U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549




                                  FORM 10 - KSB

                ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                   For the Fiscal Year Ended August 31, 2000.

                         Commission file number 0-10783

                             BSD MEDICAL CORPORATION


            DELAWARE                                      75-1590407
(State of Incorporation)                    (IRS Employer Identification Number)


         2188 West 2200 South
         Salt Lake City, Utah                                          84119
(Address of principal executive offices)                            (Zip Code)

Registrant's telephone number, including area code:  (801) 972-5555


Securities registered pursuant to Section 12(b) of the Act:   None

Securities registered pursuant to Section 12(g) of the Act:

         Title of Each Class           Name of Each Exchange on Which Registered
   Common Stock, $.01 Par Value                  Over-the-Counter

     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-B 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-KSB or any  amendment to
this Form 10-KSB. [X]

     Issuer's revenues for its most recent fiscal year: $1,730,393

     The   approximate   aggregate   market   value  of  Common  Stock  held  by
non-affiliates,  computed by reference to the price at which the stock was sold,
or the average bid and asked prices of such stock,  as of November 21, 2000, was
$8,116,266.

     As of November 21, 2000, there were 17,464,520  shares of Common Stock with
$0.01 par value outstanding.

     Documents Incorporated by Reference: None

     Transitional Small Business Disclosure Format: Yes [ ] No [X]



BSD Medical Corporation 2000 10-KSB                                       Page 1
<PAGE>
                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS

GENERAL

     BSD Medical Corporation (the "Company"),  a biomedical firm, was founded in
1978 to research the  demonstrated  ability of elevated heat  (hyperthermia)  to
destroy cancer cells. Hyperthermia has been shown to double the effectiveness of
radiation and provide  supra-additive  interactions  with many  chemotherapeutic
drugs.  BSD  was  successful  in  developing  and  commercializing  hyperthermia
treatment - a breakthrough therapy for both cancerous and benign diseases.

     Following  the initial  commercial  success,  in the late 1980s the Company
redirected    itself   away   from   commercial    sales   to   concentrate   on
research/development  of a new generation of deep electronically  focused phased
array equipment. It determined that the first generation products did not target
and steer deep  focused  energy  with  sufficient  efficacy  to achieve the full
therapeutic  benefit  of  hyperthermia.   The  second-generation   product,  the
BSD-2000,  was developed with the cooperative  efforts of such American research
institutions as Duke University, Northwestern University, University of Southern
California,   Stanford   University,   University  of  Utah  and  University  of
Washington,  St. Louis.  European research institutions that contributed to this
development effort included the Clinic of Grosshadern in Munich, Germany, Daniel
Den Hoed Cancer Center in Rotterdam, Netherlands,  Kantonsspital Aarau in Aarau,
Switzerland, University Clinic for Chirugie in Graz, Austria, Medical Clinic for
Lubeck  University  in Lubeck,  Germany,  University  Clinic in Essen,  Germany,
University  Clinic  in  Dusseldorf,  Germany,  University  Clinic  in  Tubingen,
Germany, University of Bergin in Bergin, Norway, University of Verona in Verona,
Italy and Hambolt University in Berlin, Germany.

     The objective of this  collaborative  research was to perfect the targeting
and steering  capabilities of hyperthermia  equipment and to demonstrate  safety
and efficacy for the new  generation  products  from the concepts  phase through
extensive  clinical trials.  After more than a decade-long  effort, the BSD-2000
product  family now has CE Mark  approval in Europe,  the  support of  published
Phase III clinical trials and has achieved acceptance,  including reimbursement,
in some substantial  European  countries.  Cancer sites investigated in clinical
trials include breast,  head and neck,  ovarian,  cervical/uterine,  colorectal,
prostate and bladder.  Histologies  include melanoma,  carcinoma and sarcoma. In
addition to those  completed,  ten U.S.  protocols are currently  running.  They
include  studies  relating  to use of  hyperthermia  for  treatment  of  locally
advanced carcinoma of the rectum, ovarian carcinoma, soft-tissue sarcoma and use
of hyperthermia in conjunction with intravenous liposome.

     Through  research  funded by the National  Cancer  Institute and supportive
efforts  by other  research  institutions,  the  Company  has also  been able to
develop  third-generation  enhancements to the BSD-2000 product. The BSD-2000o3D
adds  three-dimensional  steering of deep focused  energy,  delivering even more
precise  heating  to the  tumor.  As  part  of the  international  collaborative
research  efforts,  treatment  planning  software for the  BSD-2000o3D  has been
developed and is marketed through BSD.

     Both the BSD-2000 and BSD-2000o3D administer non-invasive treatment to deep
tumors. As a further objective,  non-invasive treatment monitoring has also been
added.  The  BSD-2000o3D/MR  provides  magnetic  resonance  imaging  (MRI) as an
interface with the BSD-2000o3D.

     To provide additional support for these sophisticated  products,  BSD hired
Dr. Mark  Hagmann in May 2000.  Dr.  Hagmann,  a former  Fellow at the  National
Institutes of Health,  brings broad  applicable  experience  to this effort.  He
continues to serve as, among several distinctions, an honorary member of the MIT
Institute  for Theory and  Computation  of the  Electromagnetics  Academy in the
Departments of Electrical Engineering and Computer Science.

BSD Medical Corporation 2000 10-KSB                                       Page 2
<PAGE>

     In addition  to therapy for deep  tumors,  BSD has  developed  hyperthermia
equipment  for  superficial   tumors  and  tumors  that  can  be  treated  using
interstitial  techniques.  While commercializing first generation products,  BSD
received the only FDA approval  issued for heat-alone  superficial or heat-alone
interstitial hyperthermia.  BSD also received the only FDA approval commercially
available for  interstitial  hyperthermia  in  combination  with  radiation.  In
addition,  BSD has approval for use of superficial  hyperthermia  in combination
with  radiation.  BSD has broad FDA  approvals for treatment of many tumor sites
and types. The Company is therefore using care in the current development of its
new  generation  of products  for  treating  superficial/interstitial  tumors to
preserve continuance of this broad scope FDA approval for the new products.

     Tumors that can be treated  with  superficial  hyperthermia  include  major
health problems such as melanomas,  head and neck cancer and breast cancer.  The
Company  has  FDA  approval  to  treat  these  with  hyperthermia  alone  or  in
combination  with  radiation.  A new market is also  emerging  for  interstitial
hyperthermia  in combination  with  radiation.  The  implantation of radioactive
seeds is  becoming  increasingly  common as a cancer  treatment  technique.  BSD
interstitial  products can be used to deliver  interstitial  hyperthermia  as an
additional  procedure,  using  antennae  inserted  through  the  same  implanted
catheters required for interstitial radiation  (brachytherapy).  The Company has
FDA  approval  for  interstitial  treatments  using  hyperthermia  alone  or  in
combination with radiation.

     Hyperthermia  is used to treat certain benign  diseases,  including  Benign
Prostatic  Hyperplasia (BPH), caused by enlargement of the prostate. On November
24, 1997, BSD entered into an agreement with Oracle  Strategic  Partners to form
TherMatrx, Inc., a jointly-owned company that would initially focus on minimally
invasive treatments of urological diseases,  specifically BPH. Equipment used by
TherMatrx was based on technology  originating  with the Company.  TherMatrx has
conducted Phase III randomized multi-center clinical trials. The FDA PMA process
is currently underway for the TherMatrx BPH treatment.

     The Company is engaged in four major endeavors:  (1) providing FDA approval
for its deeply  focused  electromagnetically  adaptive  phased  array  treatment
products,  (2) completion and  commercialization  of new generation products for
superficial tumor treatment also utilizing its FDA approved  superficial  phased
array  technology,  (3)  completion  and  commercialization  of  new  generation
products for interstitial  treatment and (4) support of the commercialization of
TherMatrx for the  treatment of BPH. The Company  believes that it and TherMatrx
have the competence and resources to obtain needed approvals from the FDA. There
can be no  assurance,  however,  that BSD or  TherMatrx  will be  successful  in
obtaining FDA approval for commercial marketing of deep hyperthermia products or
BPH products.  BSD believes that it can successfully  conclude and commercialize
its new generation of superficial/interstitial  systems, however there can be no
assurance  of this  success as changes  in market  conditions,  access to needed
resources or unforeseen  conditions could dilute or preclude  accomplishment  of
these  objectives.  Although there is much clinical  support for the efficacy of
hyperthermia in the treatment of tumors, there is no assurance that hyperthermia
is equally  therapeutic  or  effective in treating all forms of cancer or benign
diseases, alone or in combination with other therapies, or that hyperthermia can
be equally  effective in treating all patients with the same disease,  depending
on the patient's health, the progress of the disease and other factors.

     BSD is in the business of development, production, marketing, and servicing
of heat therapy  (hyperthermia/thermotherapy)  equipment.  BSD  currently has 11
U.S. patents,  8 foreign patents,  and 5 patent licenses (which cover all of its
current  applications  and  products  as well  as  additional  applications  and
devices).

     BSD was the first Company to obtain PreMarket  approval (PMA) from the Food
and Drug  Administration  (FDA) for a hyperthermia cancer therapy system and the
first Company to obtain Investigational Device Exemption (IDE) approval from the
FDA for thermotherapy  systems for the treatment of Benign Prostatic Hyperplasia
(BPH).  BSD  has  developed  second  and  third  generation  equipment,  and the
Company's systems,  depending upon  configuration and options,  have list prices
ranging from approximately $100,000 to $1,100,000.

