EXHIBIT 10.65

                              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").

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          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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<PAGE>

               because of physical, mental or emotional incapacity from injury,
               sickness or disease. Should the Executive be rendered disabled,
               the Company will continue to maintain for the benefit of the
               employee, the employee benefit programs referred to in Section
               2(b) that were in effect on the date of the disability.

          v.   Special Termination. In the event that (i) the executive, with or
               without a change in title or formal corporate action, shall no
               longer exercise all of his duties and responsibilities and shall
               no longer possess substantially all the authority set forth in
               Section 2; or (ii) the Company materially breaches this Agreement
               or the performance of its duties and obligations hereunder; or
               (iii) any entity or person not now an executive officers of the
               Company become either individually or as part of a group the
               beneficial owner of 20% or more of the Company's common stock,
               the Executive e, by written notice to the Company, may elect to
               deem the Executive's employment hereunder to have been terminated
               by the Company without cause under Section 2(ii) hereof, in which
               event the Executive shall be entitled to the Compensation payable
               pursuant to Section 3(1).


          vi.  Voluntary Termination. The Executive, on 30 days prior written
               notice to the Company, may terminate his employment voluntarily.
               Upon such termination, the Company will pay the Executive's
               compensation through the date of such termination. After such
               date, the Executive shall no longer be entitled to receive
               compensation, reimbursement, non-vested stock options or
               benefits.

          vii. Continuing Effect. Notwithstanding any termination of this
               Agreement at the end of the Term or otherwise, the provisions of
               Sections 7,8,9,10,11 and 12 shall remain in full force and effect
               and the provisions of these Sections shall be binding upon the
               legal representatives, successors and assigns of the Executive.

     3. COMPENSATION.

     1) The Company will pay the Executive an annual base salary of $125,000 per
annum in equal semi-monthly installments, salary will be reviewed annually.

     2) During the term of his employment, the Executive shall be entitled to
participate in employee benefits plans or programs of the Company, if any, to
the extent the Executive is eligible to participate hereunder.

          a)   The Company's Comprehensive Group Insurance Program maintained by
               the Company.

     3) The Company will reimburse or advance funds to the Executive for all
reasonable travel, entertainment and miscellaneous expenses incurred in
connection with the performance of duties under this Agreement, provided that
the Executive properly account for such expenses tot the Company in accordance
with the Company's practices.


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     4) The Company shall provide a cellular phone, and major credit card.

     5) The Executive shall receive options to purchase up to an aggregate of
175,000 shares of the Company's common stock at an exercise price of $ 0.28 per
share. The options shall vest as follows:

          (i)  Options to purchase up to 175,000 shares may be exercised after
               12 months (August 15, 2005) of continuous employment.

     In the event that the Company experiences a change of control, defined as a
sale of the Company, the Company is acquired by another company or similar
situation, then all options vest immediately. (Please see Non-Statutory Stock
Option Agreement 2004 for specific details.) In the event the Executive is
terminated without cause, all options will vest.

     In the event the Executive is terminated with cause only that portion of
the option exercisable at the time of such termination of employment may
thereafter be exercised. It may not be exercised more than three (3) months
after said termination or after the expiration of the option, which ever is
sooner.


     6) The Executive will be entitled to nine (9) paid holidays and four (4)
weeks of vacation for each 12-month period without loss of compensation or other
benefits to which she is entitled under this Agreement, to be taken at such
times as the Executive may select and the affairs of the Company may permit.

     4. DUTIES.

     (a) General Duties. The Executive shall be employed as the Chief Operating
Officer with duties and responsibilities that are customary for such Executive,
subject to the direction of the Board of Directors and the CEO and as directed
by the company by-laws. The Executive will use the standard of care befitting of
such an executive in performing duties and in discharging responsibilities
pursuant to this Agreement, which duties and responsibilities shall be
discharged competently, carefully, and faithfully.

     (b) Corporate Code of Conduct. The Executive agrees to adhere to the
Company's Corporate Code of Conduct.

     (b) Extent of Services. The Executive will devote all of time, attention
and energies during normal business hours (exclusive of periods of sickness and
disability and of such normal holiday and vacation periods as have been
established by the Company) to the affairs of the Company. The Executive will
not enter the employ of, or serve as a consultant to, or in any way perform any
services with or without compensation to any persons, business or organization
without the prior consent of the board of directors of the Company; provided,
that the Executive shall be permitted to devote a limited amount of his time,
without compensation, to charitable or similar organizations.


