UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-K

S ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2008

Commission file number 0-23873

IMAGIN MOLECULAR CORPORATION

(Exact Name of Registrant in its Charter)

Delaware	13-4099008
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

3 Grant Square, #315, Hinsdale, IL 60521

(Address of principal executive offices   (Zip Code)

(630) 371-5583

(Registrant's telephone number, including area code)

Securities registered under Section 12(b) of the Exchange Act: None

Securities registered under Section 12(g) of the Exchange Act:

Common Stock, $.001 par value per share

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes £ No S

Indicate by a check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes ¨ No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer”, “accelerated filer”, or “smaller reporting company in Rule 12b-2 of the Exchange Act (check one):

Large accelerated filer    ¨	Accelerated filer    ¨
Non-accelerated filer    ¨	Smaller reporting Company    x

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

Yes ¨  No x

Registrant's revenues for its most recent fiscal year: $613,045.

Market value of Common stock held by non-affiliates at April 14, 2009:  $3,683,164.

Shares of Common Stock outstanding at April 14, 2009: 73,663,284 shares

Documents incorporated by reference: None

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

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TABLE OF CONTENTS

		Page
PART I
Item 1.	Description of Business	1
Item 2.	Description of Properties	12
Item 3.	Legal Proceedings	12
Item 4.	Submission of Matters to a Vote of Security Holders	12
PART II
Item 5.	Market for Common Equity and Related Stockholder Matters	13
Item 6.	Selected Financial Data	14
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
Item 8.	Financial Statements	14
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	19
Item 9A.	Controls and Procedures	19
Item 9B.	Other Information	22
PART III
Item 10.	Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16(a) of the Exchange Act	22
Item 11.	Executive Compensation	23
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	24
Item 13.	Certain Relationships and Related Transactions	26
Item 14.	Principal Accountant Fees and Services	26
Item 15.	Exhibits	27
	Report of Independent Registered Public Accounting Firm	29
	Consolidated Financial Statements	30
Signatures		28
Certifications

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PART I

ITEM 1. DESCRIPTION OF BUSINESS

Special Cautionary Notice Regarding Forward-Looking Statements

This Report contains statements that constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and the Securities Exchange Act of 1934. Various matters discussed in this document and in documents incorporated by reference herein, including matters discussed under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” may constitute forward-looking statements for purposes of the Securities Act and the Securities Exchange Act. These statements are based on many assumptions and estimates and are not guarantees of future performance and may involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Imagin Molecular Corporation (the “Company” or “Imagin”) to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. The words “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “estimate,” and similar expressions are intended to identify such forward-looking statements. The Company’s actual results may differ materially from the results anticipated in these forward-looking statements due to a variety of factors, including, without limitation:

The effects of future economic conditions;

• The risks of changes in interest rates on the level and composition of deposits, loan demand, and the values of loan collateral, securities and interest-rate protection agreements, as well as interest-rate risks;

• The effects of competition from other financial institutions and financial service providers operating in the Company’s market area and elsewhere, including institutions operating locally, regionally, nationally and internationally, together with such competitors offering banking products and services by mail, telephone, and computer and the Internet; and

• The failure of assumptions underlying the establishment of reserves for possible loan losses and estimations of values of collateral and various financial assets and liabilities.

All written or oral forward-looking statements attributable to the Company are expressly qualified in their entirety by these cautionary statements.

Imagin Molecular Corporation, a Delaware corporation (“Imagin”, the “Registrant” or the “Company”), refocused its business strategy in April 2005 to concentrate on business opportunities in positron emission tomography (PET) through holdings in strategically related divisions based in the manufacturing of PET devices ownership of PET imaging centers and the diagnosis and treatment of cancer, heart and neurological diseases. PET is an advanced medical diagnostic imaging procedure used by physicians in the detection of certain cancers, coronary disease and neurological disorders including Alzheimer's disease. Through its wholly owned subsidiary, Imagin Nuclear Partners, a New York Corporation (“INP”) the Registrant intends to acquire, operate and administer out-patient medical diagnostic imaging centers that utilize PET and PET/CT scanning equipment. INP specializes in using evidence based bioinformatics specifically positioned in the market to provide the maximal cost effective benefit to their joint venture partner and the community. The Registrant is also the parent of Positron Acquisition Corporation, a Nevada corporation (“PAC”) which is the holder of 8,026,000 shares of common stock and 722,358 shares of Series B Convertible Preferred Stock of Positron Corporation, a publicly owned Texas Corporation (“Positron”), and manufacturers of certain of the PET scanners Imagin uses in its operations. Imagin Molecular Corporation is also the parent of Cipher Multimedia, Inc. (“Cipher”) formed in August 2002 as a new media marketing and distribution solution company that provides distribution solutions for publishers of digital content. As the Registrant focuses its business to concentrate on opportunities in positron emission tomography, the operations of Cipher have for the most part been discontinued.

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CORPORATE ORGANIZATION

Imagin Molecular Corporation was incorporated under the laws of the State of Colorado on September 19, 1997 as Buffalo Capital VIII, Ltd. (“Buffalo”). The Company commenced its operations upon incorporation. On June 21, 2000, the shareholders of Buffalo approved the merger of Buffalo with and into the Registrant. The merger was effected on July 14, 2000. As a result, the corporate domicile and name of Buffalo were changed to Delaware and Momentum Holdings Corporation (“Momentum”), respectively.

On September 15, 2003, Cipher Multimedia, Inc., an Illinois corporation (“Cipher”) and Momentum executed a Share Exchange Agreement whereby Momentum exchanged 14,052,800 newly issued shares of common stock for all of the issued and outstanding shares of capital stock of Cipher. As a result of the purchase and exchange of shares, Cipher acquired voting control of Momentum on August 19, 2003 and became Momentum's majority shareholder. The total number of issued and outstanding shares of Momentum after the Exchange increased to 16,452,811.

On November 24, 2003, the Company amended its Articles of Incorporation to change the name of the Company to Cipher Holding Corporation and to increase its authorized capital stock to 100,000,000 shares, of which 95,000,000 are common and 5,000,000 are "blank check" preferred stock authorizing the Company's Board of Directors to set the rights and preferences of the preferred stock without further stockholder action.

On April 19, 2005, Imagin formed Positron Acquisition Corp. (“PAC”) a wholly owned subsidiary organized under the laws of the State of Nevada.

On November 18, 2005 the Company formed a wholly owned subsidiary, Imagin Nuclear Partners Corporation, a New York corporation (“INP”), to provide Positron Emission Tomography myocardial perfusion imaging technology (“PET” or “PET imaging technology”) and related technical and educational services to diagnose and treat patients with coronary artery disease and patients who are at risk of developing coronary heart disease.

On March 13, 2007, the Registrant redomiciled Cipher as a Nevada corporation through a merger with and into Cipher Multimedia, Inc., a Nevada corporation. In accordance with the Plan of Merger, each ten shares of Cipher were exchanged for one share of Cipher-NV common stock.

BUSINESS DEVELOPMENT

Through its wholly-owned subsidiary, Imagin Nuclear Partners Corporation, the Company utilizes Positron Emission Tomography myocardial perfusion imaging technology (“PET” or “PET imaging technology”) and related technical and educational services to lease their system to aid in the diagnosis and treatment of patients with coronary artery disease as well as those who are at risk of developing coronary heart disease. The Company will attempt to establish heart health centers to provide imaging technology for the diagnosis and non-invasive management of coronary artery disease. The Company plans to use PET perfusion imaging and vigorous risk factor modification programs to diagnose and guide the management of patients with coronary artery disease. This program is aimed at the regression of coronary atherosclerosis and stabilization of plaque to prevent the clinical events of myocardial infarction, sudden death and unstable coronary syndromes requiring invasive intervention (PTCA or bypass surgery).

The Company’s methodology differs than that of traditional invasive coronary procedures by health care providers that has not resulted in significant improvement in clinical outcomes for coronary patients, primarily due to what the Company perceives as limitations of the imaging technology currently employed by health care providers and the failure to focus on lifestyle modification programs for coronary patients. The Company believes that the current barriers to entry of Positron Emission Tomography Myocardial Perfusion Imaging (PET MPI) have prevented widespread utilization.

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Studies have shown that the utilization of PET imaging technology is a cost-effective approach to the diagnosis of coronary artery disease when compared to the cost of utilizing traditional imaging technology and invasive procedures. The current approximate cost of a PET scanner, in excess of $1,500,000 continues to prevent wide spread acceptance of the technology. The Company believes that if the technology could be offered at prices equivalent to the less accurate, less expensive, routinely used, diagnostic exam of Single Photon Emission Computed Tomography (SPECT) that the barriers to entry may be significantly reduced leading to an increased utilization.

INP does not have a current center for these services, having terminated its sole operations located at Beth Israel Medical Center in the First Quarter 2009.  INP is currently seeking a purchaser or an alternate business opportunity for the scanner located therein.

PRODUCTS AND SERVICES

The Company intends to market its cardiovascular PET and noninvasive coronary artery disease reversal program to General/Family/Internal Medicine physicians in metropolitan areas within the United States. These physicians are the primary gatekeepers for patients suspected of having coronary artery disease and are responsible 40% of all referrals for nuclear imaging. This referral patterned has steadily increased more than 15% per year over the last 5 years, because of the advent of lipid management programs.

The Company anticipates its initial target states are New York, New Jersey, Pennsylvania, Maryland, Florida and Texas, where cardiac patient demographics and cardiovascular PET reimbursement are well established.

Cardiovascular PET Perfusion Imaging

The Company believes the therapeutic paradigm is now shifting away from expensive, anatomically driven treatment (e.g., coronary angiography followed by revascularization), toward identification of the vulnerable plaque, with subsequent biological stabilization of the atherosclerotic process, using aggressive lipid lowering medical management. A fundamental question for General/Family/Internal Medicine physicians which manage patients with coronary artery disease is which patients will require invasive intervention and which only require noninvasive but aggressive medical management. In addition those patients on noninvasive therapy we need to know how hard should we push lipid reduction to achieve coronary disease reversal in the individual patient?

PET myocardial perfusion imaging (MPI) can now assist in answering these critical questions for patients, insurers and referring doctors, because of the unique physical advantages of positron imaging power of positron emission tomography. PET's advantages over single photon emission computed tomography (SPECT) nuclear imaging results in an improvement in diagnostic accuracy results that rivals that of the angiogram itself. 

Coronary Disease Reversal Program

The Company intends to educate referring physicians about the program and the intensive patient / primary physician relationship necessary for success.

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Smoking Cessation - Stopping smoking is an essential step in the reversal program. There are many programs from insurance companies to help the patient quit. 

Diet Modification - The diet that we currently recommend is no more than 10% of calories as fat. This includes unrestricted vegetables and protein in the form of skinless chicken, turkey, buffalo meat, venison, fish and all shellfish. Beef and pork are once a month items. Fruit is appropriate for desert. For over weight patients, carbohydrates sources such as bread, potatoes, rice, pasta, pastry and sweets have to be portion controlled to achieve lean body mass. Once lean mean body mass is achieved, we add back enough of carbohydrates to stay at a static weight.

Exercise Program - The three essential criteria for a successful program of physical activity are (1) to determine individual preferences for the type of exercise, (2) activity for at least thirty to sixty minutes per day for five to six days per week, (3) do something each day even if the required minimum can not be met.

Cholesterol Management - Total cholesterol, through medical management, is controlled down to 110 to 140 achieving levels similar to limiting those populations that simply do not have coronary disease such as found in Central China and in Central Africa. Our goal is to drive LDL below 90, HDL’s above 45 and triglycerides below 90. Statin drugs are used to accomplish acceptable values. The physician needs to check liver enzymes and the cholesterol profile each month for three months. Dose modifications are necessary to achieve regression due to the individual variability factor. Often combination therapy with two or more lipid agents is necessary.