BSD Medical Corporation 2000 10-KSB                                       Page 3

<PAGE>

     The Company was  incorporated  under the laws of the State of Utah on March
17,  1978.  On July 31, 1986,  pursuant to a Plan and  Agreement of Merger dated
July 11, 1986, the Company was merged into a Delaware corporation,  changing the
Company's state of incorporation from Utah to Delaware. The Delaware Corporation
was the surviving  company.  At the time of the 1986 merger, the total number of
shares of all  classes of stock which the Company  shall have the  authority  to
issue was increased to 30,000,000,  of which 10,000,000  shares are of $1.00 par
value  per  share  and are of a class  designated  Preferred  Stock and of which
20,000,000  shares are of $.01 par value per share and are of a class designated
Common Stock. There are currently no preferred shares outstanding.

BSD'S PRODUCTS/THERAPIES

     HYPERTHERMIA AS A CANCER  TREATMENT.  Cancer is a disease  characterized by
uncontrolled growth and spread of abnormal cells.  According to estimates by the
American  Cancer Society,  552,200  Americans are expected to die from cancer in
the year 2000,  and  1,220,100  new cancer  cases are  expected to be  diagnosed
during the year. Cancer is the second leading cause of death in the US, exceeded
only by heart disease. The National Institutes of Health estimate overall annual
costs for cancer at $107 billion.

     Hyperthermia  is the process of applying  energy to elevate the temperature
of the cancer  cells in order to destroy  or damage  the  tumor.  The  Company's
hyperthermia  equipment is used both in an effort to cure cancer,  by destroying
and eliminating  cancer cells, and, where curing the cancer is not possible,  as
palliative  treatment  (the  shrinking of tumors in order to reduce the pain and
other side effects of cancer).  Hyperthermia can usually destroy cancerous cells
without  harming  normal cells.  There is also some  evidence that  hyperthermia
increases  the  patient's  immune  system,  allowing the patient's own system to
fight the cancer as well as the side effects of other treatments.

     The Company's  hyperthermia  treatment can be used alone,  but is typically
used in conjunction with other therapies.  The primary advantage of hyperthermia
is that it can increase the effect of other therapies, such as radiation therapy
(radiotherapy) or chemotherapy,  while sometimes  reducing overall side effects.
Hyperthermia has been shown to double the effectiveness of radiation and provide
supra-additive  interactions  with  many  chemotherapeutic  drugs.  The  use  of
pre-surgical  hyperthermia  delivered  using BSD's  equipment  has been shown to
obviate the need for  amputation  of normal  tissues in some  sarcoma  patients.
BSD's systems have also been used pre-surgically to reduce the size of the tumor
prior to  surgery  and thus  make the tumor  more  easily  resectable  (surgical
removal) and increase the chances of obtaining clear surgical tumor margins, one
of the most significant prognostic factors in recurrence.  Published, randomized
clinical  studies  using  BSD's  equipment  have  shown  that  the  addition  of
hyperthermia to other cancer  therapies can result in: increased tumor response;
increased  disease-free  survival  time;  and  improved  quality of life for the
patient.

     CANCER HYPERTHERMIA  PRODUCTS.  The Company's cancer hyperthermia  products
are designed to apply  electromagnetic  (i.e.,  microwave or  radiofrequency) or
ultrasonic  energy to the human  body in order to  generate  temperatures  of 40
(degrees) C to 60 (degrees) C at the site of the tumor.  Thermometry systems are
used to measure tumor and normal tissue  temperatures  during treatment in order
to assist in achieving and maintaining safe and optimal treatment  temperatures.
The  Company's  hyperthermia  systems are  designed to permit the  treatment  of
various tumor sizes, various tumor depths and various anatomical sites.

     Cancer Hyperthermia Systems. A hyperthermia system typically consists of an
integrated  computer  control  unit,  a fixed or variable  frequency  generator,
applicators,  and thermometry.  The Company's  computer  software is designed to
maximize the safety and  effectiveness  of the  treatment by providing  accurate
treatment  planning,  monitoring,  and recall. The treatment planning capability
utilizes  the  Company's  proprietary  algorithms  and  software  to  allow  the
physician  to  customize  hyperthermia   treatments  for  specific  tumors.  The
Company's  cancer  hyperthermia  system  product line includes  various  systems
designed to target specific markets.

BSD Medical Corporation 2000 10-KSB                                       Page 4
<PAGE>

     Cancer   Hyperthermia    Applicators.    Hyperthermia    applicators   emit
radiofrequency,  microwave or  ultrasonic  energy  directly  into the patient to
provide  tumor  heating.  The Company  has  developed  and  patented a number of
specially  designed  applicators for treating a particular tumor in a particular
location.

     Applicators   generally  fall  into  two   categories:   external   surface
applicators   (superficial   and  deep)  and   interstitial   (i.e.,   invasive)
applicators.  Superficial and external  applicators deliver externally generated
energy to  specific  sites on or slightly  below the  surface of the skin.  Deep
phased array  radiofrequency  applicators provide externally generated energy to
deep-seated tumors by combining  phase-aligned  beams from multiple  applicators
positioned around the body. Interstitial microwave applicators are antennae that
are implanted directly into the body for heating from within the tumor itself.

     Thermometry.  The Company manufactures the BSD Thermistor Probe, as well as
other thermistor based thermometry  probes. The Company has an exclusive license
for the manufacture and  distribution of the BSD Thermistor  Probe.  The Company
also manufactures and sells specially developed thermistor probes for ultrasound
treatments.

     THERMOTHERAPY AS A BPH TREATMENT. On November 24, 1997, BSD entered into an
agreement  with  Oracle   Strategic   Partners  to  form   TherMatrx,   Inc.,  a
jointly-owned   company  that  would  initially  focus  on  minimally   invasive
treatments of urological  diseases,  specifically  Benign Prostatic  Hyperplasia
(BPH), a market that is currently estimated to exceed $3 billion annually in the
United States alone.

     The partnership  allowed Oracle Strategic  Partners to invest an initial $3
million on closing and an additional $3 million upon the  achievement of certain
milestone  parameters.  Charles  Manker,  President  and CEO of  TherMatrx,  was
allowed to provide an initial  investment  of $250,000,  in addition to Oracle's
investment,  and another  $250,000  when  milestone  funding was  obtained  from
Oracle.  BSD contributed  certain assets that have  applicability in the urology
market, and agreed not to engage in BPH business. As part of the agreement,  BSD
is providing certain manufacturing and consulting services,  for which TherMatrx
compensates the Company.

     In April 1999,  TherMatrx  Investment  Holdings,  LLC  (assignee  of Oracle
Strategic  Partners,  L.P. and Charles Manker)  completed an additional  capital
infusion into TherMatrx, Inc. of $3.25 Million, based on TherMatrx's achievement
of key success  milestones  in the  clinical  investigation  of a new therapy to
treat BPH with microwave energy.  After exercise of all shares allocated for the
Management Stock Purchase Plan, the Company will retain a 30 percent interest on
a fully diluted basis.

     TherMatrx's  corporate  headquarters are in Chicago.  Dr. Gerhard Sennewald
serves as BSD's representative on TherMatrx's Board of Directors.

MARKETING AND SALES

     The Company markets its cancer hyperthermia  products primarily to research
sites in radiation  oncology  departments in the U.S. and to radiation  oncology
and  chemotherapy  oncology  research  sites  outside the U.S. In the U.S.,  the
Company markets its equipment  directly using its own sales and marketing staff.
International sales are generally  accomplished through  distributing  companies
located in various foreign  countries.  The Company's  marketing efforts include
participation at trade shows and symposia and development of product  brochures,
newsletters,  and other promotional  materials.  The Company also co-sponsors an
annual international BSD Users' Conference.

BSD Medical Corporation 2000 10-KSB                                       Page 5
<PAGE>

     The Company anticipates that future marketing will be primarily directed to
commercial  radiation  oncology and chemotherapy  oncology  customers.  Further,
future  marketing for current  cancer  products may be expanded into two largely
untapped markets: surgical and chemotherapeutic  oncology. These two disciplines
control most cancer patients and treatment funds,  and clinical  evidence of the
safety and efficacy of hyperthermia in conjunction with chemotherapy and surgery
has been published. The Company believes that the domestic market will expand in
the  future  because  of a renewed  interest  in  hyperthermia  in the U.S.  and
evidence of increased profits from the addition of hyperthermia;  however, there
can be no assurance that an increase in the U.S. market will occur.

     For  the  year  ended  August  31,  2000,   two  customers   accounted  for
approximately 51% and 9%, respectively,  of BSD's net sales.  Medizintechnik,  a
company  controlled by a shareholder  of the Company,  purchased 51% sales.  The
loss of a significant  customer could have a material  detrimental impact on the
Company's  operations.  Because  only  one  hyperthermia  machine  is  generally
required at a treatment facility, BSD does not sell capital equipment to any one
customer on an ongoing basis.