     5. PLACE OF PERFORMANCE. The Executive hereby acknowledges that the
Company's existing and potential clients are located throughout the world and
that the Company is actively engaged in marketing and selling its products and
services to such clients throughout the world.


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     6. NON-DISCLOSURE OF INFORMATION. The Executive recognizes and acknowledges
that the Company's trade secrets and proprietary information and processes,
("Confidential Business and Technical Information") as they may exist from time
to time, are valuable, special and unique assets of the Company's business,
access to and knowledge of which are essential to the performance of the
Executive's duties hereunder.

     The Executive will not, during or after the term of his employment by the
Company, in whole or in part, disclose such Confidential Business and Technical
Information to any person, firm, corporation, association or entity for any
reason or purpose whatsoever, nor shall the Executive make use of any such
Confidential Business and Technical Information for his own purposes or for the
benefit of any person, firm, corporation or entity except the Company under any
circumstances during or after the term of his employment, provided that after
the term of his employment these restrictions shall not apply to such secrets,
information and processes which are then in the public domain provided that the
Executive was not responsible, directly or indirectly, for such secrets,
information or processes entering the public domain without the Company's
consent.

     In the event an action is instituted and prior knowledge is an issue, it
shall be the obligation of the Executive to prove by clear and convincing
evidence that the Confidential Business and Technical Information disclosed was
in the public domain, was already known by the Recipient, or was developed
independently by the Recipient. The Executive agrees to hold as the Company's
property, all memoranda, books, papers, letters, formulas and other data, and
all copies thereof and there from, in any way relating to the Company's business
and affairs, whet made by him or otherwise coming into his possession, and upon
termination of his employment, or on demand of the Company, at any time, to
deliver the same to the Company.

     7. NON-COMPETITION AGREEMENT.

     (a) The Executive acknowledges and agrees that, pursuant to Florida Statute
Section 542.335, based on having access to and acquiring knowledge of highly
sensitive and valuable trade secrets, and confidential or proprietary
information belonging or relating to the Company, the Executive would be in a
position to cause serous and irreparable harm to the Company in the event that,
following the termination of his employment hereunder, the Executive were to
compete with or be involved in an enterprise which competes with the Company,
engages in the same business as the Company, or performs research and
development in the field of medical optical imaging.


     (b) Until termination of his/ employment and for a period of 24 months
commencing on the date of termination, the Executive, directly or indirectly, in
association with or as a stockholder, director, officer, consultant, executive,
partner, joint venture, member or otherwise of or through any person, firm,
corporation, partnership, association or entity, covenants that the Executive
will not compete with the Company or any of its affiliates in the design,
manufacture, construction, offer, sale or marketing of products or services that


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are competitive with the products or services offered by the Company, within the
United States or anywhere in the world. The Executive covenants and agrees that
during his employment and for a period of 24 months immediately following the
termination of such employment, the Executive will not, either individually or
in partnership or jointly or in conjunction with any person, firm, business,
corporation, partnership joint venture, entity, syndicate or association, as an
executive, principal, agent, officer director consultant, advisor, distributor,
dealer, contractor, trustee, lender, shareholder or in any manner or capacity
whatsoever, directly or indirectly, be employed by, render services to, carry on
or be engaged in, or be concerned with or be interested in or advise, lend money
to, guarantee the debts or obligations of, or in any manner participate in the
management, operation or control of any business which is directly competitive
with the business of the Company, engages in the same business as the company or
performs research and development in the medical optical imaging field with any
entity located anywhere in the world.

     (c) For the purposes of this paragraph a business shall be deemed to be in
"direct competition" or "directly competitive" with the Company if such business
is engaged in developing, manufacturing, marketing, selling, or distributing
medical optical imaging devices.