MARKET ENVIRONMENT

Coronary artery disease (CAD), remains the major cause of death in the U.S., claiming over 650,000 lives annually, which constitutes more than 25% of all deaths in adults over 35 years of age. Moreover, nearly twice this number of acute myocardial infarctions occur each year. 60% of acute myocardial infarction and sudden death occur unexpectedly, in previously apparently healthy people, with no antecedent symptoms.

The Company believes that excessive, invasive, cardiological procedures do not result in improved clinical outcomes for patients. The frequency of utilization of coronary arteriography (CATH), coronary artery bypass surgery (CABG) and percutaneous transluminal coronary intervention (PTCI) procedures in the United States has increased annually 50 - 150% with no subsequent improvement in the hard endpoints of coronary death and recurrent MI at one year.

We have learned, while utilization of invasive coronary procedures in the US has exploded over the past few years with no improvement of outcomes, from a large number of well conducted lipid lowering trials, which employed quantitative coronary arteriography, that aggressive noninvasive management of CAD with a very low fat diet and lipid lowering drugs, may reduce acute MI and coronary death by up to 85% or more. Interestingly this remarkable clinical benefit occurs despite only minimal angiographic improvement in coronary lumen diameter. This is because it is the young, mild, plaque which is actively inflamed that is structurally vulnerable, and therefore prone to rupture suddenly, leading to death or an acute coronary syndrome, rather than the older, more severe, structurally stable stenosis, which is typically responsible for chronic stable angina. It is this stable lesion that is usually the stenosis targeted for mechanical intervention.

The management of CAD in the new millennium is undergoing critical reappraisal driven by the need for health care cost containment. The Company’s business plan is to provide a basis for the shift away from expensive, anatomically driven treatment (e.g., coronary angiography followed by revascularization), toward identification of the vulnerable plaque, with subsequent biological stabilization of the atherosclerotic process, using aggressive lipid lowering medical management. Which patients will require invasive vs. aggressive noninvasive management? How hard should we push lipid reduction to achieve coronary disease reversal in the individual patient?

CUSTOMERS

The Company’s primary potential customers are General/Family/Internal Medicine physicians in Metropolitan areas. A metropolitan population can be defined as having multiple General/Family/Internal Medicine physician offices and a referral population of at least 500,000 patients.

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IMAGIN NUCLEAR PARTNERS CORPORATION

On November 18, 2005 the Company formed a wholly owned subsidiary, Imagin Nuclear Partners Corporation, a New York corporation (“INP”), the Company utilizes Positron Emission Tomography myocardial perfusion imaging technology (“PET” or “PET imaging technology”) and related technical and educational services to lease their system to aid in the diagnosis and treatment of patients with coronary artery disease as well as those who are at risk of developing coronary heart disease. Imagin Nuclear Partners Corporation is headquartered in Niagara Falls, New York.

Sales and Marketing

To fulfill its business plan Imagin Nuclear Partners will approach physicians who primarily see Medicaid patients to solicit referrals. Medicaid physicians are not routinely solicited for referrals due to the traditional low fees associated. Imagin Nuclear Partners believes that the Medicaid population will result in a significant portion of their monthly volume.  Imagin Nuclear Partners hopes to solicit large self insured companies and present the GM report with real patient data to justify the increased use of PET along with Coronary Disease Reversal.

Government Regulation

The Company’s operations which assess medical imaging and physician referral will be required to adhere to a wide variety of other regulations governing the operation of its business. For example, federal regulations commonly known as the “Stark Laws” impose civil penalties and exclusion from participation in the Medicare program of reimbursement for referrals by physicians for “designated health services” to certain entities with which the referring physician has a financial relationship, if those referrals do not fall within an exception created by law or regulation. “Designated health services” include PET services. Implementing regulations have been issued regarding referrals for clinical laboratory services, but no final implementing regulations have been issued regarding PET services. It is possible that these proposed rules will be found to apply to PET scanners, thereby restricting physician referrals for PET services by an investor-physician or a physician who has a compensation arrangement with Imagin Nuclear Partners.

In addition, several states in which Imagin Nuclear Partners intends to operate have enacted or are considering legislation that restricts physician referral arrangements in a manner similar to the Stark Laws and requires physicians to disclose any financial interest they have with a health care provider to their patients to whom they recommend that provider. Possible sanctions for violating these provisions include loss of medical licensure and civil and criminal sanctions. These state laws vary from state to state and seldom have been interpreted by the courts or regulatory agencies. Nonetheless, Imagin Nuclear Partners expects that these laws will be strictly enforced.

The Company will also be required to comply with other state and federal laws prohibiting the payment or receipt of bribes, kickbacks, rebates and any other direct or indirect remuneration in return for or to induce the referral of an individual to a person for the furnishing, directing or arranging of services, items or equipment, commonly referred to as anti-kickback laws. Violation of the anti-kickback laws may result in civil and criminal penalties, loss of medical licensure and exclusion from the Medicare and other federal health care programs to the extent such federal reimbursement program beneficiaries are involved.

Customers

Customers for our imaging operations will be patients of the medical centers with whom we intend to conduct our business either through joint ventures or equity ownership.

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Patents

We do not have any patents or patents pending and rely on the intellectual property rights of Positron Corporation and other third-party suppliers.

CIPHER MULTIMEDIA, INC.

Cipher Multimedia, Inc., a Nevada Corporation (“Cipher”) was formed in August 2002. Cipher is a digital distribution solution and marketing company which secures and allows access to digital content through proprietary encoding, encryption and authorization technology. Cipher’s technology and services allow publishers and distributors to distribute digital content in a secure format to mass markets. Secured video and software content is distributed through new and existing commercial product offerings and distribution channels.

Cipher’s Digital Rights Management (“DRM”) technology protects or controls access to digital content. Cipher’s technology allows publishers and distributors to distribute full-feature video and/or software in a secure format. Secureddigital content is delivered in the form of CD/DVDs, diskettes and Internet download format. The consumer has the ability to view a sample of the video or demonstration of the software before purchasing of the product by unlocking the full product for immediate use on their personal computer. The purchase and delivery transactions are immediate and are facilitated though Cipher’s transaction processing service. Cipher’s technology protects publisher’s content from copyright infringement by restricting access only to authorized purchasers.

On March 13, 2007, the Registrant reorganized Cipher as a Nevada corporation via merger with Cipher Multimedia, Inc., a Nevada corporation (“Cipher-NV”).  In accordance with the Plan of Merger, each ten shares of Cipher were exchanged for one share of Cipher-NV common stock.  .  On March 14, 2007, Cipher settled obligations with its two largest creditors by retiring $148,973.46 in obligations to Patrick Rooney, the Registrant’s former chairman and Chief Executive officer and Cipher’s founder, for 7,448,673 shares of Cipher’s common stock, and retiring $35,750 in exchange for the issuance of 1,787,500 shares of Cipher’s common stock.  On March 20, 2007, realizing that Cipher’s software encryption business no longer fit the Registrant’s business model of medical imaging services, the Registrant’s Board of Directors resolved to spin off the 3,513,200 shares of Cipher common stock held by the Registrant as a special dividend to its Shareholders of record as of March 26, 2007.  The operations of Cipher Multimedia, Inc. are limited and have been discontinued from an accounting perspective.

POSITRON ACQUISITION CORP.

On April 19, 2005, Imagin formed Positron Acquisition Corp. (“PAC”) a wholly-owned subsidiary organized under the laws of the State of Nevada.

On May 23, 2005, PAC acquired two convertible notes receivable issued by Positron (the “Positron Notes”) in favor of IDC. The Positron Notes are convertible into shares of Positron’s Series C and Series D Preferred Stock that are in turn convertible, under certain circumstances, into 64,000,000 shares of Positron’s common stock, par value $.01 per share. Imagin acquired the Positron Notes in exchange for 30,000,000 newly issued shares of Imagin’s common stock.  On September 30, 2006, Imagin exchanged the Positron Notes for a total of 762,358 of Positron’s Series B Convertible Preferred Stock, par value $1.00 per share (the “Series B”).  The Series B are convertible into shares of Positron’s common stock, par value $0.001 per share, at the rate of 100 shares of Common stock for each Series B.  On September 7, 2006, PAC converted 40,000 shares of Series B into 4,000,000 shares of common stock.

Positron designs, manufactures and markets medical imaging devices utilizing Positron Emission Tomography (“PET”) technology. PET technology permits the measurement of the biological processes of organs and tissues and produces anatomical and structural images. PET systems are used by physicians in the diagnosis and management of heart disease and certain other neurological and oncological illnesses.

Following the acquisition of the Positron Notes, the Company changed its principal operations from multimedia encryption technology to positron emission tomography and medical imaging and related services.

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EMPLOYEES

On April 14, 2009, the Company had two full-time employees. 

ITEM 1A - RISK FACTORS

We also caution you that this Annual Report contains forward-looking statements. The words "believes," "should be," "anticipates," "plans," "expects," "intends," and "estimates," and similar expressions identify these forward-looking statements. These forward-looking statements are contained principally under the headings "Summary," "Risk Factors," "Financial Statements," "Management's Discussion and Analysis of Operations," "Business," and "Management." Although we believe that our expectations reflected in these forward-looking statements are based on reasonable assumptions, our expectations may not prove to be correct. Because these forward-looking statements are also subject to risks and uncertainties, actual results may differ materially from the expectations expressed by these forward-looking statements. Important factors that could cause actual results to differ materially from the expectations reflected in our forward-looking statements include the following risk factors:

It Is Difficult to Evaluate the Company’s Business and Prospects Because it Does Not Have Any Operating History

The Company has yet to generate significant revenue from operations. The Company’s lack of working capital, make it difficult to evaluate the Company’s current business prospects or to accurately predict its future revenue or results of operations. The Company’s revenue and income potential continue to be unproven, and its business model is evolving. Because of the rapidly changing nature of medical imaging and medical reimbursement, the Company may need to modify its business model to adapt to these changes. Accordingly, the Company is subject to all of the risks, uncertainties, expenses and difficulties frequently encountered by companies seeking to break into a difficult-to-penetrate and rapidly changing industry segment.

The Penny Stock Rules May Have an Adverse Effect Upon Liquidity of the Company’s Shares

If the shares of the Company’s common stock are listed on The Nasdaq Stock Market or certain other national securities exchanges and the price thereof is below $5.00, then subsequent purchases of such securities will be subject to the requirements of the penny stock rules absent the availability of another exemption. The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in "penny stocks." Penny stocks generally are equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on The Nasdaq Stock Market). The penny stock rules require a broker-dealer to deliver a standardized risk disclosure document required by the SEC, to provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, monthly account statements showing the market value of each penny stock held in the customer's account, to make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for a stock that becomes subject to the penny stock rules.

Lack of Profitability

The Company currently operates at a loss. No assurance can be given that the Company will achieve sufficient revenues for profitability. We believe that we will continue to incur operating and net losses for at least the foreseeable future. The rate at which we will incur losses is expected to increase from current levels for a period when we intend to increase our costs and expenses. Even if the Company attains profitability, there is no assurance that it can sustain or increase profitability on a quarterly or annual basis in the future. If revenues grow slower than anticipated, or if operating expenses exceed expectations or cannot be adjusted accordingly, the Company’s business, results of operations and financial condition will be materially and adversely affected.

