (o)          
                  an investment fund that distributes or has distributed securities
                  under a
                  prospectus in a jurisdiction of Canada for which the regulator
                  or, in
                  Quebec, the securities regulatory authority, has issued a
                  receipt,

              
	 	 	 
	
                 ̈

              	
                (p)          
                  a trust company or trust corporation registered or authorized to
                  carry on
                  business under the Trust and Loan Companies Act (Canada) or under
                  comparable legislation in a jurisdiction of Canada or a foreign
                  jurisdiction, acting on behalf of a fully managed account managed
                  by the
                  trust company or trust corporation, as the case may be,

              
	 	 	 
	
                 ̈

              	
                (q)          
                  a person acting on behalf of a fully managed account managed by
                  that
                  person, if that person,

              
	 	 	 
	 	
                i.

              	
                is
                  registered or authorized to carry on business as an adviser or
                  the
                  equivalent under the securities legislation of a jurisdiction of
                  Canada or
                  a foreign jurisdiction, and

              
	 	 	 
	 	
                ii.

              	
                in
                  Ontario, is purchasing a security that is not a security of an
                  investment
                  fund;

              
	 	 	 
	
                 ̈

              	
                (r)    a
                  registered charity under the Income Tax Act (Canada) that, in
                  regard to the trade, has obtained advice from an eligibility adviser
                  or an
                  adviser registered under the securities legislation of the jurisdiction
                  of
                  the registered charity to give advice on the securities being
                  traded,

              
	 	 	 
	
                 ̈

              	
                (s)          
                  an entity organized in a foreign
                  jurisdiction
                  that is analogous to any of the entities referred to in paragraphs
                  (a) to
                  (d) or paragraph (i) in form and function,

              
	 	 	 
	
                 ̈

              	
                (t)           
                  a person in respect of which all of the owners of interests, direct,
                  indirect or beneficial, except the voting securities required by
                  law to be
                  owned by directors, are persons that are accredited
                  investors,

              
	 	 	 
	
                 ̈

              	
                (u)           
                  an investment fund that is advised by a person registered as an
                  adviser or
                  a person that is exempt from registration as an
                  adviser,

              
	 	 	 
	
                 ̈

              	
                (v)          
                  a person that is recognized or designated by the securities regulatory
                  authority or, except in Ontario and Quebec, the regulator
                  as,

              
	 	 	 
	 	
                i.

              	
                an
                  accredited investor, or

              
	 	 	 
	 	
                ii.

              	
                an
                  exempt purchaser in Alberta or British Columbia after this instrument
                  comes into force;

              

      

       

      Provincial
        Private Placement Restrictions:

    

    
       

      Residents
        of Prince Edward Island (PEI) are not permitted to participate beyond $10,000
        per private placement as an Accredited Investor. However, if a resident of
        PEI
        chooses to participate as a Sophisticated Investor, then the resident must
        make
        a minimum investment of no less than $150,000.

    

     

     

     7

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