     8. NONDISCLOSURE OF CONFIDENTIAL INFORMATION. The Executive acknowledges
that during his employment he will learn and will have access to confidential
information regarding the Company and its affiliates, including without
limitation (i) confidential or secret plans, programs, documents, agreements or
material relating to the business, services or activities of the Company and its
affiliates and (ii) trade secrets, market reports, customer investigations,
customer lists and or similar information that is proprietary information of the
Company or its affiliates (collectively referred to as "confidential
information"). The Executive acknowledges that such confidential information as
is acquired and used by the Company or its affiliates is a special, valuable and
unique asset. All records, files, materials and confidential information
obtained by the Executive in the course of his employment with the Company are
confidential and proprietary and shall remain the exclusive property of the
Company or its affiliates, as the case may be. The Executive will not, except in
connection with and as required by his performance of his duties under this
Agreement, for any reason use for his own benefit or the benefit of any person
or entity with which he may be associated or disclose any such confidential
information to any person, firm, corporation, association or other entity for
any reason or purpose whatsoever without the prior written consent of the board
of directors of the Company, unless such confidential information previously
shall have become public knowledge through no action by or omission of the
Executive.

     9. NON-SOLICITATION OF EXECUTIVES

     The Executive covenants and agrees that while he is employed by the Company
and for a period of twenty-four (24) months immediately following the
termination of such employment, he will not, directly or indirectly, in any
manner whatsoever, on his own behalf, or on behalf of any person, firm,
business, corporation, partnership, joint venture, entity, syndicate or
association solicit, induce or cause, or attempt to induce or cause any person
who was any executive or consultant or in relationship with, or to cease
providing services to the Company.


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     10. REASONABLENESS OF CONFIDENTIALITY, NON-COMPETITION AND NON-SOLICITATION
         OBLIGATION AND COVENANTS

     (a) The Executive hereby acknowledges and confirms that the obligations and
covenants set out in the above paragraphs are reasonable and necessary to
protect the legitimate interests of the Company. Without limiting the generality
of the foregoing, the Executive hereby acknowledges and confirms that given,
among other things, the nature and international scope of the Company's
operations and of the employment duties to be performed by the Executive
hereunder, the geographic scope and duration of the restrictions set fourth
above are reasonable and necessary to protect the legitimate interests of the
Company.

     (b) The Executive further acknowledges and agrees that these obligations
and covenants will not preclude him from becoming gainfully employed following
their termination of his employment in his/ profession.

     11. INVENTIONS.

     (a) The Executive hereby sells, transfers and assigns to the Company or to
any person, or entity designated by the Company, all of the entire right, title
and interest of the Executive in and to all inventions, ideas, disclosures and
improvements, whet patented or unpatented, and copyrightable material, made or
conceived by the Executive, solely or jointly, or in whole part, during the term
hereof which (i) relate to methods, apparatus, designs, products, processes or
devices sold, leased, used or under construction or development by the Company
or any subsidiary, or (ii) otherwise relate to or pertain to the business,
functions or operations of the Company or any subsidiary, or (iii) arise wholly
or partly from the efforts of the Executive during the term hereof. The
Executive shall communicate promptly and disclose to the Company, in such form
as the Company requests, all information, details and data pertaining to the
aforementioned inventions, ideas, disclosures and improvements; and, whet during
the term hereof or thereafter, the Executive shall execute and deliver to the
Company such formal transfers and assignments and such other papers and
documents as may be required of the Executive at the Company's expense to permit
the Company or any person or entity designated by the Company to file and
prosecute the patent applications and, as to copyrightable material, to obtain
copyright thereon. Any invention by the Executive within one (1) year following
the termination of the Agreement shall be deemed to fall within the provisions
of the paragraph unless proven by the Executive to have been first conceived and
made following such termination.

     (b) No Payment. The Executive acknowledges and agrees that no separate or
additional payment will be required to be made to her in consideration of her
undertakings in this Section..

     12. EQUITABLE RELIEF.

     (a) The Company and the Executive recognize that the services to be
rendered under this Agreement by the Executive are special, unique and of
extraordinary character, and that in the event of the breach by the Executive of


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the terms and conditions of this Agreement or if the Executive, without the
prior consent of the Board of Directors of the Company, shall leave his
employment for any reason and take any action in violation of Section 6, Section
7, Section 8, or Section 9, the Company will be entitled to institute and
prosecute proceedings in any court of competent jurisdiction referred to in
Section 11(b) below, to enjoin the Executive from breaching the provisions of
Section 6 or Section 7, or Section 8. In such action, the Company will not be
required to plead or prove irreparable harm or lack of an adequate remedy at
law. Nothing contained in this Section 11 shall be construed to prevent the
Company from seeking such other remedy in arbitration in case of any breach of
this Agreement by the Executive, as the Company may elect.