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Dependence on Executive Officers and Directors

The Company’s success is dependent on the efforts and abilities of its officers and directors. The Company currently does not have employment agreements with its executive officers. The loss of the services of any of these individuals could materially and adversely affect the development of the Company’s business plan.

The Company’s ability to attract and retain qualified marketing and management personnel is critical to its operations. While management believes it will be able to attract and retain sufficient professional employees to meet its needs, there can be no assurance that management is correct. If the Company is unable to employ the qualified employees needed, then its business would be materially and adversely affected.

Dependence Upon Third Party Relationships

The Company will be dependent on various third parties for their technologies, equipment and related services and even for providing customers to the Company. As a result, the Company's ability to generate revenues may be adversely affected by the failure of these third parties to provide equipment and related services to the Company. In addition, there can be no assurance that the Company will be successful in establishing and maintaining such relationships with those entities on favorable terms.

Risks Associated with Technological Change

The market in which the Company competes is characterized by rapidly changing technology; evolving industry standards, frequent new product and service announcements, introductions and enhancements, and changing customer demands. These market characteristics are heightened by the emerging nature of medical imaging and health care industries.  Accordingly, the Company’s future success will depend on its ability to adapt to rapidly changing technologies, its ability to adapt its services to meet evolving industry standards. The Company’s failure to successfully adapt to such changes in a timely manner could have a material adverse effect on the Company’s business, results of operations and financial condition.

Government Regulation

Laws and regulations directly applicable to the reimbursement by government and private insurance companies will have a material impact on our expected operations. Our ability to obtain payment for services which we extend to patients is directly related to governmental regulation, as well as, the manner in which we are able to obtain business. A change in these regulations may occur in which we are unable to adjust quickly enough in order to obtain payment to fund our operations or materially modify our plan of operations.

Need for Future Funding

The Company may need to raise additional funds through public or private debt or sale of equity to achieve our current business strategy. The financing we need may not be available when needed. Even if this financing is available, it may be on terms that we deem unacceptable or are materially adverse to your interests with respect to dilution of book value, dividend preferences, liquidation preferences, or other terms and may involve a substantial dilution to our shareholders. Our inability to obtain financing will inhibit our ability to implement our development strategy, and as a result, could require us to diminish or suspend our development strategy and possibly cease our operations.

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If we are unable to obtain additional financing on reasonable terms, we could be forced to delay, scale back or eliminate certain product and service development programs. In addition, such inability to obtain additional financing on reasonable terms could have a negative effect on our business, operating results, or financial condition to such extent that we are forced to restructure, file for bankruptcy, sell assets or cease operations, any of which could put your investment dollars at significant risk.

Potential Decrease in Market Price

Sales of substantial amounts of our common stock in the public market could decrease the prevailing market price of our common stock. If this is the case, investors in our shares of common stock may be forced to sell such shares at prices below the price they paid for their shares, or in the case of the investors in the May 2006 financing, prices below the price they converted their notes and warrants into shares. In addition, a decreased market price may result in potential future investors losing confidence in us and failing to provide needed funding. This will have a negative effect on our ability to raise equity capital in the future.

General Condition of the Healthcare Market

The Company’s business is subject to global economic conditions, and in particular, market conditions in the healthcare industry. The Company’s operations may be adversely affected by the continued declines in employee benefit spending by large corporations and small to medium sized businesses. If global economic conditions worsen, or a prolonged slowdown in providing such benefits exists, then the Company may experience adverse operating results.

ITEM 2. DESCRIPTION OF PROPERTY

The Registrant leases its current office space in Oak Brook, Illinois on a month to month basis.

ITEM 3. LEGAL PROCEEDINGS

On March 16, 2009 the Company received a Notice of Right To Cure and Demand for Payment from Cherry Creek Capital Partners  issued for all amounts past due pursuant to the terms of a promissory note issued by the Company on September 11, 2006.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

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PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

(a) Market Information.

Since approximately November 1996, the Company’s common stock, its only class of trading equity securities, has been traded on the NASD OTC Bulletin Board (“OTCBB”) under the symbol "IMGM.OB". The following table sets forth the range of high and low bid price information for the common stock for each fiscal quarter for the past two fiscal years as reported by the OTCBB.  High and low bid quotations represent prices between dealers without adjustment for retail mark-ups, markdowns or commissions and may not necessarily represent actual transactions.

Year Ended December 31, 2007	High Bid		Low Bid
Fourth Quarter		.09		.04
Third Quarter		.09		.05
Second Quarter		.08		.04
First Quarter		.08		.04
Year Ended December 31, 2008	High Bid		Low Bid
Fourth Quarter		.08		.01
Third Quarter		.08		.04
Second Quarter		.10		.05
First Quarter		.08		.04

(b) Holders

As of December 31, 2008, we had 73,663,284 shares of Common Stock outstanding, held by approximately 1,164 holders of record.

Series A Preferred

As of December 31, 2008 no shares of Series A Preferred were outstanding.

All of the securities set forth above were issued by the Company pursuant to Section 4(2) of the Securities Act of 1933, as amended, or the provisions of Rule 504 of Regulation D promulgated under the Securities Act. All such shares issued contained a restrictive legend and the holders confirmed that they were acquiring the shares for investment and without intent to distribute the shares. All of the purchasers were friends or business associates of the Company’s management and all were experienced in making speculative investments, understood the risks associated with investments, and could afford a loss of the entire investment. The Company has never utilized an underwriter for an offering of its securities.

(c) Dividends.

The Registrant has paid no dividends during the fiscal years ended December 31, 2008 and 2007. There are no restrictions on the Registrant's present or future ability to pay dividends.

The payment by the Registrant of dividends, if any, in the future rests within the discretion of its Board of Directors and will depend, among other things, upon the Registrant's earnings, its capital requirements, and its financial conditions, as well as other relevant factors.

(d)  Securities authorized for issuance under equity compensation plans.

The Company’s equity plan information required by this item is set forth under Item 11 of Part III below.

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ITEM 6. SELECTED FINANCIAL DATA

Not applicable

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

Imagin Molecular Corporation has focused its business strategy to concentrate on business opportunities in positron emission tomography (PET) through holdings in strategically related divisions based in the manufacturing of PET devices ownership of PET imaging center and the diagnosis and treatment of cancer, heart and neurological diseases. PET is an advanced medical diagnostic imaging procedure used by physicians in the detection of certain cancers, coronary disease and neurological disorders including Alzheimer's disease.

The Company’s  wholly owned subsidiary, Imagin Nuclear Partners Corporation, a New York corporation (“INP”), to provide Positron Emission Tomography myocardial perfusion imaging technology (“PET” or “PET imaging technology”) and related technical and educational services to diagnose and treat patients with coronary artery disease and patients who are at risk of developing coronary heart disease. Imagin Nuclear Partners Corporation is headquartered in Niagara, New York.

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Relationship with Beth Israel Hospital

In February 2006, Imagin Nuclear Partners purchased a Positron HZL-R Imaging Camera from Positron as well as a CTI Infusion Cart from Bracco Diagnostics, Inc. Also, in February 2006, the Company commenced operations of a PET center under the name Imagin Nuclear Partners at the cardiac center located within Beth Israel Medical Center (“BIMC”) in New York. The Company’s intention is to leverage its existing relationship with the New York State Department of Health Cardiac Advisory Committee to secure a “pilot program” aimed at demonstrating the cost efficiency of cardiac PET in selected markets on predetermined procedure indications. Under the initial contract with BIMC, the Company reimbursed BIMC on a fixed monthly basis for various operating expenses associated with performing scans, including physician’s fees, technologist fees, rents and other administrative expenses.  In February 2007, the Company and BIMC temporarily suspended operations at the facility pending re-negotiation of the original contract.  The parties executed a new agreement, the terms of which are discussed in detail below.

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

On December 31, 2008, INP advised BIMC that it had breached the Agreement for failure to make certain payments under the Agreement.  In addition, INP advised BIMC that it was seeking payment of $188,700 for 102 inpatient scans that BIMC had requested it perform on behalf of BIMC patients and had failed to reimburse INP for.

INP also asserted other claims in the aggregate amount of $318,144 and ceased supplying rubidium to BIMC thereafter.  Also in the first quarter 2009, BIMC asserted that INP had breached the Agreement and demanded that INP remove the scanner located therein.  INP is seeking a purchaser or another business opportunity to implement the device, however, no assurance can be given that such an agreement will be reached or if reached that it will be on terms favorable to the Company.

Cipher Multimedia Reorganization

On March 13, 2007, the Registrant reorganized Cipher as a Nevada corporation via merger with Cipher Multimedia, Inc., a Nevada corporation (“Cipher-NV”).  In accordance with the Plan of Merger, each ten shares of Cipher were exchanged for one share of Cipher-NV common stock.   On March 14, 2007, Cipher settled obligations with its two largest creditors by retiring $148,973.46 in obligations to Patrick Rooney, the Registrant’s former chairman and Chief Executive officer and Cipher’s founder, for 7,448,673 shares of Cipher’s common stock, and retiring $35,750 in exchange for the issuance of 1,787,500 shares of Cipher’s common stock.  On March 20, 2007, realizing that Cipher’s software encryption business no longer fit the Registrant’s business model of medical imaging services, the Registrant’s Board of Directors resolved to spin off the 3,513,200 shares of Cipher common stock held by the Registrant as a special dividend to its Shareholders of record as of March 26, 2007.  The operations of Cipher Multimedia, Inc. are limited and have been discontinued from an accounting perspective.

2008 Transactions

Securities Exchange Agreement among Positron Corporation, Imagin Molecular Corporation and Solaris Opportunity Fund, L.P.

On November 18, 2008, the Company, Solaris Opportunity Fund, L.P. (“Solaris”)   and Positron Corporation (“Positron”) executed and consummated a Securities Exchange Agreement whereby the Company transferred and assigned all of its rights title and interest to two notes receivable due from Positron (“Note 1” and “Note 2”) and the related pledged securities of Positron (“Pledged Shares”) to Solaris in exchange for the return of the 20,000,000 shares of the Company’s  common stock and 4,387,500 shares of the Company’s Series A Preferred Stock, to be retired and cancelled on the Company’s books and records and the retirement and satisfaction of any obligations to the advances made in the amount of $200,000 to the Company by Solaris. Simultaneously therewith, Solaris exchanged Note 1, Note 2 plus accrued interest and the Pledged Shares and the retirement and satisfaction of any obligations to the advances made to Positron Corporation in the aggregate amount of $1,155,000 for the issuance of 100,000 shares of the Company’s Series S Preferred Stock (the “Exchange”).  At December 31, 2008, the Company had not yet retired its common shares received in the Exchange and therefore those shares are being held in treasury.

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Results of Operations

For the years ended December 31, 2008 and 2007, the Company had net losses $930,529 and $658,669, respectively.   Despite significantly higher revenues during the year ended December 31, 2008 as compared to 2007, net loss increased due to an impairment charge to the carrying value of the Company’s investment in the securities of Positron Corporation.

