EXHIBIT 10.4

                       EMPLOYMENT AND ROYALTY AGREEMENT

     COMPUTERIZED THERMAL IMAGING, INC., a Nevada corporation ("CTI"), hereby
agrees to employ MAURICE J. BALES ("BALES"), and BALES agrees to be employed
by CTI, in consideration of and pursuant to the following terms and
conditions:

      1.     Position.

             CTI shall employ Bales in the position of Senior Vice President
and Director of Research and Development.

      2.     Outside Business Activities.

             During his employment, Bales shall devote his full energies,
interests, abilities and productive time to the performance of his duties
under this Agreement and shall not, without CTI  prior written consent, render
any services to others for compensation or engage or participate, actively or
passively, in any other business activities that would materially interfere
with the performance of Bales duties hereunder or compete with CTI  business.

       3.    Term.

             Subject to earlier termination as provided in Paragraph 7, Bales
shall be employed for a term of three years commencing April 17, 2000.

       4.    Place of Employment.

             Bales shall perform his duties at CTI  offices located in Walnut
Creek, California, but may be required to travel from time to time as mutually
agreed between CTI and Bales.

       5.    Compensation and Benefits.

              a.     Salary.

                     CTI shall pay an annual salary of $200,000 payable
semi-monthly, prorated for each partial year of employment, with annual
increases (but not decreases) as determined by CTI  Board of Directors for CTI
senior executives.

              b.     Options.

                     Simultaneously with the execution of this Agreement, and
on the first and second anniversaries thereof, CTI shall deliver to Bales
options to purchase up to 100,000 shares per option of CTI  common stock at
the bid price as of the last business day prior to the issuance of the option
on the exchange or in the market system in which CTI  common stock is listed.
The options shall be in the form and substance of options heretofore granted
by CTI to CTI  senior executives.

              c.     Vacation.

                     Bales shall be entitled to no less than three weeks paid
vacation for each full year of employment, with any unused portion
accumulating from year to year.

              d.     Other Benefits.

                     CTI shall provide Bales with such other benefits,
including, but not limited to, bonuses, medical and dental insurance and
participation in CTI  retirement plan (if one exists or subsequently is
adopted), as CTI may provide for CTI  employees, subject to such guidelines,
conditions and restrictions as CTI, in CTI  sole discretion, may determine.

       6.     Royalties.

              CTI shall pay Bales a royalty of $250 for each photonic
stimulator or photonic stimulator system or replacement or derivative thereof
(collectively  hotonic stimulator  manufactured by or on behalf of CTI or any
subsidiary, licensee or affiliate of CTI during the term of this Agreement.
Said royalties shall be paid on or before the 15th day of the month following
the end of CTI  fiscal quarter in which the photonic stimulator for which the
royalty is due is manufactured.  Said payments do not constitute compensation
for employment.  No federal or state tax or related deductions shall be made
therefrom, and said payments shall be reported as royalty payments to the
United States Internal Revenue Service on Form 1099.  Bales shall have the
right, upon written reasonable notice to CTI, to inspect and/or have a
representative inspect CTI  books and records to assure CTI  compliance with
its royalty payment obligations as set forth herein.

        7.     CTI  Ownership of Processes, Inventions, Etc.

               a.     Except as provided in sub-Paragraph 6(c), all software
programs, documentation, source codes, object codes, processes, inventions,
patents, copyrights, trademarks and all other tangible possessions and
intangible rights (collectively  nventions  which may be conceived or
developed by Bales, either alone or with others, during the term of this
Agreement, whether or not conceived or developed during Bales working hours,
and which materially relate to CTI  programs, products, equipment, supplies,
facilities, trade secrets, CTI  business or CTI  actual or demonstrably
anticipated research or development, or which result in any manner from any
work performed by Bales at CTI  request, shall be the sole property of CTI.
For the purpose of this Paragraph,  TI  business shall be deemed to mean the
research, development, marketing and sale of devices and systems that utilize
infrared thermal or related imaging technology.

               b.     Bales shall execute all documents, including, but not
limited to, copyright and patent applications and assignments, required by CTI
to establish and/or enforce CTI  rights under this Paragraph.

               c.     THIS PARAGRAPH 7 DOES NOT APPLY TO INVENTIONS WHICH  ARE
DEVELOPED ENTIRELY ON BALES OWN TIME WITHOUT USING CTI  EQUIPMENT, SUPPLIES,
FACILITIES OR TRADE SECRET INFORMATION AND WHICH: (i) DO NOT RELATE AT THE
TIME OF CONCEPTION OR REDUCTION TO PRACTICE TO CTI  BUSINESS OR ACTUAL OR
DEMONSTRABLY ANTICIPATED RESEARCH OR DEVELOPMENT; OR (ii) DO NOT RESULT FROM
ANY WORK PERFORMED BY BALES FOR CTI.

               d.     The provisions of sub-Paragraph 7(c) are intended to
provide the notice to Bales required under California Labor Code Section 2872.
Bales specifically acknowledges that he has read all of the provisions of
Paragraph 7, including the notice contained in sub-Paragraph 7(c), and that he
has received a copy of this entire Agreement.