     (b) Any proceeding or action must be commenced in state court in Broward
County, Florida we the Company maintains its principal offices. The Executive
and the Company irrevocably and unconditionally submit to the jurisdiction of
such court and agree to take any and all future action necessary to submit to
the jurisdiction of such courts. The Executive and the Company irrevocably waive
any objection that they now have or hereafter or hereafter may have to the
laying of venue of any suit, action or proceeding brought in any such court and
further irrevocably waives any claim that any such suit, action or proceeding
brought in any such court has been brought in an inconvenient forum. Final
judgment against the Executive or the Company in any such suit shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment, a
certified or true copy or which shall be conclusive evidence of the fact and the
amount of any liability of the Executive or the Company therein described, or by
appropriate proceedings under any applicable treaty or otherwise.

     13. ASSIGNMENT. The rights and obligations of the Company under this
Agreement shall inure to the benefit of and be binding upon the successors and
assigns of the Company, provided that such successor or assign shall acquire all
or substantially all of the assets and business of the Company. The Executive's
obligations hereunder may not be assigned or alienated and any attempt to do so
by the Executive will be void.

     14. SEVERABILITY.

     (a) The Executive expressly agrees that the character, duration and
geographical scope of the provisions set forth in this Agreement are reasonable
in light of the circumstances, as they exist on the date hereof. Should a
decision, however, be made at a later date by a court of competent jurisdiction
that the character, duration or geographical scope of such provisions is
unreasonable, then it is the intention and the agreement of the Executive and
the Company that this Agreement shall be construed by the court in such a manner
as to impose only those restrictions on the Executive's conduct that are
reasonable in the light of the circumstances and as are necessary to assure to
the Company the benefits of this Agreement. If, in any judicial proceeding, a
court shall refuse to enforce all of the separate covenants deemed included
herein because taken together they are more extensive than necessary to assure
to the Company the intended benefits of this Agreement, it is expressly
understood and agreed by the parties hereto that the provisions of this
Agreement that, if eliminated, would permit the remaining separate provisions to
be enforced in such proceeding shall be deemed eliminated, for the purposes of
such proceeding, from this Agreement.


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     (b) If any provision of this Agreement otherwise is deemed to be invalid or
unenforceable or is prohibited by the laws of the state or jurisdiction we it is
to be performed, this Agreement shall be considered divisible as to such
provision and such provision shall be inoperative in such state or jurisdiction
and shall not be part of the consideration moving from either of the parties to
the other The remaining provisions of this Agreement shall be valid and binding
and of like effect as though such provision were not included.

     14. NOTICES AND ADDRESSES. All notices, offers, acceptance and any other
acts under this Agreement (except payment) shall be in writing, and shall be
sufficiently given if delivered to the addressees in person, by Federal Express
or similar receipted delivery, by facsimile delivery or, if mailed, postage
prepaid, by certified mail, return receipt requested, as follows:

                  To the Company:            Imaging Diagnostic Systems, Inc.
                                             6531 N.W. 18th Court
                                             Plantation, Florida 33313


                  To the Executive:          Ed Horton



or to such other address as either of them, by notice to the other may designate
from time to time. The transmission confirmation receipt from the sender's
facsimile machine shall be conclusive evidence of successful facsimile delivery.
Time shall be counted to, or from, as the case may be, the delivery in person or
by mailing.

     15. COUNTERPART. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument. The execution of this
Agreement may be by actual or facsimile signature.

     16. ARBITRATION. Except for any controversy or claim seeking equitable
relief as provided in Section 11 of this Agreement, any controversy or claim
arising out of or relating to this Agreement, or to the interpretation, breach
or enforcement thereof or any other dispute between the parties, shall be
submitted to one arbitrator and settled by arbitration in Fort Lauderdale,
Florida, in accordance with the rules, then obtaining, of the American
Arbitration Association. Any reward made by such arbitrator shall be final,
binding and conclusive on all parties hereto for all purposes, and judgment may
be entered thereon in any court having jurisdiction thereof.

     17. ATTORNEYS FEES. In the event that there is any controversy or claim
arising out of or relating to this Agreement, or to the interpretation, breach
or enforcement thereof, and any action or proceeding is commenced to enforce the
provisions of this Agreement, the prevailing party shall be entitled to
reasonable attorneys fees, costs and expenses.