Revenues – Revenue was generated exclusively from PET scans at Beth Israel Medical Center (“BIMC”) and totaled $613,045 and $259,985 for the years ended December 31, 2008 and December 31, 2007, respectively.  The increase is due to the minimum monthly lease payment of $51,000 that is due under the lease agreement with BIMC that was executed in May of 2007. September 2007 was the first month in which the minimum payment was recognized. Due to the uncertainty surrounding reimbursement, prior to executing the lease, the Company used an estimate of 40% for scans billed but not reimbursable and therefore revenues recognized represented only 60% of scans billed during the period.  Minimum lease payments are not dependent upon reimbursable amounts.   Costs of revenues, which consist primarily of monthly fixed costs associated with performing the scans, operating the imaging camera and CTI infusion were $424,045 and $317,801 in 2008 and 2007, respectively.  The 2008 costs reflect a full year of scans, whereas in 2007 scans were suspended between March and May pending the negotiation of the lease.  During this period the Company did not purchase rubidium necessary to operate the PET imaging camera, a cost approximating $30,000 per month. Since the Company was under contract with the rubidium supplier to make monthly purchases they were obligated to continue purchasing during the suspended months.  The Company and its supplier agreed to add the suspended months to the end of the contract period thus extending the period of the contract. However, the Company terminated the contract in December 2008 making those deferred payments due immediately.  The Company has charged those amounts to cost of scans for the year ended December 31, 2008.

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Operating Expenses – Marketing and general and administrative expenses for the year ended December 31, 2008 were $177,093 compared to $328,131 for the year ended December 31, 2007.  .For the year ended December 31, 2007, the Company charged $200,000 to operations for common stock issued for services, including $120,000 of compensation expense.  The Company did not issue any common stock for services during the year ended December 31, 2008.  General and administrative expenses for the year ended December 31, 2008 consist primarily of legal, accounting and consulting fees.

Other Income (Expense) - Interest income of $67,875 represents interest earned on notes receivable due from Positron Corporation.  Pursuant to a Securities Exchanges Agreement dated November 18, 2008, the notes and the accrued interest were exchanged for all certain common and preferred shares the Company had previously issued to Solaris Opportunity Fund, a related party.

Interest expense for the years ended December 31, 2008 and 2007, was $22,413 and $33,256, respectively.   Interest expense is related to a note payable to Cherry Creek Capital Partners, an unrelated party to whom the Company issued a 12% secured promissory note on September 11, 2006 in the amount of $300,000.

During the year ended December 31, 2007, the Company adopted the equity method of accounting for it’s investment in the securities of Positron Corporation securities.  For the years ended December 31, 2008 and 2007 the Company recorded equity in the losses of Positron of $258,351 and $219,480, respectively.

At December 31, 2008, the Company recorded an other-than-temporary impairment charge of $734,068 against the carrying value of its investment in the securities of Positron Corporation.  The Company’s wholly-owned subsidiary, PAC, holds both common and preferred shares of Positron Corporation. The fair market value of the common was determined using Positron’s quoted stock price on December 31, 2008 while the fair market value of the preferred shares was based on relative values of the same class of securities sold by Positron during recent private placements.

Discontinued Operations of Cipher Multimedia (“Cipher”)

Income from discontinued operations for the year ended December 31, 2008 was $4,521 compared to a loss of $19,986 for the same period in 2007.  No revenue was recorded by Cipher in either period.  During the year ended December 31, 2008, Cipher recorded other income of $22,009, the majority of which is attributed to debt forgiveness of amounts accrued during 2006 and 2007. Cipher’s loss for the year ended December 31, 2007 is attributable primarily to professional fees and other general and administrative expenses.

Liquidity and capital resources

At December 31, 2008, the Company had current assets of $942 and current liabilities of $535,968 compared to December 31, 2007 when the Company had current assets and current liabilities of $144,542 and $722,748, respectively.  Cash and cash equivalents at December 31, 2008 were $942.  The Company’s investment in the securities of Positron decreased to $376,167 at December 31, 2008 from $1,368,586 at December 31, 2007 as a result of recording its shares of proportionate shares of Positron losses under the equity method of accounting, and an impairment charge against the carrying value of the investment.

Current liabilities at December 31, 2008 include accounts payable and accrued liabilities of $344,198 and the of the Cherry Creek note payable of $182,710. At December 31, 2008 the Company is in default. On March 16, 2009 Cherry Creek issued a Notice of Right To Cure and Demand for Payment of all past due amounts totaling $100,278 plus late charges of $5,014.    The notice gave the Company until March 31, 2009 to pay all past due amounts. Although the Company did not make any additional payments by March 31, 2009, they are currently negotiating a resolution with Cherry Creek. However, no assurance can be given that such a resolution will be achieved or that it will be achieved on terms favorable to the Company.

The Company had net cash provided by operating activities of $273,761 for the year ended December 31, 2008 compared to net cash used in operating activities of $112,924 for the same period in 2007.  The increase in cash flow from operations is due primarily to cash received from BIMC for minimum lease payments required by the operating agreement between the Company and BIMC.

The Company used $902,875 in cash in investing activities related to the notes receivable due from Positron Corporation during the year ended December 31, 2008, as compared to $1,346,000 for the same period in 2007, all of which was also advanced to Positron.

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Net cash provided by financing activities during the year ended December 31, 2008 was $605,936 which included a total of $970,000 in equity investments and advances made by Solaris Opportunity Fund (“Solaris”), a related party. Financing activities also includes approximately $71,000 of payments to Cherry Creek against the note payable and repayment of amounts borrowed from affiliates of approximately $293,000. During the year ended December 31, 2007, the Company had cash provided by financing activities of $1,479,906 which included a $1,397,000 equity investment from Solaris, approximately $111,000 of funds advanced by Positron Corporation and $5,100 received from a shareholder.

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On December 31, 2008 the Company had an accumulated deficit of $3,547,921 and total stockholders’ deficit of $205,764.  The Company is dependent upon the success of INP and PET scanning and raising additional debt or equity financings to resolve the Company’s liquidity issues and allow it to continue to operate as a going concern.

ITEM 8. FINANCIAL STATEMENTS

The required Financial Statements and notes thereto are contained in a separate section of this report beginning with the page following the signature page.

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

Item 9A. CONTROL AND PROCEDURES

Disclosure Controls and Procedures

In accordance with Rule 13a-15(b) of the Securities Exchange Act of 1934 as amended (the “Exchange Act”), as of the end of the period covered by this Annual Report on Form 10-K, the Company’s management evaluated, with the participation of the Company’s principal executive and financial officer, the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) or Rule 15d-15(e) under the Exchange Act). Disclosure controls and procedures are defined as those controls and other procedures of an issuer that are designed to ensure that the information required to be disclosed by the issuer in the reports it files or submits under the Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. Based on their evaluation of these disclosure controls and procedures, the Company’s chairman of the board and chief executive and financial officer has concluded that that there are material weaknesses in our disclosure controls and procedures.

The material weaknesses in our disclosure control procedures are as follows:

1. Lack of formal policies and procedures necessary to adequately review significant accounting transactions.The Company utilizes a third party independent contractor for the preparation of its financial statements. Although the financial statements and footnotes are reviewed by our management, we do not have a formal policy to review significant accounting transactions and the accounting treatment of such transactions. The third party independent contractor is not involved in the day to day operations of the Company and may not be provided information from management on a timely basis to allow for adequate reporting/consideration of certain transactions. In the case of the Company’s recent restatement of the investment in Positron securities, a periodic review (not less than quarterly) and discussion of significant transactions (i.e. increasing advances to a related party) may have led to more timely adoption of the proper method of accounting.

2. Audit Committee and Financial Expert. The Company does not have a formal audit committee with a financial expert, and thus the Company lacks the board oversight role within the financial reporting process.

We intend to initiate measures to remediate the identified material weaknesses including, but not necessarily limited to, the following:

· Establishing a formal review process of significant accounting transactions that includes participation of the Chief Executive Officer, the Chief Financial Officer and the Company’s corporate legal counsel.

· Form an Audit Committee that will establish policies and procedures that will provide the Board of Directors a formal review process that will among other things, assure that management controls and procedures are in place and being maintained consistently.

Item 9A(T) CONTROL AND PROCEDURES

Internal Control Over Financial Reporting

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Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act). Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2008. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control-Integrated Framework. Based on its evaluation, our management concluded that there is a there is a significant deficiency and a material weakness in our internal control over financial reporting.

The significant deficiency relates to a lack of segregation of duties due to the small number of employees involvement with general administrative and financial matters. However, management believes that compensating controls are in place to mitigate the risks associated with the lack of segregation of duties. Compensating controls include outsourcing certain financial functions to an independent contractor.

The material weakness relates to a lack of formal policies and procedures necessary to adequately review significant accounting transactions.The Company utilizes a third party independent contractor for the preparation of its financial statements. Although the financial statements and footnotes are reviewed by our management, we do not have a formal policy to review significant accounting transactions and the accounting treatment of such transactions. The third party independent contractor is not involved in the day to day operations of the Company and may not be provided information from management on a timely basis to allow for adequate reporting/consideration of certain transactions. We intend to initiate measures to remediate the identified material weaknesses including establishing a formal review process for significant accounting transactions that includes the participation of the Company’s  management and corporate legal counsel, and establishing a formal audit committee.

This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this annual report.

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ITEM 9B.  OTHER INFORMATION.

None.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

(a) Identify Directors and Executive Officers.

The following table sets forth: (1) names and ages of all persons who presently are and who have been selected as directors of the Registrant; (2) all positions and offices with the Registrant held by each such person; (3) the term or office of each person named as a director; and (4) any period during which he or she has served a such:

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SUMMARY COMPENSATION TABLE

Name	Duration and Date of Expiration of Present Term	Position and Office with Registrant	Age and Director Since
Joseph G. Oliverio	One year December 31, 2008	Chief Executive Officer, Director	39 August 18, 2006
Corey Conn	One year December 31, 2008	Chief Financial Officer, Director	47 August 19, 2003
Neil Sy	One year December 31, 2008	Chairman Director	39 August 19, 2005

There is no understanding or arrangement between any directors or any other person or persons pursuant to which such individual, was or is to be, selected as a director or nominee of the Registrant.

Business Experience

Joseph G. Oliverio – Age 39, Mr. Oliverio commenced service as the Company’s Chief Executive Officer and was also appointed to serve on the Company’s Board of Directors. Mr. Oliverio also serves as the President of Positron Corporation, a publicly-owned Texas corporation, and affiliate of the Registrant. Mr. Oliverio was the former Chief Operating Officer of Michael E. Merhige, M.D., LLC, a well known coronary disease reversal and prevention center in Niagara, New York. Mr. Oliverio earned an MBA from the University of Phoenix and a BS in Nuclear Medicine Technology from State University of New York at Buffalo. Mr. Oliverio is a certified nuclear medicine technologist.

Corey Conn - Age 47, Chief Executive Officer, Director: Mr. Conn is a co-founder of Cipher Multimedia, Inc. Mr. Conn also serves as the Chief Financial Officer and director of Positron Corporation, a publicly-owned Texas corporation, an affiliate of the Registrant. Since September, 1999. Mr. Conn has served as Managing Director of Virtual Partnerships, LLC, a business development and business strategy consulting firm. Previously, Mr. Conn was Vice President of Business Development at iLX, an e-business and e-transformation services provider from June 1996 to September 1999.

Neil Sy - Age 39, Chairman, Director: Mr. Sy is currently engaged in capital raising ventures including consumer medicine and real estate properties in Chicago, Illinois and Las Vegas, Nevada. Prior thereto and from 1997 to 2003, Mr. Sy was a member of the Chicago Board Options Exchange as a market maker. Prior thereto, and from 1992 to 1997, Mr. Sy worked on the Chicago Board Options Exchange as a trade manager. Mr. Sy received a Bachelor’s Degree in Business Administration from Southern Illinois University.

Directorship

Except as disclosed in this Item, each director of the Registrant has indicated to the Registrant that he is not presently a director in any other Registrant with a class of securities registered pursuant to Section 12 of the 34 Act or subject to the requirements of Section 15(d) of such act or any investment company registered under the Investment Company Act of 1940.

