EMPLOYMENT AGREEMENT





         THIS EMPLOYMENT AGREEMENT dated August 15, 2004 between Imaging

 Diagnostic Systems, Inc., a Florida corporation (the "Company"), and Ed Horton

(the "Executive").



                                  WITNESSETH:



     WHEREAS, The Company is engaged in the business of developing laser-based

medical optical imaging devices; and



     WHEREAS, the Company has the intent to market and sell its products and

services to clients and potential clients throughout the world; and



     WHEREAS, the Executive has expertise, in the medical device and imaging

industries; and



     WHEREAS, the Company wishes to extend the Employment Agreement to employ

the Executive as its Chief Operating Officer, charged with all the

responsibilities and duties legally required by the State of Florida and to

oversee various broad and specific aspects of its business; and



     WHEREAS, in the course of the Executive's employment, the Executive will

continue to have access to and acquire knowledge of valuable trade secrets,

confidential information and other proprietary information belonging and

relating to the Company and its business, and which the Company has a legitimate

interest in protecting; and



     WHEREAS, the Company and Executive are willing to extend the employment and

render such services, all upon and subject to the terms and conditions contained

in this Employment Agreement (the "Agreement");



     NOW, THEREFORE, in consideration of the promises and the mutual covenants

set forth in this Agreement, and intending to be legally bound, the Company and

the Executive agree as follows:



     1. EMPLOYMENT. The Company hereby continues the employment of the Executive

and the Executive hereby accepts employment upon the terms and condition

hereinafter set forth.



     2. TERM & TERMINATION.



          i.   Term. The Company hereby continues the employment of the

               Executive, and the Executive hereby accepts employment with the

               Company, for a period commencing on August 15, 2004 and ending

               one (1) year from that date (the "Term").



<PAGE>





          ii.  Termination without Cause. The Company may terminate the

               Executive's employment without Cause. Such termination will

               become effective upon the dated specified in such notice,

               provided that such date is at least 60 days from the date of

               specified in such notice. Upon such termination without cause:



               (1)  for the remainder of the term of this Agreement or for a

                    period of 12 months following such termination, which ever

                    is greater the Company will continue to pay the Executive

                    annual salary pursuant to Section 3(1).

               (2)  the Company will continue to maintain for such period, for

                    the benefit of the Executive, the employee benefit programs,

                    referred to in Section 2(b) were in effect on the date of

                    such termination.

               (3)  All options that were scheduled to vest will vest and will

                    remain exercisable for a period of ten (10) years from the

                    date of this agreement.





          iii. Termination for Cause. The Company may terminate the Executive

               pursuant to the terms of this Agreement at any time for cause by

               giving written notice of termination. Such termination shall

               become effective upon the giving of such notice, except that

               termination based upon cause shall not become effective unless

               Executive shall fail to correct such breach within 30 days of

               receipt of written notice hereof. Upon such termination the

               Executive shall have no right to compensation, commission, bonus,

               benefits or reimbursement pursuant to this contract, for any

               period subsequent to the termination. Further, the Executive

               shall have no right to any non-unvested stock options. For

               purposes of this section, "cause" shall mean; (1) the Executive

               is convicted of a felony; (2) the Executive, in carrying out his

               duties hereunder, has been found in a civil action by the

               Company, to have committed willful gross negligence or willful

               gross misconduct resulting, in either case, in material harm to

               the Company; (3) the Executive misappropriates Company funds or

               otherwise defrauds the Company; (4) the Executive materially

               breaches any provision of this Agreement; (5) the Executive

               materially fails to perform his duties under section four (4)

               resulting in harm to the Company.





          iv.  Death or Disability. Upon the death or disability of the

               Executive, the Executive shall be entitled to and the company

               will pay the remaining amount of compensation from the date of

               death or from the date of disability through the termination of

               this Agreement. (For purposes of this Section, "disability" shall

               mean that for a period of six (6) months in any 12-month period

               the Executive is incapable of substantially fulfilling his duties

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