     18. GOVERNING LAW. This Agreement and any dispute, disagreement, or issue
of construction or interpretation arising hereunder whet relating to its
execution, its validity, the obligations provided therein or performance shall


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be governed or interpreted according to the internal laws of the State of
Florida without regard to choice of law considerations.

     19. ENTIRE AGREEMENT. This Agreement constitutes the entire Agreement
between the parties and supersedes all prior oral and written agreements between
the parties her with respect to the subject matter hereof. Neither this
Agreement nor any provision hereof may be changed, waived, discharged or
terminated orally, except by a statement in writing signed by the party or
parties against which enforcement or the change, waiver discharge or termination
is sought.

     20. ADDITIONAL DOCUMENTS. The parties hereto shall execute such additional
instruments as may be reasonably required by their counsel in order to carry out
the purpose and intent of this Agreement and to fulfill the obligations of the
parties hereunder.

     21. SECTION AND PARAGRAPH HEADINGS. The section and paragraph headings in
this Agreement are for reference purposes only and shall not affect the meaning
or interpretation of this Agreement.

     22. WAIVER OF BREACH. A waiver by the Company or the Executive of a breach
of any provision of the Agreement by the other party shall not operate or be
construed as a waiver of any subsequent breach by the other party.

         IN WITNESS WHEREOF, the Company and the Executive have executed this
Agreement as this 15th day of August 2004.


Imaging Diagnostic Systems, Inc.                 Executive


/s/ Jay S. Bendis                                /s/ Ed Horton
----------------------------                     ---------------------------
Jay S. Bendis, Co-Chairman of the Board             Ed Horton





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                             STOCK OPTION AGREEMENT
                     (2004 Non-Statutory Stock Option Plan)

Imaging Diagnostic Systems, Inc. (the "Company"), desiring to afford an
opportunity to the Grantee named below to purchase certain shares of common
stock of the Company's, to provide the Grantee with an added incentive as an
employee, director or consultant of the Company hereby grants to Grantee, and
the Grantee hereby accepts, an option to purchase the number of such shares
optioned as specified below, during the term ending at midnight (prevailing
local time at the Company's principal offices) on the expiration date of this
Option specified below, at the option exercise price specified below, subject to
and upon the following terms and conditions:

         1. Identifying Provisions: As used in this Option, the following terms
shall have the following respective meanings.

         (a)      Grantee:   Ed Horton

         (b) Date of grant: August 15, 2004

         (c) Number of shares optioned: 175,000

         (d) Option exercise price per share: $0.28

         (e) Expiration Date: August 15, 2014

     This Option is not intended to be an incentive stock option pursuant to
Section 422 of the Internal Revenue Code --- ("Sec. 422 Qualified Shares").

         2. Timing of Purchases:

(a) August 14, 2005: 175,000


         3. Restrictions on Exercise: The following additional provisions shall
apply to the exercise of this Option:

                  Termination of Employment. If the Grantee's employment by the
Company or any of its subsidiaries is terminated for any reason other than death
only that portion of this Option exercisable at the time of such termination of
employment may thereafter be exercised, and it may not be exercised more than
three months after such termination or after the expiration date of this Option,
whichever date is sooner, except as provided for in the Grantees' Employment
Agreement.

                    (ii) Death of Grantee. If the Grantee shall die during the
term of this Option, the Grantee's legal representative or representatives, or
the person or persons entitled to do so under the Grantee's last will and
testament or under applicable intestate laws, shall have the right to exercise
this Option, but only for the number of shares as to which the Grantee was
entitled to exercise this Option in accordance with Section 2 hereof on the date
of his death, and such right shall expire and this Option shall terminate one
(1) year after the date of the Grantee's death or on the expiration date of this
Option, whichever date is sooner. In all other respects, this Option shall
terminate upon such death.

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<PAGE>


                  (iii) Continuity of Employment. This Option shall not be
exercisable by the Grantee in any part unless at all times beginning with the
date of grant and ending no more than one year prior to the date of exercise,
the Grantee has, except for military service leave, sick leave or other bona
fide leave of absence (such as temporary employment by the United States
Government) been in the continuous employ of the Company, except that such
period shall be one (1) year following any termination of the Grantee's
employment by reason of his permanent and total disability.