(b) Identification of Certain Significant Employees

The Registrant does not presently employ any person as a significant employee who is not an executive officer but who makes or is expected to make a significant contribution to the business of the Registrant.

(c) Family Relationships

No family relationship exists between any director or executive officer of the Registrant.

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(d) Involvement in Certain Legal Proceedings

No event listed in Sub-paragraphs (1) through (4) of Subparagraph (d) of Item 401 of Regulation S-K, has occurred with respect to any present executive officer or director of the Registrant or any nominee for director during the past five years which is material to an evaluation of the ability or integrity of such director or officer.

Compliance with Section 16(a) of the Exchange Act

Section 16(a) of the Exchange Act, as amended, requires the Registrant's executive officers and directors and persons who own more than 10% of a registered class of the Registrant's equity securities, to file with the SEC initial statements of beneficial ownership, reports of changes in ownership and annual reports concerning their ownership, of Common Stock and other equity securities of the Registrant on Forms 3, 4, and 5, respectively. Executive officers, directors and greater than 10% shareholders are required by SEC regulations to furnish the Registrant with copies of all Section 16(a) reports they file. To the Registrant's knowledge, all beneficial owners of greater than 10% of Registrant's Common Stock have complied with all Section 16(a) filing requirements applicable to them during the Registrant's most recent fiscal year.

Code of Ethics

The Registrant has adopted its Code of Ethics and Business Conducts that applies to all officers, directors, and employees of the Registrant.

ITEM 11. EXECUTIVE COMPENSATION.

The following Summary Compensation Table shows certain compensation information for each of the Named Executive Officers.  Compensation data is shown for the years ended December 31, 2008 and 2007.  This information includes the dollar value of base salaries, bonus awards, the number of stock options granted, and certain other compensation, if any, whether paid or deferred.

Name and Principal Position	Year	Salary		Bonus		Stock Awards (a)		Option Awards		Nonequity incentive plan compensation		Non-qualified deferred  comp earnings		All Other Compensation (b)		Total
Joseph G. Oliverio	2008		—		—		—		—		—		—		—		—
Chief Executive Officer, Director	2007		—		—	$	120,000		—		—		—		—	$	120,000
Corey Conn	2008		—		—		—		—		—		—		—		—
Chief Financial Officer, Director	2007		—		—		—		—		—		—	$	34,000	$	34,000
Neil Sy	2008		—		—		—		—		—		—		—		—
Chairman, Director	2007		—		—		—		—		—		—		—		—

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

(b)           Includes a lump sum cash payment of $24,000 and on March 14, 2007, the Company issued a total of 500,000 shares of the Registrant’ subsidiary, Cipher Multimedia, Inc. common stock, par value $0.001, valued at $0.02 per share.

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Equity Compensation Plan Information

The following table summarizes share and exercise information about the Company's equity compensation plans as of December 31, 2008.

Plan Category	Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights		Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights		Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (excluding securities included in 1st column)
All Equity Compensation Plans Approved by Security Holders		—		—		5,000,000

2007 Stock Option Plan

Imagin Molecular Corporation’s Board administers the 2007 Stock Option Plan (the "2007 Plan"), which was adopted by the Board effective May 14, 2007.  The 2007 Plan provides for the grant stock options to directors, officers, employees and consultants.  The administrator is authorized to determine the terms of each award granted under the plan, including the number of shares, exercise price, term and exercisability.   Options may not be exercised more than five years after the date of grant.  In the case of an optionee who is a director or officer of the Company, upon termination of employment for any reason other than death or termination for cause, each option may be exercised for a period of 90 days; to the extent it is exercisable on the date of termination. In the case of an optionee who is an employee or consultant of the Company, upon termination of employment for any reason other than death or termination for cause, each option may be exercised for a period of 60 days; to the extent it is exercisable on the date of termination.    In the case of a termination due to death, an option will remain exercisable for a period of one year; to the extent it is exercisable on the date of termination.  . In the case of a termination due to cause, any unexercised options shall expire immediately.  A total of 5,000,000 shares of Common Stock have been authorized for issuance under the 2007 Plan.  As of December 31, 2008, no shares had been issued to under the 2007 Plan.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

(a) Security Ownership of Certain Beneficial Owners. The information is furnished as of December 31, 2008, as to the number of shares of the Registrant's Common Stock, $.001 par value per share, owned beneficially, or known by the Registrant to own beneficially, more than 5% of any class of such security:

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Name and Address  of Beneficial Owner	Amount and Nature of Beneficial Ownership			Percentage of Class(a)
Patrick G. Rooney		12,407,625			16.8	%
Cipher Multimedia, Inc (c)		1,900,000	(b)		2.6	%

(a) Based on 73,663,284 shares of Common Stock outstanding on April 14, 2009.  

(b) Represents shares owned directly.  The address for Cipher Multimedia, Inc is 3801 N. Washington Street Oak Brook, Illinois 60523.

(c) Patrick G. Rooney is the principal stockholder of Cipher Multimedia, Inc. and holds dispositive voting power.

(b) Security Ownership of Management. The following information is furnished as of December 31, 2008, as to the number of shares of the Registrant's Common Stock, $.001 par value per share owned beneficially by each executive officer and director of the Registrant and by all executive officers and directors as a group:

Name and Address Of Beneficial Owner	Amount and Nature of Beneficial Ownership		Percentage of Class
Joseph G. Oliverio		3,000,000		4.1	%
3 Grant Square # 315.
Hinsdale, IL 60521
Corey Conn		800,000		1.1	%
3 Grant Square # 315.
Hinsdale, IL 60521
Neil Sy		360,000		.5	%
3 Grant Square # 315
Hinsdale, IL 60521
All Officers and Directors		4,160,000		5.7	%
as a Group

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

During the year ended December 31, 2007, the Company advanced funds to Positron Corporation and its wholly-owned subsidiary Imaging Pet Technologies (collectively “Positron”).  Imagin’s  Chief Executive Officer and Director, Joseph Oliverio and its Chief Financial Officer and Director, Corey Conn are both officers and directors of Positron Corporation..  On April 10, 2008, the advances were formalized into a promissory note (“Note 1”), with interest at 8%, due on December 31, 2008 and secured by a pledge of 100,000,000 shares of Positron’s common stock (the “Security”). During the nine months ended September 30, 2008, the Company advanced Positron additional funds in the amount of $835,000.  On August 18, 2008, those advances were formalized into a promissory note (“Note 2”), with interest at 8%, due on December 31, 2008. The August 18, 2008 note is also secured by the Security.  Accrued interest due to the Company for the note was $67,875 at September 30, 2008.

On November 18, 2008, the Company, Solaris Opportunity Fund, L.P. and Positron Corporation executed and consummated a Securities Exchange Agreement whereby the Company transferred and assigned all of its rights title and interest to Note 1, Note 2 and the Pledged Shares to Solaris in exchange for the return of the 20,000,000 shares of the Company’s  common stock and 4,387,500 shares of the Company’s Series A Preferred Stock, to be retired and cancelled on the Company’s books and records and the retirement and satisfaction of any obligations to the advances made in the amount of $200,000 to the Company by Solaris. Simultaneously therewith, Solaris exchanged Note 1, Note 2 plus accrued interest and the Pledged Shares and the retirement and satisfaction of any obligations to the advances made to Positron Corporation in the aggregate amount of $1,155,000 for the issuance of 100,000 shares of the Company’s Series S Preferred Stock (the “Exchange”).  At December 31, 2008, the Company had not yet retired its common shares received in the Exchange and therefore those shares are being held in treasury.

.  

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ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The following table sets forth the aggregate fees billed to us for fiscal years ended December 31, 2008 and 2007 by our auditors, Frank L. Sassetti & Co.

	2008		2007
Audit Fees (1)	$	35,485	$	19,100
Non-Audit Fees:
Audit Related Fees (2)		1,290		—
Tax Fees (3)		2,100		—
Total Fees paid to auditors	$	38.875	$	19,100

(1) Audit fees consist of fees billed for professional services rendered for the audit of the Registrant's annual financial statements and review of the interim consolidated financial statements included in quarterly reports and services that are normally provided in connection with statutory and regulatory filings or engagements.

(2) Audit-Related fees consist of fees billed for consultation regarding financial accounting and reporting matters.

(3) Tax fees consist of fees billed for professional services rendered for tax compliance, tax advice and tax planning (domestic and international). These services include assistance regarding federal, state and international tax compliance, acquisitions and international tax planning.

The Board of Directors has considered the role of Frank L. Sassetti & Co. in providing certain tax services to Imagin and has concluded that such services are compatible with Frank L. Sassetti Co.’s independence as our auditors. In addition, the Board of Directors has approved providing certain tax services since the effective date of the SEC rules. The rule states that an auditor is not independent of an audit client if the services it provides to the client are not appropriately approved. The Board of Directors will continue to pre-approve all audit and permissible non-audit services provided by the independent auditors until an audit committee is formed which will then be responsible for approving audit fees. We are looking for new board members that would be qualified to serve on an audit committee. When the audit committee is formed one of their first assignments will be to propose to the board a code of ethics.

The Board of Directors has adopted a policy for the pre-approval of services provided by the independent auditors, pursuant to which it may pre-approve any service consistent with applicable law, rules and regulations. Under the policy, the Board of Directors may also delegate authority to pre-approve certain specified audit or permissible non-audit services to one or more of its members, including the Chairman. A member to whom pre-approval authority has been delegated must report its pre-approval decisions, if any, to the Board of Directors at its next meeting, and any such pre-approvals must specify clearly in writing the services and fees approved. Unless the Board of Directors determines otherwise, the term for any service pre-approved by a member to whom pre-approval authority has been delegated is twelve months.

ITEM 15. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits:

EXHIBITS

31.1	Chairman of the Board Certification of Periodic Financial Report Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*
31.2	Chief Financial Officer Certification of Periodic Financial Report Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*
32.1	Chairman of the Board Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002#
32.2	Chief Financial Officer Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002#
*	Filed herewith
#	Furnished herewith

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SIGNATURES

Pursuant to the requirements of the Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned persons, and in the capacities so indicated on April 15, 2009.

Imagin Molecular Corporation
By:	/s/ Joseph G. Oliverio
	Joseph G. Oliverio
	Chief Executive Officer,
	Director
By:	/s/Corey Conn
	Corey Conn
	Chief Financial Officer,
	Director

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Frank L. Sassetti & Co.

Certified Public Accountants

The Board of Directors

Imagin Molecular Corporation

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We have audited the accompanying consolidated balance sheets of Imagin Molecular Corporation and Subsidiaries as of December 31, 2008 and 2007, and the related consolidated statements of operations, stockholders' equity, and cash flows for the years then ended.  These financial statements are the responsibility of the Company's management.  Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Imagin Molecular Corporation and Subsidiaries as of December 31, 2008 and 2007, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.  As discussed in Note 1 to the financial statements, the Company has a significant accumulated deficit which raises substantial doubt about the Company's ability to continue as a going concern.  Management's plans in regard to these matters are described in Note 1.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ Frank L. Sassetti & Co.

