DR. BOGDAN C. MAGLICH
                                                                  CHAIRMAN & CEO

                                  JULY 5, 2004

MR. GREGORY C. HENKEL
32462 SEVEN SEAS DRIVE
MONARCH BEACH, CA 92629


Dear Mr. Henkel:

I am  pleased to offer you the full time  consulting  position  of Acting  Chief
Financial  Officer  of  HiEnergy  Technologies,  Inc.  for the  period  July 6 -
September 30, 2004. At the end of this period your performance will be evaluated
with the  understanding and intent of converting your position into that of Vice
President   and  Chief   Financial   Officer.   However,   if  your  service  is
unsatisfactory  based upon my evaluation  and you are  dismissed,  or if you are
unable or unwilling to continue providing service to the company, this agreement
is terminated.

Your duties will consist of those usually discharged by Chief Financial Officers
of  publicly  traded  startup  companies,  with the  upmost  attention  given to
completion  of SEC  compliance  filings  and  the  company's  SB-2  registration
statement.  Other duties include, but are not limited to product pricing, profit
planning,   forecasting,  cash  budgeting,   financial  ratio  analysis,  short,
intermediate and long term financing and negotiations  associated therewith,  as
well as the selection and retainer of financial personnel and auditors.

You will be reporting to me on a weekly basis and  periodically  to the Board of
Directors.

Your remuneration shall be as follows:

     1.  A  non-refundable  signing  bonus of $10,000,  payable to you upon your
         acceptance of this offer;

     2.  An annual salary of $200,000, which will consist of two parts:

         a.   An initial  salary of $125,000  will be paid  ratably  biweekly in
              cash during the evaluation  period,  starting from your acceptance
              date, and

         b.   $75,000  will be your  deferred  salary,  paid  by  three  6-month
              Promissory  Notes of $25,000 each,  bearing 5% interest and issued
              to you on  October  6,  2004,  January  6, 2005 and April 6, 2005,
              provided you are still a service  provider on those dates.  If you
              cease to be a service  provider  following  the issuance of any of
              these notes,  the note(s) shall become  immediately due. The Notes
              can be prepaid  while a service  pervider  should the funds become
              available for prepayment of similar Promissory Notes issued to all
              employees, and

<PAGE>

     3.  You will be granted a non-qualified  option to purchase  500,000 shares
         of common stock of HiEnergy Technologies, Inc exercisable at a price of
         $1 per share.  The option shall be forty (40) percent vested on January
         6, 2005,  provided you are then still a service provider;  seventy (70)
         percent vested on April 6, 2005,  provided you are then still a service
         provider and fully vests on July 6, 2005, provided you are then still a
         service  provider.  The option will  immediately vest if the company is
         sold or absorbed by a merger or any other change in corporate ownership
         structure.  The term of the  option  shall be no  longer  than Five (5)
         years.

Items 1 and 2a are  non-refundable  with the other  items  being  subject to the
approval of the Board of Directors of HiEnergy Technologies, Inc.

I hope you will find this  offer  attractive  and the  creative  climate  of the
company stimulating and such in which your talents will manifest at their best.

Please confirm your acceptance of the offer by cosigning this letter below.

                                                Sincerely,
                                                HiEnergy Technologies, Inc. by

                                                /s/
                                                ------------------------
                                                Bogdan Castle Maglich
                                                CEO



Accepted by:


/s/                                                   7/6/04
--------------------------
Gregory C. Henkel                                     Date