         4. Non-Transferable. The Grantee may not transfer his Option except by
will or the laws of descent and distribution. This Option shall not be otherwise
transferred, assigned, pledged, hypothecated or disposed of in any way, whether
by operation of law or otherwise, and shall be exercisable during the Grantee's
lifetime only by the Grantee or his guardian or legal representative.

         5. Adjustments and Corporate Reorganization. Subject to any required
action by the shareholders of the Company, the number of Shares covered by each
outstanding Option, and the number of Shares which have been authorized for
issuance under the Plan but as to which no Options have yet been granted or
which have been returned to the Plan upon cancellation or expiration of any
Option, as well as the price per Share covered by each such outstanding Option,
shall be proportionately adjusted for any increase or decrease in the number of
issued Shares resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or
decrease in the number of issued shares of Common Stock effected without receipt
of consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the
Committee, whose determination in that respect shall be final, binding and
conclusive. Except as expressly provided herein, no issuance by the Company of
shares of stock of any class, or securities convertible into shares of stock of
any class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of Shares subject to an Option.

In the event of the proposed dissolution or liquidation of the Company, the
Option will terminate immediately prior to the consummation of such proposed
action, unless otherwise provided by the Committee. The Committee may, in the
exercise of its sole discretion in such instances, declare that any Option shall
terminate as of a date fixed by the Committee and give each Grantee the right to
exercise his Option as to all or any part of the Optioned Stock, including
Shares as to which the Option would not otherwise be exercisable. In the event
of the proposed sale of all or substantially all of the assets of the Company,
or the merger of the Company with or into another corporation in a transaction
in which the Company is not the survivor, the Option shall be assumed or an
equivalent option shall be substituted by such successor corporation or a parent
or subsidiary of such successor corporation, unless the Committee determines, in
the exercise of its sole discretion and in lieu of such assumption or
substitution, that the Grantee shall have the right to exercise the Option as to
all of the Optioned Stock, including Shares as to which the Option would not
otherwise be exercisable. If the Committee makes an Option fully exercisable in
lieu of assumption or substitution in the event of such a merger or sale of
assets, the Committee shall notify the Grantee that the Option shall be fully
exercisable for a period of 30 days from the date of such notice, and the Option
will terminate upon the expiration of such period.

         6. Exercise, Payment For and Delivery of Stock: This Option may be
exercised by the Grantee or other person then entitled to exercise it by giving
four business days' written notice of exercise to the Company specifying the
number of shares to be purchased and the total purchase price. The option price
shall become immediately due upon exercise of the option and, subject to the
instrument evidencing the grant, shall be payable in one of the following
alternative forms specified below:

(a) full payment in cash or check drawn to the Company's order;


                                       12
<PAGE>

(b) full payment in shares of Common Stock held for at least six (6) months and
valued at fair market value on the Exercise Date (as such term is defined
below);

(c) full payment in a combination of shares of Common Stock held for at least
six (6) months and valued at fair market value on the Exercise Date and cash or
check; or

(d) full payment through a broker-dealer sale and remittance procedure provided
that sale of the Optioned stock is permitted as a result of an effective
registration statement under the Securities Act of 1933, as amended, and
compliance with all applicable securities laws, pursuant to which the Grantee
(i) shall provide irrevocable written instructions to a Company-designated
brokerage firm to effect the immediate sale of the purchased shares and remit to
the Company, out of the sale proceeds available on the settlement date,
sufficient funds to cover the aggregate option price payable for the purchased
shares plus all applicable Federal and State income taxes required to be
withheld by the Company in connection with such purchase and (ii) shall provide
written directives to the Company to deliver the certificates for the purchased
shares directly to such brokerage firm in order to complete the sale
transaction.

For purposes of this subparagraph (2), the Exercise Date shall be the date on
which written notice of the option exercise is delivered to the Company. Except
to the extent the sale and remittance procedure is utilized in connection with
the exercise of the option, payment of the option price for the purchased shares
must accompany such notice.

The fair market value per share of Common Stock on any relevant date under the
Plan shall be determined in accordance with the following provisions:

 (a) If the Common Stock is not at the time listed or admitted to trading on any
national stock exchange but is traded on the Nasdaq National Market, the fair
market value shall be the closing selling price per share of Common Stock on the
date in question, as such price is reported by the National Association of
Securities Dealers on the Nasdaq National Market System or any successor system.
If there is no reported closing selling price for the Common Stock on the date
in question, then the closing selling price on the last preceding date for which
such quotation exists shall be determinative of fair market value.