     THIRD-PARTY  REIMBURSEMENT/MEDICAL COST CONTAINMENT.  In the United States,
the Company's products are purchased  primarily by medical  institutions,  which
then  bill  various  third-party  payers,  such  as  Medicare,  Medicaid,  other
government  programs,  and private insurance plans, for the health care services
provided to their patients, or by managed care organizations, which directly pay
for  services  provided to their  patients.  In December  1984,  the Health Care
Financing  Administration  ("HCFA" --- the agency  responsible for administering
the  Medicare and Medicaid  systems) and most of the private  medical  insurance
carriers in the U.S. approved reimbursement for hyperthermia in conjunction with
radiation   therapy  for  the  treatment  of  surface  and  subsurface   tumors.
Reimbursement  for services  rendered to Medicaid  beneficiaries  is  determined
pursuant to each state's  Medicaid  plan,  which is established by state law and
regulations, subject to requirements of Federal law and regulations.

     In  November  1995,  HCFA  authorized   Medicare   reimbursement   for  all
investigational  therapies and devices for which underlying  questions of safety
and   effectiveness   of  that  device  type  have  been   resolved,   based  on
categorization  by  FDA.  All  of  BSD's  investigational  (IDE)  equipment  and
protocols  have  been  placed  in this  category  by the  FDA,  and  thus may be
reimbursed by Medicare.

     Cost-containment  policies are impacting  the major cancer  markets such as
the U.S., Western Europe, and Japan, and these changes have negatively  impacted
the industry.  The Company is unable to predict the extent to which its business
may be affected by future legislative and regulatory developments.  There can be
no assurance that future health care reform  legislation or regulation  will not
have a material adverse effect on the Company's  business,  financial  condition
and results of operations.  There can be no assurance that procedures  using the
Company's  products  will,  in  the  future,  be  considered  cost-effective  by
third-party payers, that reimbursement will be available or, if available,  that
payers'  reimbursement levels will not adversely affect the Company's ability to
sell its products.

COMPETITION

     The Company  believes  that its  combination  of  technology,  performance,
quality,  reliability,  price,  and  breadth of product  line and  services  are
important  competitive  factors,  however,  competition in the medical  products
industry  is  intense,  both in the  United  States and  internationally.  BSD's
therapies are generally considered complementary to rather than competitive with
other  cancer  therapies,  such as radiation  and  chemotherapy.  However,  some
companies  that could be  competitors,  in that they are also  engaged in cancer
treatment businesses, have significantly greater financial,  technical, research
and  development,  engineering,  manufacturing,   distribution,  and  sales  and
marketing  resources than the Company.  Several  companies have received IDEs in
the United  States for certain  experimental  hyperthermia  systems  designed to
treat  both  malignant  and  benign  diseases.  In  addition  to BSD,  two other
companies  have  received FDA  Pre-Market  Approval for the  commercial  sale of
certain  hyperthermia  equipment  for  the  treatment  of  cancer  in the  U.S.:
Labthermics and Celsion Corporation (formerly Cheung Labs).

BSD Medical Corporation 2000 10-KSB                                       Page 6
<PAGE>

     BSD  participates in the BPH market as an investor in TherMatrx,  Inc. (see
"Thermotherapy  as a BPH  Treatment",  Page 3). In the BPH  market,  competitive
companies  offering  products  similar to TherMatrx's  products include EDAP TMS
(being  acquired by Urologix),  Urologix,  and Dornier  (which have PMA approval
from the FDA), VidaMed and ArgoMed,  Inc. (which have 510(k) marketing clearance
from the FDA),  and other foreign  manufacturers.  In addition to  thermotherapy
equipment made by competitors,  there are many other competitive  treatments for
BPH [including various drug treatments,  surgical lasers,  ultrasound  ablation,
electro-cautery  surgery,   stents,   transurethral  incision  of  the  prostate
(T.U.I.P.), and balloon dilation] that are currently being developed, clinically
investigated and/or actively marketed.

     The  Company   believes  that  other   companies  may  consider   marketing
hyperthermia/thermotherapy   equipment  and   anticipates   possible   increased
competition in the United States and internationally.  There can be no assurance
that others will not develop products that would materially adversely affect the
ability of the Company to compete effectively. Further, the treatment of disease
with hyperthermia equipment, and with other methods, is subject to technological
change.  There can be no  assurance  that other forms of  treatment  will not be
developed  which could be superior to the Company's  hyperthermia  systems.  The
Company expects to rely on trade secrets,  unpatented  proprietary  know-how and
continuing technological  innovation,  as well as current patents and new patent
applications, in order to maintain and improve its competitive position.

PRODUCT SERVICE

     The Company  provides a 12-month  warranty  following  installation  on all
cancer treatment systems and a 90-day limited warranty on individual components.
BSD's  employees  install  and  service  the  hyperthermia  systems  it sells to
domestic  customers.  In  addition,  Company  personnel or  consultants  perform
technical and clinical training.  Subsequent to the applicable  warranty period,
the Company offers full or limited service contracts to its domestic customers.

     Generally,  the Company's  distributors install and service systems sold to
foreign  customers and are responsible for managing their own warranty  programs
for their customers,  including labor and travel expenses.  The Company provides
parts  repair/replacement  warranties  for 12 months for systems and for 90 days
for  individual   components.   Spare  parts  are  generally  purchased  by  the
distributors  and stored at the  distributors'  maintenance  facilities to allow
prompt repair.  Distributor  service  personnel are usually  trained at customer
sites and at the Company's facilities in Salt Lake City.

PRODUCTION

     The Company  produces and tests its products at its facilities in Salt Lake
City,  Utah.  Some  purchased  components  are  modified by the  supplier or are
customized to the  Company's  specifications.  Key factors in the  manufacturing
process are assembly and testing.  Certain  components and processes used in the
manufacturing of the Company's  products are currently  provided or performed by
single-source  vendors.  Any supply  interruption  or yield  problems from these
vendors  would  have a  material  adverse  effect on the  Company's  ability  to
manufacture  its products  until a new source of supply were qualified and, as a
result,  could  have  a  material  adverse  effect  on the  Company's  business,
financial condition and results of operations.

     In order to provide outside financial support for manufacturing  operations
and diversify the Company's services, the Company is providing manufacturing and
testing services under contract to other companies.

BSD Medical Corporation 2000 10-KSB                                       Page 7
<PAGE>

RESEARCH AND DEVELOPMENT

     During the fiscal  years ended August 31,  2000,  and August 31, 1999,  the
Company  expended   $586,420  and  $517,564   respectively,   for  research  and
development,  representing  33.9%  and  83.4% of total  revenues.  Research  and
Development  expenditures  increased  in 2000 due to costs  associated  with the
development of the  BSD-2000 3D/MR  system and a new BSD-300-4 system,  combined
with costs associated with obtaining ISO 9001 and EN 46001  certification and CE
Marking for the BSD-2000 3D.

     BSD has  developed  the  BSD-2000 3D  - a new  generation  of deep regional
hyperthermia equipment funded in part by Phase I and II grants received from the
National Cancer Institute  (Grant No. CA61515).  The BSD-2000 3D can be modified
for  integration  with a magnetic  resonance  imaging  system,  and  becomes the
BSD-2000 3D/MR system. The BSD-2000 3D System integrates three-dimensional (3D),
"steerable",  focused  deep  regional  hyperthermia  with  3D  patient  specific
treatment planning.  This system is targeted for the treatment of large and deep
tumors; i.e., recurrent breast,  sarcoma,  lung,  colorectal,  liver,  cervical,
bladder,  stomach,  and  prostate.  The  first  BSD-2000 3D/MR  system  has been
installed and tested at a leading German oncological  research institution - the
Clinic  of  Medical  Oncology  of the  Klinikum  Grobhadern  Medical  School  of
Ludwigs-Maximilians-Universitat  Munchen,  Munich,  Germany.  The Medical School
received funding from the Stiftung Deutsche  Krebshilfe e. V. (German Cancer Aid
Foundation) for the system order.

     The BSD-2000 3D/MR  System was designed to provide simultaneous heating and
non-invasive  measurement of treatment  parameters;  such as tumor  temperature,
tumor response,  tissue heat damage,  tissue blood-flow,  tissue pathology,  and
other  chemical and  biological  changes in the tissue.  Non-invasive  treatment
monitoring   has  the  potential  to  optimize  tumor  heating  and  thus  tumor
destruction.  The development of reliable  non-invasive  thermometry is the next
required  step  in  the  field  of   hyperthermia   and  has  the  potential  to
significantly  increase the clinical  applications  and commercial  potential of
hyperthermia;  however,  there can be no assurance that this system will provide
reliable   non-invasive   thermometry.   Preliminary   laboratory   testing  has
demonstrated the ability to simultaneously heat and image with the MR portion of
this system.

     Technological  changes play an  important  part in the  advancement  of the
hyperthermia  industry.   Thus,  the  Company  intends  to  continue  to  devote
substantial  sums to  research  and  development  in order to  improve  existing
products and develop new products.  The Company is also currently in discussions
with some  researchers and  institutions  regarding heat treatment  products and
treatments  that might increase the clinical  applications  for BSD's  products,
with a  focus  on deep  regional  hyperthermia,  which  would  include  ovarian,
colorectal,  uterine,  cervix,  and  bladder,  and the  treatment  of  prostatic
carcinoma and breast cancer.