       8.     Termination.

              a.     CTI may terminate this Agreement at any time without
notice if Bales commits any material act of dishonesty, is convicted of a
crime involving moral turpitude, or, after written notice thereof by CTI,
continues to be negligent in the performance of his duties under this
Agreement in a manner that substantially adversely affects CTI  business.

              b.     CTI may terminate this Agreement at any time if Bales
becomes physically or mentally ill or otherwise incapacitated so that for a
continuous period of six months, Bales has been unable to perform his
obligations under this Agreement in substantially the same manner and with
substantially the same effect as prior to the incapacity.  If CTI terminates
Bales employment under this Paragraph 8(b), CTI shall provide Bales with a
one-time disability payment of one-half of Bales then current annual salary.

              c.     Bales may terminate this Agreement at any time if CTI
breaches any of its obligations under this Agreement.  Bales failure or
refusal to terminate this Agreement upon any such breach shall not constitute
a waiver of Bales right to terminate this Agreement upon any subsequent
breach.

       9.     Unfair Competition Prohibited.

              a.     Bales understands and acknowledges that during the course
of his employment Bales will be exposed to confidential information and
numerous trade secrets of and concerning CTI whose divulgence to third parties
would substantially adversely affect CTI  business and/or reputation.  Those
trade secrets and confidential information relate to and include, but are not
limited to, the following:

                     i.     The source and object codes of CTI  software;

                     ii.    The source and object codes of third party
                            software marketed or used by CTI;

                     iii.   CTI  marketing techniques;

                     iv.    Customer lists;

                     v.     Contact lists;

                     vi.    Internal accounting and record keeping systems;

                     vii.   Information concerning CTI  financial condition;

                     viii.  Management and personnel records;

                     ix.    CTI  inventions as defined in Paragraph 7; and

                     x.     Such other technical and nontechnical trade
                            secrets as may subsequently be developed or
                            obtained by CTI.

              b.     Bales expressly agrees that he shall not, without CTI
prior written consent, either during the term of this Agreement or at any time
thereafter, divulge to third parties any of CTI  trade secrets or confidential
information.  In this regard, the parties specifically acknowledge and agree
that if Bales breaches any of his obligations under this Paragraph 9, CTI may
not have an adequate remedy at law, and a prohibitory injunction restraining
and enjoining Bales from divulging CTI  trade secrets and confidential
information to third parties and a mandatory injunction requiring Bales to
inform CTI of the recipients and nature of all trade secrets and confidential
information theretofore divulged by Bales are proper remedies in addition to
all other remedies which CTI may have at law and in equity.

       10.     Attorneys Fees.

               If either party commences an action for the enforcement and/or
interpretation of any of the provisions of this Agreement, the prevailing
party shall be entitled to recover his or its reasonable attorneys fees in
addition to all other remedies.

       11.     Necessary Acts.

               Each party agrees to perform all further acts and execute and
deliver all other documents which may be reasonably necessary to carry out the
provisions of this Agreement.

       12.     Severability.

               If any provision of this Agreement is determined by a court of
competent jurisdiction to be unenforceable, the remaining provisions shall
remain in full force and effect.

       13.     Entire Agreement.

               This Agreement contains the entire agreement between the
parties and supersedes all prior oral and written understandings and
agreements concerning the subject hereof.  No amendments may be made except by
a writing signed by both parties.

       14.     Applicable Law.

               This Agreement, and all provisions hereof, shall be interpreted
and enforced in accordance with the laws of the State of California.

       Executed at Walnut Creek, California, as of April 17, 2000.

                                     COMPUTERIZED THERMAL IMAGING, INC.,
                                     a Nevada corporation

                             By:     /s/ David P. Johnston
                                     -------------------------------------
                                     David P. Johnston
                                     President and Chief Executive Officer

                                     /s/ Maurice J. Bales
                                     -------------------------------------
                                     MAURICE J. BALES