 (b) If the Common Stock is at the time listed or admitted to trading on any
national stock exchange, then the fair market value shall be the closing selling
price per share of Common Stock on the date in question on the stock exchange
determined by the Committee to be the primary market for the Common Stock, as
such price is officially quoted in the composite tape of transactions on such
exchange. If there is no reported sale of Common Stock on such exchange on the
date in question, then the fair market value shall be the closing selling price
on the exchange on the last preceding date for which such quotation exists.

 (c) If the Common Stock is quoted on the Nasdaq Small Cap Market, or any
similar system of automated dissemination of quotations of securities process in
common use, the fair market value shall be the mean between the closing bid and
asked quotations for the Common Stock on such date.

 (d) If neither clause (a), (b) or (c) is applicable, then the fair market value
shall be the mean between the closing bid and asked quotations for the Common
Stock as reported by the National Quotation Bureau, Inc., if at least two
securities dealers have inserted both bid and asked quotations for Common Stock
on at least five of the ten preceding business days.


                                       13
<PAGE>

         7. Rights in Shares Before Issuance and Delivery. No person shall be
entitled to the privileges of stock ownership in respect of any shares issuable
upon exercise of this Option, unless and until such shares have been issued to
such person as fully paid shares.

         8. Requirements of Law and of Stock Exchanges. By accepting this
Option, the Grantee represents and agrees for himself and his transferees by
will or the laws of descent and distribution that, unless a registration
statement under the Securities Act of 1933 is in effect as to shares purchased
upon any exercise of this Option, (i) any and all shares so purchased shall be
acquired for his personal account and not with a view to or for sale in
connection with any distribution, and (ii) each notice of the exercise of any
portion of this Option shall be accompanied by a representation and warranty in
writing, signed by the person entitled to exercise the same, that the shares are
being so acquired in good faith for his personal account and not with view to or
for sale in connection with any distribution.

         No certificate or certificates for shares of stock purchased upon
exercise of this Option shall be issued and delivered unless and until, in the
opinion of counsel for the Company, such securities may be issued and delivered
without causing the Company to be in violation of or incur liability under any
federal, state or other securities law, any requirement of any securities
exchange listing agreement to which the Company may be a party, or any other
requirement of law or of any regulatory body having jurisdiction over the
Company.

         9. Stock Option Plan. This Option is subject to, and the Company and
the Grantee agree to be bound by, all of the terms and conditions of the
Company's 2004 Non-Statutory Stock Option Plan under which this Option was
granted, as the same shall have been amended from time to time in accordance
with the terms thereof, provided that no such amendment shall deprive the
Grantee, without his consent, of this Option or any of his rights hereunder.
Pursuant to said Plan, the board of directors of the Company or its Committee
established for such purposes is vested with final authority to interpret and
construe the Plan and this Option, and is authorized to adopt rules and
regulations for carrying out the Plan. A copy of the Plan in its present form is
available for inspection during business hours by the Grantee or other persons
entitled to exercise this Option at the Company's principal office.

        10. Notices. Any notice to be given to the Company shall be addressed to
the Company in care of its Secretary at its principal office, and any notice to
be given to the Grantee shall be addressed to him at the address given beneath
his signature hereto or at such other address as the Grantee may hereafter
designate in writing to the company. Any such notice shall be deemed duly given
when enclosed in a properly sealed envelope or wrapper addressed as aforesaid,
registered or certified, and deposited, postage and registry of certification
fee prepaid, in a post office or branch post office regularly maintained by the
United States Postal Service.

         11. Laws Applicable to Construction. This Agreement has been executed
and delivered by the Company in the State of Florida, and this Agreement shall
be construed and enforced in accordance with the laws of said State.

  IN WITNESS WHEREOF, the Company has granted this Option on August 15, 2004;

IMAGING DIAGNOSTIC SYSTEMS, INC.                        ACCEPTED




/s/ Jay S. Bendis                                       /s/ Ed Horton


------------------------------                       --------------------------
By: Jay S. Bendis, Co-Chairman of the Board              By:  Ed Horton
and Chairman of the Compensation Committee.