PATENTS, INTELLECTUAL PROPERTY, LICENSING, AND ROYALTY AGREEMENTS

     Because  of the  substantial  length of time and  expense  associated  with
bringing  new  products  through  development  and  regulatory  approval  to the
marketplace,  the medical  device  industry  places  considerable  importance on
obtaining patent and trade secret protection for new technologies,  products and
processes.  The  Company's  policy is to file  patent  applications  to  protect
significant  technology,   inventions  and  product  improvements.  The  Company
currently has 11 patents in the United  States and 8 patents  outside the United
States.  [Four  patents  were  assigned  to  TherMatrx,  for which  the  Company
maintained  a license,  and one patent  license was obtained by the Company from
University  of California  San Francisco  (UCSF).]  Other  hyperthermia  related
patents  are  pending.  A European  patent for the  BSD-2000 3D  system has been
issued.  There can be no assurance that the patents  presently  issued, or those
applied for (if granted), will be of significant value to the Company or will be
held valid upon judicial review.  Successful litigation against these patents by
a competitor could have a material  adverse effect upon the Company's  business,
financial  condition  and results of  operations.  The Company  believes that it
possesses  significant   proprietary  know-how  in  its  hardware  and  software
capabilities.  However,  there can be no assurance that others will not develop,
acquire or patent  technologies  similar or  superior to those of the Company or
that secrecy will not be breached.

BSD Medical Corporation 2000 10-KSB                                       Page 8
<PAGE>

     In July 1979, the Company entered into an exclusive worldwide license for a
unique  temperature  probe (Bowman Probe).  The license will remain in effect as
long as the  technology  does not become  publicly  known as a result of actions
taken by the licensor.  The Company pays  royalties  based upon its sales of the
Bowman Probe.  The license  agreement was amended and renewed in August 2000 and
is currently in effect.

     On  September  15, 1996,  Medizintechnik  (a company  owned by Dr.  Gerhard
Sennewald,  a member of BSD's Board of Directors and a major  stockholder of the
Company)    obtained   a   worldwide   fully   paid   software    license   from
Konrad-Zuse-Zentrum   fur   Informationstechnik    (ZIB)   of   Berlin   for   a
three-dimensional  (3D) hyperthermia  treatment  planning software - HYPERPLAN -
developed  by ZIB.  On January 21,  1998,  BSD entered  into an  agreement  with
Medizintechnik wherein Medizintechnik  irrevocably assigned the worldwide rights
under the ZIB  software  license  agreement to BSD,  with the sole  exception of
Europe,  where  Medizintechnik  retained these rights. In consideration for this
assignment  of  rights,  BSD  agreed to  supply,  at no  charge,  one  Sigma-Eye
applicator (not an MR compatible version) to Medizintechnik,  which will forward
this  applicator  to  Strahlenklinik  and  Poliklinik,  Virchow-Klinikum  of the
Humboldt-Universitat  of Berlin.  BSD also agreed to inform  Medizintechnik on a
regular  basis  about  software  sales to final  customers  and to pay timely to
Medizintechnik the software license fee (8% of the sales price for the HYPERPLAN
software or a minimum of DM 6,000) that,  under the terms of the ZIB  agreement,
is due to ZIB for each software sale.

     In July  1996,  BSD  entered  into a license  agreement  and  granted  EDAP
Technomed, Inc., now EDAP TMS S.A., a non-exclusive, non-transferable license of
certain  rights to one of BSD's  patents.  In 1994,  BSD issued a  non-exclusive
license  to  Urologix  to  practice  some of its  patented  technology  for cash
payments and royalties on future sales;  in 1996,  the Company  terminated  this
license. This license became part of a lawsuit that was settled in May 1998. The
license is now fully paid and irrevocable (see Note 15 to Financial Statements).

     BSD has acquired from UCSF the exclusive patent license for small microwave
antennae  that can be inserted  into  cancerous  tumors to destroy them from the
inside. The innovative  microwave antenna design enables the therapeutic heating
length to be  tailored to match the tumor size.  Clinical  studies  have shown a
survival  improvement  when using this technology in combination  with radiation
brachytherapy. This technology has been shown to be effective for many cancerous
tumors, including brain tumors.

     There  has  been   substantial   litigation   regarding  patent  and  other
intellectual  property rights in the medical device  industry.  In the past, the
Company  has  filed  lawsuits  for  patent  infringement  against  three  of its
competitors and subsequently settled all three of those lawsuits.

     From time to time, the Company has had and may continue to have discussions
with other  companies,  universities  and  private  individuals  concerning  the
possible granting of licenses covering  technology and/or patents.  There can be
no assurance that such discussions  will result in any agreements.  In the past,
BSD has granted  non-exclusive  practice  licenses for a few selected patents to
three companies. One of these companies is no longer in business.

GOVERNMENT REGULATION

     The medical  devices that have been and are being  developed by the Company
are subject to  extensive  and  rigorous  regulation  by  numerous  governmental
authorities,  principally  by the  United  States  Food and Drug  Administration
(FDA).  Pursuant to the Federal  Food,  Drug and Cosmetic Act (the FD&C Act), as
amended,  the FDA regulates and must approve the clinical testing,  manufacture,
labeling,  distribution,  and promotion of medical devices in the United States.
This regulation has become stringent and the approval process expensive and time
consuming.  In  addition,  various  foreign  countries  in which  the  Company's
products are or may be sold, have regulatory requirements.

BSD Medical Corporation 2000 10-KSB                                       Page 9
<PAGE>

     Sales into the  European  Union (EU) are now governed by the need to obtain
ISO  certification  and a CE  Mark  and  the  requirement  to  comply  with  all
applicable  directives.  In June 1998,  the  Medical  Devices  Directives  (MDD)
requirements  went into  effect  for the EU.  Following  June  1998,  no medical
products  could be  marketed  in  Europe  without  obtaining  a CE Mark and thus
demonstrating  compliance  to MDD  requirements.  The Company has  obtained  ISO
certification of its quality,  development,  and manufacturing processes and has
successfully  completed the CE Mark testing and Annex II audit, which will allow
BSD to affix the CE Mark label on the BSD-2000 3D  system and deliver systems to
Europe.  However,  the Company  must  maintain  compliance  with all current and
future directives and requirements in order to maintain ISO certification and to
continue to affix the CE Mark,  and there can be no  assurance  that the Company
will  continue  to  maintain  compliance.  If BSD is  unable to  maintain  these
approvals,  it could have a significant  material effect on the Company's future
financial condition.

     The majority of the Company's  past and present  hyperthermia  systems have
required,  (and  future  systems,  if any,  would  likely  continue  to require)
Pre-Market  Approval  from  the FDA  instead  of the  simpler  510(k)  marketing
approval.  Pre-Market  Approval  requires  clinical testing to assure safety and
effectiveness  prior to  marketing  and  distribution  of medical  devices.  The
Company  intends  to  continue  to  make  improvements  in and  to its  existing
products.  Significant  product changes must be submitted to the FDA under IDEs,
510(k) PreMarket notifications or PMA supplements.

     All medical devices must be  manufactured  in accordance  with  regulations
specified in the FDA Quality  System  Regulation  (QSR) and in the ISO and other
applicable regulations. In complying with these regulations,  manufacturers must
continue  to  expend  time,  money and  effort  in the areas of design  control,
production,  and quality control to ensure full  compliance.  The Medical Device
Reporting regulation requires that the Company provide information to the FDA on
death or serious  injuries  alleged to have been  associated with the use of its
products, as well as information on product malfunctions that would likely cause
or contribute to a death or serious  injury if the  malfunctions  were to recur.
The MDD  vigilance  system  regulations  require  that  the  Company's  European
Representative  provide  information  to the  Competent  Authority  on  death or
serious  injuries  alleged to have been associated with the use of its products,
as well as  information  on  product  malfunctions  that would  likely  cause or
contribute to a death or serious injury if the malfunctions were to recur.

     International sales of unapproved medical devices are subject to FDA export
requirements,  unless these products have been previously approved by one of the
countries  specified by the FDA. Failure to comply with regulatory  requirements
could  have a  material  adverse  effect on the  Company's  business,  financial
condition and results of operations. Although the Company believes that it is in
material compliance with all applicable  manufacturing and marketing regulations
of the FDA and other regulatory bodies with respect to its existing products,  a
determination  that the Company is in  material  violation  of such  regulations
could lead to the  imposition  of penalties,  including  fines,  recall  orders,
product  seizures,  and criminal  sanctions.  In addition,  current  regulations
depend heavily on administrative  interpretation,  and there can be no assurance
that future  interpretations  made by the FDA or other regulatory  bodies,  with
possible retroactive effect, will not adversely affect the Company.

     International  sales are subject to the regulatory and safety  requirements
of the country into which the sale occurs. There can be no assurance that all of
the necessary  approvals will be granted on a timely basis or at all.  Delays in
receipt of or failure to receive such  approvals  could have a material  adverse
effect on the Company's financial condition and results of operations.

BSD Medical Corporation 2000 10-KSB                                      Page 10
<PAGE>

     The Federal  Communications  Commission  (FCC) regulates the frequencies of
microwave and radiofrequency emissions from medical and other types of equipment
to  prevent   interference  with  commercial  and  governmental   communications
networks.  BSD's fixed frequency  systems and applicators  emit 915 MHz for U.S.
and some European installations and 433.92 MHz for some European  installations,
which  is  approved  by the FCC for  medical  applications.  Accordingly,  these
systems do not require shielding to prevent  interference  with  communications.
BSD's  variable-frequency  generators and  applicators  require  electromagnetic
shielding.  Ultrasound  hyperthermia  systems can be operated without  shielding
because the applicators emit acoustic rather than electromagnetic energy.