April 15, 2009

Oak Park, Illinois

6611 W. North Avenue * Oak Park, Illinois 60302 * Phone (708) 386-1433 * Fax (708) 386-0139

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IMAGIN MOLECULAR CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2008 AND 2007

ASSETS
	2008			2007
Current assets:
Cash	$	942		$	24,120
Accounts receivable, net of allowance of $51,000 and $0		--			120,422
Total current assets		942			144,542
Property and equipment, net		183,153			208,909
Other assets:
Due from related party		--			1,346,000
Investment in securities of Positron Corporation		376,167			1,368,586
Total assets	$	560,262		$	3,068,037
LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY
Current liabilities:
Accounts payable	$	64,046		$	104,951
Advances from shareholder		5,200			5,100
Accrued expenses		280,152			187,367
Current portion of promissory note		182,710			128,580
Advances from related party		3,860			296,750
Total current liabilities		535,968			722,748
Promissory note payable – less current portion		--			125,404
Majority interest in consolidated subsidiary		230,058			216,245
Total liabilities		766,026			1,064,397
Stockholders’ (deficit) equity:
Preferred Stock, $0.001 par value; 5,000,000 shares Authorized, 0 and 2,362,500 shares issued and outstanding		--			2,362
Common stock, $0.001 par value; 95,000,000 shares authorized, 93,663,284 and 93,663,284 shares issued, and 73,663,284 and 93,663,284 outstanding, on December 31, 2008 and 2007.		93,663			93,663
Additional paid-in capital		3,628,794			4,525,007
Accumulated deficit		(3,547,921	)		(2,617,392	)
Treasury stock		(380,300	)		--
Total stockholders’ (deficit) equity		(205,764	)		2,003,640
Total liabilities and stockholders’ equity	$	560,262		$	3,068,037

See accompanying notes to financial statements.

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IMAGIN MOLECULAR CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

	2008		2007
Revenues	$	613,045	$	259,985
Costs of revenues		424,045		317,801
Gross profit (loss)		189,000		(57,816)
Operating expenses:
Marketing, general and administrative		177,093		328,131
Total operating expenses		177,093		328,131
Income (loss) from operations		11,907		(385,947)
Other income (expenses):
Interest income		67,875		—
Interest expense		(22,413)		(33,256)
Equity in losses of Positron Corporation		(258,351)		(219,480)
Impairment of investment in securities of Positron Corporation		(734,068)		—
Total other expense		(946,957)		(252,736)
Loss from continuing operations before income taxes		(935,050)		(638,683)
Income taxes		—		—
Loss from continuing operations		(935,050)		(638,683)
Gain (loss) from discontinued operations		4,521		(19,986)
Net loss	$	(930,529)	$	(658,669)
Per share amounts:
From continuing operations	$	(.0102)	$	(.0080)
From discontinued operations	$	(.0000)	$	(.0002)
Net loss	$	(.0102)	$	(.0082)
Weighted average common Shares		91,313,557		80,464,197

See accompanying notes to financial statements.

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IMAGIN MOLECULAR CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

	Series A Preferred						Common Stock
	Number of						Number of					Additional Paid			Accumulated			Treasury
	Shares			Amount			Shares			Amount		in Capital			Deficit			Stock			Total
December 31, 2006		—		$	—			67,276,617		$	67,277	$	2,826,755		$	(1,958,723	)	$	—		$	935,309
Common shares issued for services		—			—			5,000,000			5,000		195,000			—			—			200,000
Common shares issued for debt repayment		—			—			1,386,667			1,386		128,614			—			—			130,000
Common shares issued for cash								20,000,000			20,000		380,000			—			—			400,000
Preferred shares issued for cash		2,362,500			2,362			—			—		994,638			—			—			997,000
Net loss		—			—			—			—		—			(658,669	)		—			(658,669	)
December 31, 2007		2,362,500		$	2,362			93,663,284		$	93,663	$	4,525,007		$	(2,617,392	)	$	—		$	2,003,640
Preferred shares issued for cash		2,025,000			2,025			—			—		767,975			—			—			770,000
Notes receivable plus accrued interest due from affiliated company exchanged for outstanding securities		(4,387,500	)		(4,387	)		(20,000,000	)		—		(1,664,188	)		—			(380,300	)		(2,048,875	)
Net loss		—			—			—			—		—			(930,529	)		—			(930,529	)
December 31, 2008		—		$	—			73,663,284		$	93,663	$	3,628,794		$	(3,547,921	)		(380,300	)	$	(205,764	)

See accompanying notes to financial statements.

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IMAGIN MOLECULAR CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

	2008			2007
Cash flows from operating activities::
Loss from continuing operations	$	(935,050	)	$	(638,683	)
Income (loss) from discontinued operations		4,521			(19,986	)
Net loss		(930,529	)		(658,669	)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation expense		25,757			25,757
Common stock issued for services		—			200,000
Subsidiary common stock issued for services		—			30,000
Equity in losses of Positron Corporation		258,351			219,480
Impairment of investment in securities of Positron Corporation		734,068			—
Majority interest in loss of consolidated subsidiary		13,812			1,523
Changes in operating  assets and liabilities
Accounts receivable		120,422			43,117
Accounts payable  and accrued liabilities		51,880			25,868
Net cash provided by (used in) operating activities		273,761			(112,924	)
Cash flows from  investing activities:
Advances to related party		(902,875	)		(1,346,000	)
Net cash used in investing activities		(902,875	)		(1,346,000	)
Cash flows from financing activities:
Advances from shareholders		100			5,100
Advances from related party		(292,890	)		111,365
Payment of notes payable		(71,274	)		(33,559	)
Proceeds from issue of common stock		—			400,000
Proceeds from deposits on and issues of preferred stock		970,000			997,000
Net cash provided by financing activities		605,936			1,479,906
Net increase (decrease) in cash		(23,178	)		20,982
Cash at beginning of period		24,120			3,138
Cash at end of period	$	942		$	24,120
Supplemental cash flow information:
Interest paid	$	17,861		$	28,256
Income taxes paid	$	—		$	—

See accompanying notes to financial statements.

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IMAGIN MOLECULAR CORPORATION

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

(CONTINUED)

Supplementary Schedule of Noncash Transactions

2008

On November 18, 2008, Solaris, Positron and the Company executed and consummated a Securities Exchange Agreement whereby the Company transferred and assigned all of its rights title and interest to notes receivable and accrued interest totaling $2,248,875 due from Positron in exchange for the return of the 20,000,000 shares of the Company’s common stock and 4,387,500 shares of Series A to be retired and cancelled on the Company’s books and records and the retirement and satisfaction of any obligations to the advances made in the amount of $200,000.

2007

On January 10, 2007 and March 12, 2007, the Company issued 586,667 and 800,000 shares of common stock, par value $0.001, respectively, to two non-affiliated shareholders in final satisfaction of a $130,000 note payable made to the Company. The shares were valued at $0.06 per share.

On March 14, 2007, the Company issued 7,448,673 shares of its subsidiary, Cipher Multimedia, Inc. common stock, par value $0.001 to an affiliated shareholder in final satisfaction of $148,973 of advances and other notes payable made to the Company. The shares were valued at $0.02 per share.

On March 14, 2007, the Company issued 1,787,500 shares of its subsidiary, Cipher Multimedia, Inc. common stock, par value $0.001 to a non-affiliated shareholder in final satisfaction of $35,750 of interest payable related to a note payable made to the Company. The shares were valued at $0.02 per share.

On March 14, 2007, the Company issued a total of 1,500,000 shares of its subsidiary, Cipher Multimedia, Inc. common stock, par value $0.001 to three employees, including 500,000 shares to Corey N. Conn, the Registrant’s Chief Financial Officer, pursuant to their employment agreements. The shares were valued at $0.02 per share.

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

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

See accompanying notes to financial statements.

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IMAGIN MOLECULAR CORPORATION

NOTES TO CONSOLIDATED STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

NOTE 1. BUSINESS ORGANIZATION

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

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

Positron Acquisition Corp.

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

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

Imagin Nuclear Partners Corporation

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

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

On December 31, 2008, INP advised BIMC that it had breached the Agreement for failure to make certain payments under the Agreement.  In addition, INP advised BIMC that it was seeking payment for certain inpatient scans that BIMC had requested it perform on behalf of BIMC patients and had failed to reimburse INP for.

INP also asserted other claims in the aggregate amount of $318,144 and ceased supplying rubidium to BIMC thereafter.  Also in the first quarter 2009, BIMC asserted that INP had breached the Agreement and demanded that INP remove the scanner located therein.  INP is seeking a purchaser or another business opportunity to implement the device, however, no assurance can be given that such an agreement will be reached or if reached that it will be on terms favorable to the Company.

NOTE 2.  GOING CONCERN

These financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business.  The Company has sustained losses since inception and has accumulated losses of $3,547,921 and total stockholders’ deficit of $205,764 as of December 31, 2008.  The Company’s ability to continue as a going concern is dependent in part upon  the success of INP and its ability to execute  lease or similar agreements with  facilities that perform PET imaging for patients.  In addition the Company will need to raise additional capital to continue operations. Management plans to raise equity capital to finance the operating and capital requirements of the Company.

 

 The Company has made a significant investment into the securities of Positron Corporation, a publicly owned Texas Corporation and affiliate of the Company (“Positron”).  As of December 31, 2008, the Company held 4,000,000 shares of Positron’s common stock and 722,358 shares of Positron’s Series B Convertible Preferred stock.

While the Company is expending its best efforts to achieve it’s operating goals, there is no assurance that such activity will generate sufficient funds to accomplish its business purpose, or that the Company’s business plan will be successful. Furthermore, there can be no assurance that amounts invested in and advanced to Positron Corporation will ever be realized.

NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation and Nature of Operations

For the years ended December 31, 2008 and 2007, the financial statements include the accounts and transactions of Cipher Multimedia, Inc. (a discontinued operation), Positron Acquisition Corp. and Imagin Nuclear Partners Corporation (subsidiaries). All Intercompany transactions and balances have been eliminated.

.

Cash and Cash Equivalents

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

36

Revenue recognition

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

Loss Per Share

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

Use of Estimates

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

Income Taxes

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

In addition, the Company follows the provisions of   FASB Interpretation No. 48,"Accounting for Uncertainty in Income Taxes," an interpretation of FASB Statement No.109 ("FIN 48"). FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. A company must determine whether it is "more-likely-than-not" that a tax position will be sustained upon examination, including resolution of any related appeals or litigation procedures, based on the technical merits of the position.  Once it is determined that a position meets the more-likely-than-not recognition threshold, the position is measured to determine the amount of benefit to recognize in the financial statements. Review of the Company’s possible tax for 2008 and 2007 did not result in any positions requiring disclosure.  Should the Company need to record interest and/or penalties related to uncertain tax positions, or other tax authority assessments, it would classify such expenses as part of the income tax provision.

Fair Value of Financial Instruments

The Company measures its financial assets and liabilities in accordance with generally accepted accounting principles.  SFAS No. 157, “Fair Value Measurements,” requires certain disclosures regarding the fair value of financial instruments.  For certain of the Company’s financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, the carrying amounts approximate fair value due to their short maturities.

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements,” (SFAS 157). This statement defines fair value, establishes a framework for measuring fair value and expands the related disclosure requirements.  The statement indicates, among other things, that a fair value measurement assumes that the transaction to sell an asset or transfer a liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability based upon an exit price model.

SFAS No. 157 prescribes a fair value hierarchy in order to increase consistency and comparability in fair value measurements and related disclosures.  The hierarchy is broken down into three levels based on the reliability of inputs as follows:

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Level 1—Valuations based on quoted prices in active markets for identical assets.  Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these products does not entail a significant degree of judgment.

Level 2—Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, directly or indirectly.  Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3—Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

In accordance with SFAS 157, the following table represents the Company’s fair value hierarchy for its  investments in securities of Positron Corporation (“Positron”) measured at fair value on a recurring basis as of December 31, 2008:

 

Securities Owned	Level 1		Level 2		Level 3		Total
Investment securities of Positron Corporation	$	80,000	$	296,167	$	--	$	376,167
Total	$	80,000	$	296,167	$	--	$	376,167

Fair market value of the Level 1 securities were determined by applying the quoted stock price at December 31, 2008 to the 4,000,000 shares of common stock portion component of the securities.  At December 31, 2008 Positron’s quoted stock price was $0.02 per share.