PRODUCT LIABILITY EXPOSURE

     The manufacturing and marketing of medical devices involve an inherent risk
of product liability.  Because the Company's products are intended to be used in
hospitals on patients who may be physiologically  unstable and severely ill, the
Company is exposed to potential product liability claims.  The Company presently
carries product liability insurance. However, there can be no assurance that the
product  liability  insurance will provide adequate  coverage against  potential
claims that might be made against the Company.  No product  liability claims are
presently pending against the Company;  however,  there can be no assurance that
product liability claims will not be filed in the future.

EMPLOYEES

     As of August 31, 2000,  the Company had 28 employees;  24 of them were full
time  employees.  None of the  Company's  employees  is covered by a  collective
bargaining agreement.  The Company considers its relations with its employees to
be  satisfactory.  The  Company  is  dependent  upon  a  limited  number  of key
management, manufacturing, and technical personnel. The Company's future success
will depend in part upon its ability to retain these highly qualified employees.


ITEM 2.  PROPERTIES

     The office,  production and research  facilities of the Company are located
in Salt Lake City,  Utah.  The complete  headquarters  and  production  facility
occupies  approximately  20,000 square feet. The Company leases the building for
an annual rental  expense of $78,396 (see Note 4 to Financial  Statements).  The
Company has an option to purchase the building.  The building lease is accounted
for as an operating  lease for  financial  statement  purposes.  The building is
currently in good  condition;  is adequate for the Company's  needs; is suitable
for all Company functions;  and provides room for future expansion.  The Company
believes that it carries adequate insurance on the property.


ITEM 3.  LEGAL PROCEEDINGS

None.


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

None.


BSD Medical Corporation 2000 10-KSB                                      Page 11
<PAGE>

                                     PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     The Company's  Common Stock trades publicly on the OTC Bulletin Board under
the  symbol  "BSDM".  The  following  table  sets  forth  the  high  and low bid
transactions,  as provided by the OTC Bulletin Board, for the quarters in fiscal
year 1998 and 1999.  The amounts  reflect  inter-dealer  prices,  without retail
mark-up, markdown or commission, and may not represent actual transactions.


                                                        Bid
                                             ---------------------------
        Quarter Ended:                            High          Low
        ----------------------------------------------------------------
        ----------------------------------------------------------------

        November 30, 1998.................        3/8          .19
        February 28, 1999.................        9/16         3/16
        May 31, 1999......................        1/2          .26
        August 31, 1999...................        .45          5/16
        November 30, 1999.................        .88          .25
        February 29, 2000.................       5.19         1.03
        May 31, 2000......................       3.81         1.13
        August 31, 2000...................       2.31          .88



     As of August 31, 2000,  there were  approximately  591 holders of record of
the Common  Stock.  The  Company has not paid any cash  dividends  on its Common
Stock since its  inception  and has no intention  of declaring  any Common Stock
dividends in the foreseeable future.

ITEM 6. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

RESULTS OF OPERATIONS

     The balance sheet as of August 31, 2000,  and the statements of operations,
statements  of cash flow and  statements of  stockholders'  equity for the years
ending August 31, 1999, and 2000, and the  independent  auditors report thereon,
are  included  elsewhere  in  this  report.  The  following  selected  financial
information  should be read in  conjunction  with the financial  statements  and
notes thereto included  elsewhere in this report.  At August 31, 1998, BSD had a
fifty-four  percent  interest in a subsidiary,  TherMatrx,  thus,  the financial
statements for the two companies were consolidated. During the year ended August
31,  1999,  the  Company's  interest  in the  subsidiary  was reduced to 34% and
consolidation was no longer required.  Therefore, the financial statements as of
August 31, 1999,  have been restated with the Company's  investment in TherMatrx
recorded  using the equity  method as of August 31,  2000 the equity  method has
been discontinued.(see Note 1 to Financial Statements).

     FISCAL YEAR ENDED AUGUST 31,  2000.  Revenues for the year ended August 31,
2000, totaled $1,730,393,  as compared to $620,221 for the year ended August 31,
1999,  an increase of  $1,110,172,  or 178.99%,  primarily  due to processing of
European  orders after the Company  received the CE Marking  approval on the new
BSD-2000 3D system, now required for sales to all European Union (EU) countries.
The Company has  successfully  completed the CE Mark testing and Annex II audit,
which  allows  BSD to affix  the CE Mark  label on the  BSD-2000 3D  system  and
deliver systems to Europe.

BSD Medical Corporation 2000 10-KSB                                      Page 12
<PAGE>


     Product  sales  increased  from  $596,441 in 1999 to $1,535,600 in 2000, an
increase of $939,159, or 157.46%. Sales remained principally limited to research
centers, awaiting new product  commercialization.  Gross profit on product sales
was  $604,228,  as compared to a gross loss of $36,064 for fiscal  1999,  due to
above mentioned increase in sales. Selling,  General and Administrative Expenses
for 2000  totaled  $1,147,868,  as compared to $944,756 in 1999,  an increase of
$203,112,  or 21.49%,  primarily due to increases in Sales and Marketing efforts
and  compensation  expense  associated  with  amortization  of options and stock
awards.

     Research and Development Expenses for 2000 totaled $586,420, as compared to
$517,564  in 1999,  an increase of $68,856 or 13.3%,  due to  development  costs
associated  with the  BSD-2000 3D/MR  system  and with a new  BSD-300-4  system,
combined  with  costs   associated   with   obtaining  ISO  9001  and  EN  46001
certification and CE Marking for the BSD-2000 3D.

     Total Costs and Expenses for 2000 were $2,665,660, an increase of $570,835,
or 27.24%,  as compared to $2,094,825 for fiscal 1999 due to the  aforementioned
increases  in  Research  and   Development   Expenses,   Selling,   General  and
Administrative Expenses and higher product costs as a result of increased sales.

     Interest  Expense in 2000 decreased to $654, as compared to $3,630 in 1999.
The decrease was caused  primarily by lower interest costs associated with notes
payable as they reach  maturity  and that the company  has no  interest  bearing
debt.

     During  fiscal  2000,  the Company  experienced  a Net Loss of $888,947 as,
compared  to a Net Loss in fiscal 1999 of  $1,928,050.  The fiscal 2000 loss was
primarily  associated with expenses designated to prepared new product lines for
commercialization. The loss for 1999 included $546,452 which was attributable to
Thermatrx  which does not apply to fiscal  2000  because of the above  mentioned
change in accounting method resulting from the change in ownership percentage by
the Company and it's carrying value of the Thermatrx investment.

     RISKS  ASSOCIATED  WITH  INTERNATIONAL   OPERATIONS.   International  sales
accounted for 69.60% and 47.59% of the Company's  total product sales during the
fiscal  years ended  August 31, 2000,  and August 31,  1999,  respectively.  The
Company  expects  that   international   sales  will  continue  to  represent  a
significant  portion of its total sales. The Company has successfully  completed
the CE Mark  testing  and Annex II audit,  which  will allow BSD to affix the CE
Mark label on the BSD-2000 3D system and deliver systems to Europe.  However, an
inability  to maintain the  necessary  approvals  could have adverse  effects on
future sales of products to EC countries (see  Government  Regulation,  page 7).
The  Company  is  subject  to  risks  generally  associated  with  international
operations,  including  the  establishment  by foreign  regulatory  agencies  of
product  standards  different from, and in some cases more stringent than, those
in the United  States.  Although the  Company's  sales are  denominated  in U.S.
dollars,  its  international  business  may be  affected  by  changes  in demand
resulting  from   fluctuations  in  currency   exchange  rates.   The  Company's
international  sales may also be adversely  affected by tariff  regulations  and
export license requirements.  Possible  governmental,  legislative and political
actions that may be taken by the United States in order to reduce the balance of
payments deficit may result in retaliatory actions by foreign governments.  Such
actions  could have  adverse  effects  upon sales of the  Company's  products in
certain foreign markets.  In addition,  the laws of certain foreign countries do
not protect the Company's  intellectual property rights to the same extent as do
the laws of the United States.

     FLUCTUATIONS  IN  OPERATING  RESULTS.  The  Company's  sales and  operating
results historically have varied (and will likely continue to vary) greatly on a
quarter-to-quarter   and  year-to-year   basis  due  to  risks  associated  with
international  operations;  budgeting considerations of the Company's customers;
the nature of the medical capital equipment market; the inability of the Company
to  predict  the  timing of various  approvals  required  from the Food and Drug
Administration,  the European Union countries,  and other governmental agencies;
the  relatively  large per unit  sales  prices of the  Company's  products;  the
typical  fluctuations  in the mix of orders  for  different  systems  and system
configurations;  the limited  unit sales  volumes;  the  Company's  limited cash
resources;  changes in Medicare and other  third-party  reimbursement  policies;
competition;  and other  factors.  For these and other  reasons,  the results of
operations  for a particular  fiscal period may not be indicative of results for
any other period.

BSD Medical Corporation 2000 10-KSB                                      Page 13
<PAGE>

     LIQUIDITY AND CAPITAL  RESOURCES.  Total assets  decreased to $2,154,413 in
2000, a decrease of $643,504,  as compared to 1999.  The decrease was  primarily
due to a decrease in cash. Cash decreased to $731,494, as compared to $1,689,027
in 1999,  primarily as a result of using cash for operating  expenses.  Accounts
receivable increased to $348,333, an increase of $289,067, or 487.74%, primarily
due to  shipment  of European  orders  after the  receipt of the CE Mark.  Total
inventories  decreased  to  $905,102,  a decrease  of $3,139,  or .34%.  Current
liabilities increased to $848,452, an increase of $86,528, or 11.35%,  primarily
due to an increase in customer deposits.

MANAGEMENT DISCUSSION AND CURRENT STATUS OF FINANCIAL CONDITION.

     Management believes that the current projected sales and cash position will
be sufficient to meet the Company's  operating cash requirements  through fiscal
year 2000. Management further believes that the primary financial  opportunities
for  the  company  are in  commercialization  of  new  generation  products  and
commercialization  of TherMatrx  products,  as described in Part I General.  The
Company's ability to be profitable will depend on achieving  regulatory approval
of certain new products,  the completion of development  for others,  and in the
successful commercialization of these products in the marketplace.  There can be
no assurance that commercialization of these new products will be successful, or
that profitability will be achieved.

     On  November  14,  1997,  BSD signed an  agreement  with  Oracle  Strategic
Partners  (OSP) to form  TherMatrx,  Inc., a  jointly-owned  company  which will
initially focus on minimally invasive treatments of benign urological  diseases,
specifically  Benign  Prostatic  Hyperplasia  (BPH). BSD participates in the BPH
market through  TherMatrx.  The BPH market is currently  estimated to be over $3
billion  annually in the U.S. alone.  The FDA PMA process is currently  underway
for TherMatrx. There is no assurance, however, that TherMatrx will obtain a PMA.

     FORWARD  OUTLOOK  AND RISKS.  From time to time,  the  Company  may publish
forward-looking  statements  relating to such matters as  anticipated  financial
performance,  business  prospects,   technological  development,  new  products,
research and development  activities and similar matters. The Private Securities
Litigation  Reform  Act of  1995  provides  a safe  harbor  for  forward-looking
statements.  In order to comply with the terms of the safe  harbor,  the Company
notes that a variety of factors  could cause the  Company's  actual  results and
experience  to  differ   materially  from  the  anticipated   results  or  other
expectations expressed in any of the Company's forward-looking statements.

     This  form  10-KSB   contains  and   incorporates   by  reference   certain
"forward-looking statements" within the meaning of Section 27A of the Securities
Act and Section 21E of the Exchange  Act with  respect to results of  operations
and  businesses  of the  Company.  All  statements,  other  than  statements  of
historical facts, included in this Form 10-KSB, including those regarding market
trends, the Company's  financial position,  business strategy,  projected costs,
and  plans  and   objectives   of   management   for  future   operations,   are
forward-looking  statements.  These forward-looking  statements are based on the
Company's  current   expectations.   Although  the  Company  believes  that  the
expectations reflected in such forward-looking statements are reasonable,  there
can be no assurance that such expectations will prove to be correct.

ITEM 7.  FINANCIAL STATEMENTS

     Pursuant to Rule 12b-23,  the financial  statements  set forth on pages F-1
through F-18 attached hereto are incorporated by reference.


BSD MEDICAL CORPORATION
Financial Statements
August 31, 2000 and 1999


<PAGE>

                                                         BSD MEDICAL CORPORATION
                                                   Index to Financial Statements


--------------------------------------------------------------------------------




                                                                      Page

Independent Auditor's Report                                            F-1


Balance Sheet                                                           F-2


Statement of Operations                                                 F-3


Statement of Stockholders' Equity                                       F-4


Statement of Cash Flows                                                 F-5


Notes to Financial Statements                                           F-6
<PAGE>

                                                   INDEPENDENT AUDITORS' REPORT








To the Board of Directors and Stockholders
of BSD Medical Corporation


We have audited the balance sheet of BSD Medical Corporation (the Company) as of
August 31, 2000, and the related statements of operations, stockholders' equity,
and cash flows for the years ended  August 31,  2000 and 1999.  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  generally   accepted  auditing
standards.  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 financial  statements  referred to above present fairly, in
all material respects,  the financial position of BSD Medical  Corporation as of
August 31,  2000,  and the  results of their  operations  and cash flows for the
years  ended  August 31, 2000 and 1999 in  conformity  with  generally  accepted
accounting principles.










Salt Lake City, Utah
October 13, 2000

                                                                             F-1
<PAGE>
                                                         BSD MEDICAL CORPORATION
                                                                   Balance Sheet
                                                                 August 31, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>



              Assets

Current assets:
<S>                                                                                     <C>
     Cash and cash equivalents                                                          $          731,494
     Receivables, net                                                                              348,333
     Inventories                                                                                   905,102
     Prepaid expenses                                                                               21,459
     Deposits and other assets                                                                      28,987
                                                                                        ------------------

                  Total current assets                                                           2,035,375

Property and equipment, net                                                                         86,582
Long-term trade receivables                                                                         19,210
Patent, net of amortization of $683                                                                 13,246
                                                                                        ------------------

                                                                                        $        2,154,413
                                                                                        ------------------

----------------------------------------------------------------------------------------------------------

              Liabilities and Stockholders' Equity

Current liabilities:
     Accounts payable                                                                   $           61,537
     Accrued expenses                                                                              692,561
     Current portion of deferred revenue                                                            32,938
     Current portion of deferred gain on sale - leaseback                                           61,416
                                                                                        ------------------

                  Total current liabilities                                                        848,452
                                                                                        ------------------

Deferred revenue                                                                                    13,086
Deferred gain on sale - leaseback                                                                   76,691
                                                                                        ------------------

                  Total liabilities                                                                938,229
                                                                                        ------------------

Commitments and contingencies                                                                            -

Stockholders' equity:
     Common stock, $.01 par value; authorized 20,000,000
       shares; issued and outstanding 17,479,692 shares                                            174,797
     Additional paid-in capital                                                                 20,766,625
     Deferred compensation                                                                         (13,897)
     Accumulated deficit                                                                       (19,711,107)
     Treasury stock, at cost                                                                          (234)
                                                                                        ------------------

                  Total stockholders' equity                                                     1,216,184
                                                                                        ------------------

                                                                                        $        2,154,413
                                                                                        ------------------
</TABLE>
See accompanying notes to financial statements.                              F-2
<PAGE>
<TABLE>
<CAPTION>

                                                                                   Statement of Operations

                                                                                    Years Ended August 31,
-------------------------------------------------------------------------------------------------------------------




                                                                             2000              1999
                                                                       -----------------------------------

Revenues:
<S>                                                                    <C>                <C>
     Sales                                                             $         577,003  $        215,441
     Sales to related parties                                                    958,597           381,000
     Grants and licenses                                                         194,793            23,780
                                                                       -----------------------------------

                                                                               1,730,393           620,221
                                                                       -----------------------------------

Costs and expenses:
     Cost of sales                                                               546,753           437,556
     Cost of sales to related parties                                            384,619           194,949
     Research and development                                                    586,420           517,564
     Selling, general, and administrative                                      1,147,868           944,756
                                                                       -----------------------------------

                                                                               2,665,660         2,094,825
                                                                       -----------------------------------

                  Operating loss                                                (935,267)       (1,474,604)

Other income (expense):
     Interest income                                                              46,974            96,636
     Interest expense                                                               (654)           (3,630)
     Loss of joint venture                                                             -          (546,452)
                                                                       -----------------------------------

                  Net loss                                             $        (888,947  $     (1,928,050)
                                                                       -----------------------------------

Loss per common share - basic and diluted                              $           (.05)  $           (.12)
                                                                       -----------------------------------

Weighted average shares                                                       17,047,000        16,468,000
                                                                       -----------------------------------



</TABLE>

--------------------------------------------------------------------------------
See accompanying notes to financial statements.                              F-3
<PAGE>
<TABLE>
<CAPTION>

                                                                                   BSD MEDICAL CORPORATION

                                                                         Statement of Stockholders' Equity

                                                                      Years Ended August 31, 2000 and 1999
-------------------------------------------------------------------------------------------------------------------




                                               Additional   Deferred
                            Common Stock        Paid-In      Compen-   Accumulated      Treasury Stock
                        ---------------------                                       ----------------------
                          Shares     Amount     Capital      sation      Deficit      Shares     Amount
                        ----------------------------------------------------------------------------------

Balance,
<S>                      <C>        <C>       <C>           <C>         <C>              <C>     <C>
  September 1, 1998      16,370,052 $ 163,701 $  20,531,967 $ (311,366) $ (16,894,110)    13,412 $     (234)

Amortization of deferred
  compensation                    -         -             -    151,880             -          -          -

Common stock issued
  for services              323,923     3,239       156,142          -             -          -          -

Net loss                          -         -             -          -     (1,928,050)        -          -
                        ----------------------------------------------------------------------------------

Balance,
  August 31, 1999        16,693,975   166,940    20,688,109   (159,486)   (18,822,160)    13,412       (234)

Common stock issued
for:
  Cash                      244,912     2,449        23,748          -             -          -          -
  Stock options
    and warrants            509,044     5,090        (5,090)         -             -          -          -
  Services                   29,761       298        52,452          -             -          -          -
  Subscription receivable     2,000        20           480          -             -          -          -

Amortization of deferred
  compensation                    -         -             -    151,880             -          -          -

Deferred compensation             -         -         6,926     (6,291)            -          -          -

Contribution of
treasury shares                   -         -             -          -             -      10,919         -