Fair market value of the Level 2 securities were determined by applying the relative per share fair market of the 722,358 shares of Series B Preferred Stock component of the investment. The fair market value was based on the price per share offered by Positron in its most recent private placement of Series B securities.

The changes in Level 1 and 2 assets measured at fair value on a recurring basis for the year ended December 31, 2008 were:

	Fair Value at December 31, 2007		Total Unrealized Losses			Other Adjustments To Assets			Fair Value at December 31, 2008
Level 1 securities	$	272,000	$	(140,588	)	$	(51,412	)	$	80,000
Level 2 securities	$	1,096,586	$	(593,480	)	$	(206,939	)	$	296,167
Total	$	1,368,,586	$	(734,068	)	$	(258,351	)	$	376,167

New Accounting Pronouncements

 In December 2007, the FASB issued SFAS No. 141(R),'Business Combinations - Revised, that improves the relevance, representational faithfulness, and comparability of the information that a reporting entity provides in its financial reports about a business combination and its effects. To accomplish that, this statement establishes principles and requirements how the acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any non-controlling interest in the acquiree, recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase, and determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. The changes to current practice resulting from the application of SFAS No. 141(R) are effective for financial statements issued for fiscal years beginning after December 15, 2008. The adoption of SFAS No. 141(R) before December 15, 2008 is prohibited. The Company has not determined the effect, if any, that may result from the adoption of SFAS No. 141(R) on its financial statements.

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

In April 2008, the FASB issued FSP No. 142-3, Determination of the Useful Life of Intangible Assets. FSP 142-3 amends the factors an entity should consider in developing renewal or extension assumptions used in determining the useful life of recognized intangible assets under SFAS 142, Goodwill and Other Intangible Assets, and adds certain disclosures for an entity’s accounting policy of the treatment of the costs, period of extension, and total costs incurred.  FSP 143-3 must be applied prospectively to intangible assets acquired after January 1, 2009.  The Company is currently evaluating the impact that FSP 142-3 will have on its financial position or results of operations.

In May 2008, the Financial Accounting Standards Board (the “FASB”) issued FAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles” (“FAS 162”). This statement identifies the sources of accounting principles and the framework for selecting the principles used in the preparation of financial statements of nongovernmental entities that are presented in accordance with GAAP. With the issuance of this statement, the FASB concluded that the GAAP hierarchy should be directed toward the entity and not its auditor, and reside in the accounting literature established by the FASB as opposed to the American Institute of Certified Public Accountants (AICPA) Statement on Auditing Standards No. 69, “The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles.” This statement is effective 60 days following the SEC’s approval of the Public Company Accounting Oversight Board amendments to AU Section 411, “The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles.” The adoption of FAS 162 is not expected to have a material impact on the Company’s results from operations or financial position.

Management does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying financial statements.

NOTE 4. CIPHER MULTIMEDIA INC. REORGANIZATION / DISCONTINUED OPERATIONS

On March 13, 2007, the Registrant reorganized its wholly-owned subsidiary Cipher Multimedia, Inc., an <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />Illinois corporation (“Cipher”) as a Nevada corporation via merger with Cipher Multimedia, Inc., a Nevada corporation (“Cipher-NV”).  In accordance with the Plan of Merger, each ten shares of Cipher were exchanged for one share of Cipher-NV common stock.   On March 14, 2007, Cipher settled obligations with its two largest creditors by retiring $148,973 in obligations to Patrick Rooney, the Registrant’s former chairman and Chief Executive officer and Cipher’s founder, for 7,448,673 shares of Cipher-NV common stock, and retiring $35,750 of interest payable to a third-party in exchange for the issuance of 1,787,500 shares of Cipher’s common stock.  On March 20, 2007, realizing that Cipher’s software encryption business no longer fit the Registrant’s business model of medical imaging services, the Registrant’s Board of Directors resolved to spin off the 3,513,200 shares of Cipher common stock held by the Registrant as a special dividend to its Shareholders of record as of March 26, 2007.<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

After the merger between Cipher and Cipher-NV, the Registrant no longer holds a majority of the common stock of the reorganized subsidiary, Cipher-NV.   However, in applying the requirements of Financial Accounting Standards Board Interpretation No. 46, as revised, (“FIN 46(R)”), the Registrant believes itself to be the primary beneficiary as evidenced by continued management control over the operations of the subsidiary. This being the case, the operations of Cipher-NV for the years ended December 31, 2008 and 2007 continue to be consolidated in the Registrant’s financial statements and are reflected as discontinued operations.

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Summarized financial information for discontinued operations for the years ended December 31, 2008 and 2007 were as follows:

	December 31, 2008		December 31, 2007
Operating expenses	$	3,676	$	29,990
Other expenses (income)		(22,009)		(11,527)
Income (loss) before majority interest		18,333		(18,463)
Majority interest		(13,812)		(1,523)
Net income (loss)	$	4,521	$	( 19,986)
Total assets	$	--	$	846
Total liabilities		230,908		236,603
Majority interest		15,335		1,523
Stockholders’ deficit		(231,236)		(235,757)

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NOTE 5.  RELATED PARTIES AND SECURITIES EXCHANGE AGREEMENT

Between May 2007 and March 2008, Solaris Opportunity Fund, L.P. (“Solaris”) made equity investments in the Company in the amount of $2,167,000.  The Company issued Solaris 20,000,000 common shares and 4,387,500 shares of Series A Preferred Stock.  Pursuant to the terms of a Securities Exchange Agreement dated November 18, 2008 (see discussion below), the Company exchanged two notes receivable plus accrued interest due from Positron Corporation and reacquired all the outstanding common and preferred stock issued to Solaris.  In addition, in June 2008 Solaris advanced the Company an additional $200,000. This advanced was also settled upon execution of the Securities Exchange Agreement dated November 18, 2008.

During the year ended December 31, 2007, the Company advanced funds to Positron Corporation and its wholly-owned subsidiary Imaging Pet Technologies (collectively “Positron”).  Imagin’s  Chief Executive Officer and Director, Joseph Oliverio and its Chief Financial Officer and Director, Corey Conn are both officers and directors of Positron Corporation..  On April 10, 2008, the advances were formalized into a promissory note (“Note 1”), with interest at 8%, due on December 31, 2008 and secured by a pledge of 100,000,000 shares of Positron’s common stock (the “Security”). During the period January 1 – August 18,   2008, the Company advanced Positron additional funds in the amount of $835,000.  On August 18, 2008, those advances were formalized into a promissory note (“Note 2”), with interest at 8%, due on December 31, 2008. The August 18, 2008 note is also collateralized by the Security.  Accrued interest due to the Company for the note was $67,875 at September 30, 2008.

Securities Exchange Agreement among Positron Corporation, Imagin Molecular Corporation and Solaris Opportunity Fund, L.P.

On November 18, 2008, the Company, Solaris Opportunity Fund, L.P. and Positron Corporation executed and consummated a Securities Exchange Agreement whereby the Company transferred and assigned all of its rights, title and interest to Note 1, Note 2 and the Pledged Shares to Solaris in exchange for the return of the 20,000,000 shares of the Company’s  common stock and 4,387,500 shares of the Company’s Series A Preferred Stock, to be retired and cancelled on the Company’s books and records and the retirement and satisfaction of any obligations to the advances made in the amount of $200,000 to the Company by Solaris. Simultaneously therewith, Solaris exchanged Note 1, Note 2 plus accrued interest and the Pledged Shares and the retirement and satisfaction of any obligations to the advances made to Positron Corporation in the aggregate amount of $1,155,000 for the issuance of 100,000 shares of the Company’s Series S Preferred Stock (the “Exchange”).  At December 31, 2008, the Company had not yet retired its common shares received in the Exchange and therefore those shares are being held in treasury.

Advances from shareholder and related parties

Patrick G. Rooney, the Company’s former Chairman, President and Chief Executive Officer, advanced funds to finance the Company’s working capital requirements. On December 31, 2008 and 2007 advances and loans, including accrued interest, made to the Company by Mr. Rooney totaled $5,200 and $5,100, respectively.

Advances from related parties at December 31, 2008 and 2007 consisted of the following:

	December 31, 2008		December 31, 2007
Positron Corporation and Subsidiaries	$	3,860	$	296,750

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

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

In a second stage of the financing IDC agreed to purchase additional secured convertible promissory notes in the aggregate principal amount of $1,300,000. These notes were to be purchased over a six and a half month period, commencing July 15, 2004. These notes are due and payable on May 21, 2006, the due date was subsequently extended to September 30, 2006. These notes are initially convertible into new shares of Series D Preferred Stock that, in turn is convertible into an aggregate of 52,000,000 shares of Positron common stock. As of June 30, 2005, principal of $1,208,500 has been advanced related to these notes. On June 30, 2005, IDC converted $575,000 of these promissory notes into shares of Series D Preferred Stock that, in turn were converted into 23,000,000 shares of the Positron common stock. This conversion reduced the principal owed under these promissory notes from $1,208,500 to $633,500. On October 21, 2005, $770,000 of unpaid principal and interest was converted into 770,000 shares of Positron’s Series C Convertible Preferred Stock.

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On September 30, 2006 the Company converted $818,066 of principal and interest outstanding on the Series D Convertible Promissory Notes and the 770,000 Shares of Series C into 762,358 shares of Positron’s Series B Convertible Preferred Stock, par value $1.00 per share (the “Series B”) and subsequently converted 40,000 Series B Preferred Stock into 4,000,000 shares of common stock, par value $0.01.  Each share of Series B is convertible into 100 shares of Positron Corporation common stock and has 100 votes on all matters which Positron shares are entitled to vote.  Due to the restrictions on sale or transfer of these securities and the significant number of underlying common shares relative to the issuers’ outstanding common shares, management believes that any adjustment of its investment to fair value under FAS 115 would result in an overstatement of the value of the investment. As such the securities are valued at the previous carrying value of the note receivable and accrued interest at the date of conversion. In considering the guidance of paragraph 17 of APB 18 with respect to the investment in Positron, and events and transactions occurring during the third quarter of 2007(see discussion below) as well as the current relationship between the Company and Positron, the Company adopted the equity method of accounting with respect to the Positron securities during the third quarter of 2007.

At December 31, 2007, the Company owned approximately 4% of Positron’s outstanding common stock and 722,358 Series B Preferred Shares or approximately 11.5% of the class.  Despite holdings of less than 20% of the voting stock of Positron, management believes that events and transactions occurring during the second half of 2007 and continuing into the first quarter of 2008 has given the Company the ability to exercise an increasing degree of influence over certain operating and financial policies.  The events and transactions include advances of funds by the Company to Positron beginning in July 2007 and totaling $1,346,000 at December 31, 2007. The advances were subsequently converted to a note receivable that is collateralized by Positron common stock.  In addition to the financing, on January 2, 2008 Corey Conn, who serves as Chief Financial Officer for both companies, was elected to the Positron Board of Directors. The two companies share one other common director; however Positron has four directors that are not on the Company’s Board.

Based on its percentage of ownership of Positron common stock, for the year ended December 31, 2008 and 2007, the Company recorded equity in the losses of Positron of $258,351 and $219,480, respectively.  Additionally at December 31, 2008, the Company recorded an impairment charge of $734,068 against the carrying value of the investment.  The impairment charge was computed by comparing current fair market value of the investment with the carrying value.