Net loss                          -         -             -          -       (888,947)         -         -
                        ----------------------------------------------------------------------------------

Balance,
  August 31, 2000        17,479,692 $ 174,797 $  20,766,625 $  (13,897) $ (19,711,107)    24,331 $     (234)
                        ----------------------------------------------------------------------------------
</TABLE>



-------------------------------------------------------------------------------
See accompanying notes to financial statements.                              F-4
<PAGE>
<TABLE>
<CAPTION>

                                                                                   BSD MEDICAL CORPORATION

                                                                                   Statement of Cash Flows

                                                                                    Years Ended August 31,
-------------------------------------------------------------------------------------------------------------------



                                                                             2000              1999
                                                                       -----------------------------------
Cash flows from operating activities:
<S>                                                                    <C>                <C>
     Net loss                                                          $        (888,947) $      (1,928,050)
     Adjustments to reconcile net loss to net
       cash (used in) operating activities:
         Depreciation and amortization                                            23,082            23,854
         Provision for losses on receivables                                           -               (30)
         Deferred gain on sale of building                                       (61,416)          (61,416)
         Loss (gain) on disposal of
           property and equipment                                                     25             1,203
         Deferred compensation                                                   145,589           151,880
         Stock compensation expense                                               59,676           159,381
         (Increase) decrease in:
              Receivables                                                       (295,037)          304,848
              Inventories                                                          3,139          (283,966)
              Prepaid expenses and other assets                                   (8,898)          (10,580)
         Increase (decrease) in:
              Accounts payable                                                    30,748           (51,520)
              Accrued expenses                                                   135,089           196,491
              Deferred revenue                                                   (65,018)          (83,288)
              Loss (income) from equity investment                                     -           546,452
                                                                       -----------------------------------

                  Net cash used in
                  operating activities                                          (921,968)       (1,034,741)
                                                                       -----------------------------------

Cash flows from investing activities:
     Purchase of property and equipment                                          (21,914)          (43,374)
     Purchase of patent license                                                  (13,928)                -
                                                                       -----------------------------------

                  Net cash used in
                  investing activities                                           (35,842)          (43,374)
                                                                       -----------------------------------

Cash flows from financing activities:
     Payments on long-term debt                                                  (25,922)          (30,888)
     Proceeds from issuance of common stock                                       26,197                 -
                                                                       -----------------------------------

                  Net cash (used in) provided by
                  financing activities                                               275           (30,888)
                                                                       -----------------------------------

Decrease in cash and cash equivalents                                           (957,535)       (1,109,003)

Cash and cash equivalents, beginning of year                                   1,689,029         2,798,032
                                                                       -----------------------------------

Cash and cash equivalents, end of year                                 $         731,494  $      1,689,029
</TABLE>

--------------------------------------------------------------------------------
See accompanying notes to financial statements.                             F-5
<PAGE>
                                                   Notes to Financial Statements

                                                        August 31, 2000 and 1999
--------------------------------------------------------------------------------


1.Organization and Significant Accounting Policies

Organization
BSD Medical Corporation (the Company) develops,  produces, markets, and services
systems used for the treatment of cancer and other  diseases.  These systems are
sold worldwide.  In addition,  the Company  currently has a thirty-four  percent
interest in  Thermatrx,  Inc.  (Thermatrx)  a corporate  joint  venture  that is
engaged in the manufacture and sale of medical equipment.

Cash and Cash Equivalents
Cash  and  cash  equivalents  consist  of cash  and  investments  with  original
maturities to the Company of three months or less.

Inventories
Parts and supplies  inventories are stated at the lower of cost or market.  Cost
is determined using the average cost method.  Work-in-process and finished goods
are stated at the lower of the accumulated manufacturing costs or market.

Property and Equipment
Property  and  equipment  are  stated  at cost  less  accumulated  depreciation.
Depreciation and amortization is determined using the straight-line  method over
the  estimated  useful lives of the assets.  Expenditures  for  maintenance  and
repairs are expensed when incurred and  betterments are  capitalized.  Gains and
losses on sale of property and equipment are reflected in operations.

Investment in Joint Venture
The Company has a 34% ownership in another company.  The investment is accounted
for on the equity method of accounting.  In accordance  with APB 18, the Company
has  discontinued  applying the equity method as the investment has,  because of
recurring  losses,  been eliminated as an asset and the Company is not obligated
for any liability obligations of the joint venture.

Patents
Patents  are  carried at the cost and are being  amortized  over the life of the
patent.


--------------------------------------------------------------------------------
                                                                             F-6
<PAGE>
                                                         BSD MEDICAL CORPORATION
                                                   Notes to Financial Statements
                                                                       Continued

--------------------------------------------------------------------------------

1.   Organization and Significant Accounting Policies Continued

Income Taxes
The Company  accounts  for income  taxes using the asset and  liability  method.
Under the asset and liability  method,  deferred tax assets and  liabilities are
recognized for the future tax consequences  attributable to differences  between
the financial  statement carrying amounts of existing assets and liabilities and
their  respective tax bases.  Deferred tax assets and  liabilities  are measured
using  enacted  tax rates  expected  to apply to taxable  income in the years in
which those temporary  differences are expected to be recovered or settled.  The
effect  on  deferred  tax  assets  and  liabilities  of a change in tax rates is
recognized in income in the period that includes the enactment date.


Loss Per Common Share
The computation of basic loss per common share is based on the weighted  average
number of shares outstanding during each year.

The  computation  of diluted  earnings per common share is based on the weighted
average  number of shares  outstanding  during the year,  plus the common  stock
equivalents  that would arise from the  exercise of stock  options and  warrants
outstanding,  using the treasury  stock method and the average  market price per
share during the year.  Common stock equivalents are not included in the diluted
loss per share calculation when their effect is antidilutive.


Stock Subscription Receivable
A stock subscription  receivable of $500, included in deposits and other assets,
represents stock acquired with a note  receivable.  Proceeds from the receivable
were collected subsequent to August 31, 2000.


Revenue Recognition
Sales for  products  are  recorded  when  products  are  shipped.  Revenue  from
long-term service contracts is recognized on a straight-line basis over the term
of the contract,  which  approximates  recognizing it as it is earned.  Deferred
revenue includes amounts from service contracts as well as revenue from sales of
products which have not been shipped.


Research and Development Costs
Research and development costs are expensed as incurred.


--------------------------------------------------------------------------------
                                                                             F-7
<PAGE>
                                                         BSD MEDICAL CORPORATION
                                                   Notes to Financial Statements
                                                                       Continued

--------------------------------------------------------------------------------



1.   Organization and Significant Accounting Policies Continued

Concentration of Credit Risk
Financial  instruments that potentially  subject the Company to concentration of
credit risk  consists  primarily of trade  receivables.  In the normal course of
business, the Company provides credit terms to its customers.  Accordingly,  the
Company  performs  ongoing  credit  evaluations  of its  customers and maintains
allowances for possible losses which, when realized,  have been within the range
of management's expectations.


The Company has cash in bank and  short-term  investments  that,  at times,  may
exceed federally  insured limits.  The Company has not experienced any losses in
such accounts.  The Company believes it is not exposed to any significant credit
risk on cash and short-term investments.


Use of Estimates in the Preparation of Financial Statements
The preparation of financial  statements in conformity  with generally  accepted
accounting principles 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.


2.   Detail of Certain Balance Sheet Accounts

Details of certain balance sheet accounts as of August 31, 2000, are as follows:

Receivables:
     Trade receivables                                    $         295,540
     Other receivables                                               62,762
     Less allowance for doubtful
       accounts                                                      (9,969)
                                                          -----------------

                                                          $         348,333
                                                          -----------------


--------------------------------------------------------------------------------
                                                                            F-8
<PAGE>
                                                         BSD MEDICAL CORPORATION
                                                   Notes to Financial Statements
                                                                       Continued

--------------------------------------------------------------------------------



2.   Detail of Certain Balance Sheet Accounts Continued

Inventories:
     Parts and supplies                                   $         533,306
     Work-in-process                                                371,796
     Finished goods                                                       -
                                                          -----------------

                                                          $         905,102
                                                          -----------------



Accrued expenses:
     Customer deposits                                    $         380,817
     Accrued expenses                                               311,744
                                                          -----------------

                                                          $         692,561
                                                          -----------------



3.   Property and Equipment

Property and equipment consists of the following:


Equipment                                                 $         493,850
Furniture and fixtures                                              297,741
                                                          -----------------

                                                                    791,591

Less accumulated depreciation
  and amortization                                                 (705,009)
                                                          -----------------

                                                          $          86,582
                                                          -----------------



4.   Deferred Gain

During the year ended August 31, 1998, the Company entered into a sale-leaseback
on its  building.  The  sale-leaseback  resulted  in a gain of $325,513 of which
$307,000  was  deferred  and  is  being  credited  to  income  as  rent  expense
adjustments  over the term of the lease.  The lease requires monthly payments of
$6,533 through November 2002.


--------------------------------------------------------------------------------
                                                                             F-9
<PAGE>
                                                         BSD MEDICAL CORPORATION
                                                   Notes to Financial Statements
                                                                       Continued

--------------------------------------------------------------------------------




4.   Deferred Gain Continued

Future minimum payments at August 31, 2000, are as follows:


Years Ending August 31,                                        Amount
                                                          -----------------

                           2001                           $          78,396
                           2002                                      78,396
                           2003                                      19,599
                                                          -----------------

                                                          $         176,391
                                                          -----------------

Annual rent expense on this operating  lease for the years ended August 31, 2000
and 1999, amounted to approximately $78,000.