At December 31, 2008 the investment in the securities of Positron had an estimated fair market value of $376,167.

Summarized financial information for Positron for the years ended December 31, 2008 and 2007 follows:

	2008			2007
Revenues	$	2,126,000		$	3,309,000
Loss from operations		(8,327,000	)		(7,212,000	)
Net loss		(8,975,000	)		(7,780,000	)
Loss per share	$	(0.07	)	$	(0.08	)
Weighted average shares outstanding		134,556,000			95,875,000

	2008			2007
Current assets	$	1,033,000		$	2,071,000
Total assets		1,104,000			2,277,000
Current liabilities		4,940,000			4,147,000
Total liabilities		7,654,000			7,220,000
Stockholders’ deficit		(6,550,000	)		(4,943,000	)
Common shares outstanding		160,240,384			102,555,302

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The underlying common shares related to anti-dilutive securities not included in Positron’s net loss per share calculation as of December 31, 2008 were as follows:

Convertible Series A Preferred Stock	457,000
Convertible Series B Preferred Stock	621,486,000
Convertible Series G Preferred Stock	11,139,000
Convertible Series S Preferred Stock	1,000,000,000
Stock Warrants	60,588,000
Stock Options	19,425,000
	1,713,095,000

NOTE 7.  PROPERTY AND EQUIPMENT

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

	Dec. 31, 2008		Dec. 31, 2007
Machinery and equipment	$	234,760	$	234,760
Computers and software		9,442		9,442
Subtotal		244,202		244,202
Less: accumulated depreciation		(61,049)		(35,293)
Total	$	183,153	$	208,909

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NOTE 8.  NOTES PAYABLE

On September 11, 2006, the Company issued a 12% secured promissory note to Cherry Creek Capital Partners (“Cherry Creek”), an unrelated party, in the amount of $300,000.  Pursuant to the terms of the note, commencing on October 1, 2006, as amended the Company made a payment of $17,566 in November 2006 and is required to make 30 consecutive monthly installments of $11,142, including interest, commencing in July 2007.  A final payment of all outstanding principal and accrued interest is due and payable on March 10, 2010.   The promissory note is secured by certain assets of the Company including 4,000,000 shares of common stock of Positron Corporation, for which the Company has granted Cherry Creek a security interest. As of December 31, 2008 the principal balance of the promissory note is $182,710, all of which is included in current liabilities.

As a condition of the promissory note, on September 11, 2006 the Company and Cherry Creek entered into an Assignment of Economic Interests whereby the Company shall be obligated to pay Cherry Creek, on a quarterly basis, an amount equal to 5% of operating income (as defined in the agreement), and upon the occurrence of a liquidity event, a payment in the amount of 5% of the net proceeds of such transaction. At December 31, 2008, no amounts had been recorded for these items.

At December 31, 2008 the Company is in default pursuant to the terms of the promissory note. On March 16, 2009 Cherry Creek issued a Notice of Right To Cure and Demand for Payment of all past due amounts totaling $100,278 plus late charges of $5,014.    The notice gave the Company until March 31, 2009 to pay all past due amounts. Although the Company did not make any additional payments by March 31, 2009, they are currently negotiating a resolution with Cherry Creek. However, no assurance can be given that such a resolution will be achieved or that it will be achieved on terms favorable to the Company.

NOTE 9. EQUIPMENT LEASE AGREEMENT

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

On December 31, 2008, INP advised BIMC that it had breached the Agreement for failure to make certain payments under the Agreement.  In addition, INP advised BIMC that it was seeking payment of $188,700 for 102 inpatient scans that BIMC had requested it perform on behalf of BIMC patients and had failed to reimburse INP for.  Due to the uncertainty surrounding the reimbursement of the scans, the Company had either reserved against revenue amounts previously recorded or did not record these scans as revenue.

 INP also asserted other claims in the aggregate amount of $318,144 and ceased supplying rubidium to BIMC thereafter.  Also in the first quarter 2009, BIMC asserted that INP had breached the Agreement and demanded that INP remove the scanner located therein.  INP is seeking a purchaser or another business opportunity to implement the device, however, no assurance can be given that such an agreement will be reached or if reached that it will be on terms favorable to the Company.

NOTE 10. SERIES A PREFERRED STOCK

On July 24, 2007 the Board of Directors authorized a new series of preferred stock designated Series A Convertible Preferred Stock.  The number of shares authorized was 5,000,000.  Each share of Series A Preferred Stock $.001 par value is convertible into 20 shares of the Company’s Common Stock. Holders of the Series A Preferred Stock are entitled to 20 votes per share on all matters requiring shareholder vote.  While Series A Preferred Stock is outstanding no Common Stock dividends may be paid or declared by the Company. As of December 31, 2007 there were 2,362,500 shares of Series A Preferred Stock outstanding.  During the year ended December 31, 2008, the Company issued an additional 2,025,000 shares.  On November 18, 2008, pursuant to the Securities Exchange Agreement discussed in Note 5, all issued and outstanding shares were reacquired by the Company.  As of December 31, 2008 no shares of Series A Preferred Stock were outstanding.

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NOTE 11. INCOME TAXES

The Company has incurred losses since its inception and, therefore, has not been subject to federal income taxes.  As of December 31, 2008, the Company had net operating loss (“NOL”) carryforwards for income tax purposes of approximately $3,800,000 which expire in 2022 through 2028.  Under the provisions of Section 382 of the Internal Revenue Code the greater than 50% ownership change of the Company’s common stock limits the Company’s ability to utilize its NOL carryforwards to reduce future taxable income and related tax liabilities.

Section 382 allows an owner shift any time there is a transfer of stock by a person who directly, or indirectly, owns more than 5% of the corporation and the percentage of stock of the corporation owned by one or more five percent shareholders has increased, in the aggregate, by more than 50 percentage points over the lowest percentage of stock owned by such shareholders at any time during the "testing period."  The "testing period" is generally a three-year period ending on the date of any owner or equity structure shift.

The amount of post-change income that may be offset by pre-change losses is limited each year by the "Section 382 Limitation." Generally, the Section 382 Limitation is an amount equal to the value of the old loss corporation multiplied by a long-term interest rate established monthly by the Internal Revenue Service

Deferred income taxes consist of the following as of December 31, 2008 and 2007:

	2008		2007
Deferred tax assets
Net operating loss carryforwards	$	1,282,000	$	1,320,000
Accounts receivable allowance		17,000
Unrealized loss on investment impairment and equity in losses of Positron Corporation		412,000		75,000
		1,711,000		1,395,000
Valuation allowance		(1,711,000)		(1,395,000)
	$	-	$	-

Due to the uncertainty of future realization of the net deferred tax asset, a valuation allowance has been placed against this asset.

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FY2008 IMAGIN MOLECULAR CORPORATION FORM 10-K

NOTE 12. STOCKHOLDERS' EQUITY

On January 28, 2008, the Company consummated a Securities Purchase and Subscription Agreement with Solaris Opportunity Fund, L.P., a Delaware limited partnership ("Solaris").  Solaris acquired 175,000 shares of the Registrant's Series A Convertible Preferred Stock for $70,000.  The preferred shares are convertible into a total of 3,500,000 shares of Imagin common stock. Solaris' Managing Member, Patrick G. Rooney, is the principal shareholder of the Company and its former Chairman and Chief Executive Officer, and founder of its subsidiary Cipher–NV.  Mr. Rooney is also the Chairman of Positron Corporation, a publicly owned Texas corporation and an affiliate of the Company.

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

On November 18, 2008, Solaris, Positron and the Company executed and consummated a Securities Exchange Agreement whereby the Company transferred and assigned all of its rights title and interest to notes receivable and accrued interest due from Positron exchange for the return of the 20,000,000 shares of the Company’s common stock and 4,387,500 shares of Series A to be retired and cancelled on the Company’s books and records and the retirement and satisfaction of any obligations to the advances made in the amount of $200,000. (See Note 5).

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

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FY2008 IMAGIN MOLECULAR CORPORATION FORM 10-K

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

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

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

On July 24, 2007, the Company consummated a Securities Purchase and Subscription Agreement with Solaris. Solaris acquired 500,000 shares of the Registrant's Series A Convertible Preferred Stock for $200,000.  The preferred shares are convertible into a total of 10,000,000 shares of Imagin common stock.

On August 28, 2007, the Company consummated Securities Purchase and Subscription Agreements with Solaris. Solaris acquired 500,000 shares of the Registrant's Series A Convertible Preferred Stock for $200,000.  The preferred shares are convertible into a total of 10,000,000 shares of Imagin common stock.

On October 5, 2007 the Company consummated a Securities Purchase and Subscription Agreements with Solaris. Under the Agreement Solaris acquired 500,000 shares of the Registrant's Series A Convertible Preferred Stock for $200,000.  The preferred shares are convertible into a total of 10,000,000 shares of Imagin common stock.

On November 4, 2007 the Company consummated a Securities Purchase and Subscription Agreements with Solaris. Under the Agreement Solaris acquired 500,000 shares of the Registrant's Series A Convertible Preferred Stock for $200,000.  The preferred shares are convertible into a total of 10,000,000 shares of Imagin common stock.

On November 30, 2007 the Company consummated a Securities Purchase and Subscription Agreements with Solaris. Under the Agreement Solaris acquired 187,500 shares of the Registrant's Series A Convertible Preferred Stock for $97,000.  The preferred shares are convertible into a total of 3,750,000 shares of Imagin common stock.

On December 14, 2007 the Company consummated a Securities Purchase and Subscription Agreements with Solaris. Under the Agreement Solaris acquired 175,500 shares of the Registrant's Series A Convertible Preferred Stock for $100,000.  The preferred shares are convertible into a total of 3,500,000 shares of Imagin common stock.

NOTE 13. LOSS PER SHARE

The following information details the computation of basic and diluted loss per share:

	Years Ended
	December 31, 2008			December 31, 2007
Numerator
Basic and diluted loss	$	(930,529	)	$	(658,669	)
Denominator
Basic and diluted earnings per share- weighted average shares outstanding		91,313,557			80,464,197
Basic and diluted loss per common share	$	(0.0102	)	$	(0.0082	)

Anti-dilutive securities (based on conversions to common shares) not included in the net loss per share calculation:

47

	December 31, 2008		December 31, 2007
Series A Preferred Stock		--		47,250,000

NOTE 14. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

	Quarter ended
	March 31, 2008			June 30, 2008			September 30, 2008			December 31, 2008
Net sales	$	153,000		$	153,000		$	154,045		$	153,000
Gross profit (loss)		62,685			62,685			63,730			(100	)
Net income (loss)		(20,134	)		(27,286	)		78,743			(961,852	)
Net loss per share:
Basic	$	(0.0002	)	$	(0.0003	)	$	(0.0008	)	$	(0.0100	)
Diluted	$	(0.0002	)	$	(0.0003	)	$	(0.0004	)	$	(0.0100	)
Weighted average shares
Basic		93,663,284			93,663,284			93,663,284			84,315,458
Diluted		93,663,284			93,663,284			181,413.284			84,315,458

	Quarter ended
	March 31, 2007			June 30, 2007			September 30, 2007			December 31, 2007
Net sales	$	35,628		$	12,581		$	65,091		$	146,685
Gross profit (loss)		(33,270	)		(16,449	)		(51,999	)		43,902
Net loss		(90,125	)		(229,532	)		(166,536	)		(172,476	)
Net loss per share – basic and diluted	$	(0.0013	)	$	(0.0032	)	$	(0.0019	)	$	(0.0018	)
Weighted average basic and diluted shares		67,966,988			71,190,757			88,663,284			93,663,284

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