5.   Income Taxes

The Income tax benefit  differs  from the amount  computed at federal  statutory
rates as follows:


                                                    Years Ended
                                         ----------------------------------
                                               2000             1999
                                         ----------------------------------

Income tax benefit at statutory rate     $         457,000$         655,000
Subsidiary loss                                   (155,000)        (186,000)
Other                                               (9,000)        (111,000)
Change in valuation allowance                     (293,000)        (358,000)
                                         ----------------------------------

                                         $                $-               -
                                         ----------------------------------


--------------------------------------------------------------------------------
                                                                            F-10
<PAGE>
                                                         BSD MEDICAL CORPORATION
                                                   Notes to Financial Statements
                                                                       Continued

--------------------------------------------------------------------------------



5.   Income Taxes Continued

Deferred tax assets (liabilities) are comprised of the following:


Net operating loss carryforwards                          $       1,574,000
General business and AMT credit carryforwards                       180,000
Accrued expenses and deposits                                       167,000
Inventory                                                             7,000
Allowance for bad debts and reserves                                  3,000
Depreciation                                                        (13,000)
Deferred compensation expense                                         5,000
Deferred gain                                                        42,000
                                                          -----------------

                                                                  1,965,000

Valuation allowance                                              (1,965,000)
                                                          -----------------

                                                          $              -
                                                          -----------------



At August 31, 2000, the Company has net operating losses (NOL) as follows:


Expiration Date                                                  NOL
                                                          -----------------

     2003                                                 $         339,000
     2005                                                         1,270,000
     2007                                                           190,000
     2008                                                            99,000
     2009                                                           671,000
     2010                                                           170,000
     2012                                                           838,000
     2018                                                         1,052,000
                                                          -----------------

                                                          $       4,629,000
                                                          -----------------



--------------------------------------------------------------------------------
                                                                            F-11
<PAGE>
                                                         BSD MEDICAL CORPORATION
                                                   Notes to Financial Statements
                                                                       Continued

--------------------------------------------------------------------------------



5.   Income Taxes Continued

At August 31,  2000,  the Company has Research  and  Experimentation  Tax Credit
(RETC) , Investment Tax Credit (ITC), and Alternative  Minimum Tax Credit (AMTC)
as follows:


Expiration Date                   RETC            ITC            AMTC
                             ----------------------------------------------

     2001                    $             - $          2,000 $           -
     2002                              8,000               -              -
     2003                             41,000               -              -
     2005                             72,000               -              -
     No expiration date                    -               -         57,000
                             ----------------------------------------------

                             $       121,000 $         2,000  $      57,000
                             ----------------------------------------------



The Company  has  experienced  a greater  than 50 percent  change of  ownership.
Consequently,  use of the Company's  carryovers against future taxable income in
any one year may be limited and those  carryovers  may expire  unutilized due to
limitations imposed by the change of ownership rules.


6.   Stock Options and Warrants

Stock Options
The  Company's  1987  Employee  Stock  Option Plan  authorizes  the  granting of
incentive options to certain key employees of the Company and nonqualified stock
options to certain key employees,  nonemployee  directors,  or  individuals  who
provide services to the Company. The Plan, as amended, provides for the granting
of options for an aggregate of 950,000  shares.  The options vest according to a
set  schedule  of  over a  five-year  period  and  expire  upon  the  employee's
termination  or after ten years  from the date of grant.  In 1995,  the Board of
Directors authorized the cancellation of all outstanding options under this plan
and reissue of options with an exercise  price of $.10 per share which vest over
a one to five year period.

The  Company's  1998  Employee  Stock  Option Plan  authorizes  the  granting of
incentive  stock options to certain key employees and  nonemployees  who provide
services to the  Company.  The Plan  provides for the granting of options for an
aggregate  of  2,000,000  shares.  The  options  vest  subject  to  management's
discretion.


--------------------------------------------------------------------------------
                                                                            F-12
<PAGE>
                                                         BSD MEDICAL CORPORATION
                                                   Notes to Financial Statements
                                                                       Continued

--------------------------------------------------------------------------------


6.   Stock Options and Warrants Continued

The Company's 1998 Director Stock Plan authorizes granting a total of $12,000 in
cash and options to each nonemployee director.  The Plan allows for an aggregate
of 1,000,000 shares to be granted.  The options vest according to a set schedule
over a five-year period and expire upon the director's termination, or after ten
years from the date of grant.  For certain  options  issued under this plan, the
Company has recorded as deferred  compensation the excess of the market value of
common stock at the date of grant over the exercise price.


A schedule of the options and warrants are as follows:



                                                                  Price Per
                                          Options     Warrants      Share
                                       ---------------------------------------

Outstanding at August 31, 1998             1,135,246     242,655  $ .10 to .25
                           Granted           419,000           -    .24 to .45
                           Canceled          (75,000)          -    .24 to .35
                                       ---------------------------------------

Outstanding at August 31, 1999             1,479,246     242,655  $ .10 to .45
                           Granted           445,000      75,000   .39 to 9.00
                           Exercised        (596,978)   (181,991)   .10 to .45
                           Cancelled         (45,600)               .24 to .45
                                       ---------------------------------------

Outstanding at August 31, 2000             1,281,668     135,664 $ .10 to 9.00
                                       ---------------------------------------



--------------------------------------------------------------------------------
                                                                            F-13
<PAGE>
                                                         BSD MEDICAL CORPORATION
                                                   Notes to Financial Statements
                                                                       Continued

--------------------------------------------------------------------------------



6.   Stock Options and Warrants Continued

The Company has adopted the disclosure-only provisions of Statement of Financial
Accounting  Standards (SFAS) No. 123,  Accounting for Stock-Based  Compensation.
Accordingly,   no  compensation  cost  has  been  recognized  in  the  financial
statements  for  employees,  except when the exercise  price is below the market
price of the stock on the date of grant. Had compensation cost for the Company's
stock option plans been determined based on the fair value at the grant date for
awards in 2000 and 1999  consistent  with the  provisions  of SFAS No. 123,  the
Company's  approximate net loss and loss per share would have been the pro forma
amounts indicated below:


                                                        Years Ended
                                                         August 31,
                                            ------------------------------------
                                                   2000              1999
                                            ------------------------------------

Loss income - as reported                   $          889,000  $    (1,928,000)
Income - pro forma                          $         (976,000) $    (1,957,000)
Diluted loss per share - as reported        $             (.05) $          (.12)
Diluted loss per share - pro forma          $             (.06) $          (.12)
                                            ------------------------------------



The fair value of each option  grant is estimated in the date of grant using the
Black-Scholes option pricing model with the following assumptions:


                                                        August 31,
                                            -----------------------------------
                                                   2000             1999
                                            -----------------------------------

Expected dividend yield                     $               - $              -
Expected stock price volatility                           148%             124%
Risk-free interest rate                                   5.6%             5.6%
Expected life of options                               5 years          5 years
                                            -----------------------------------


The weighted  average fair value of options and warrants granted during 2000 and
1999 are $.68 and $.31, respectively.


--------------------------------------------------------------------------------
                                                                            F-14
<PAGE>
                                                         BSD MEDICAL CORPORATION
                                                   Notes to Financial Statements
                                                                       Continued

--------------------------------------------------------------------------------




6.   Stock Options and Warrants Continued

The  following  table  summarizes  information  about stock options and warrants
outstanding at August 31, 2000:


                                                        Options and Warrants
                 Options and Warrants Outstanding            Exercisable
              ------------------------------------------------------------------
                             Weighted
                              Average
                 Number      Remaining    Weighted      Number       Weighted
   Range of    Outstanding  Contractual    Average    Exercisable    Average
   Exercise        at          Life       Exercise         at        Exercise
    Prices       8/31/00      (Years)       Price       8/31/00       Price
--------------------------------------------------------------------------------
$ .10 -  .24    644,132        5.00     $     .13        548,632          .12
  .37 -  .81    648,200        9.10           .52         43,600          .38
 1.76 - 3.00    125,000        6.83          2.50         -                 -
--------------------------------------------------------------------------------

$ .10 - 3.00  1,417,332        7.02     $     .52        592,232          .13
--------------------------------------------------------------------------------


7.   Foreign Customer and Major Customer

During the years  ended  August 31,  2000 and 1999,  the  Company had sales to a
customer  in Europe  that  amounted  to  approximately  $884,000  and  $291,000,
respectively.  The  Company  also had sales to a  stockholder  that  amounted to
$884,000 and $285,000, respectively.


8.   Related Party Transactions

During the years  ended  August 31,  2000 and 1999,  the  Company had sales to a
stockholder of approximately $884,000 and $285,000, respectively.

During  the year  ended  August 31,  2000 and 1999 the  Company  had sales to an
unconsolidated subsidiary of approximately $75,000 and $96,000, respectively.


At August 31, 2000 and 1999,  accrued expenses includes  approximately  $212,000
and $170,000, respectively due to a stockholder.  Accrued expenses also includes
$35,000 and $165,000 due from an  unconsolidated  subsidiary  at August 31, 2000
and 1999, respectively.


At August 31, 2000 and 1999 accounts receivable includes  approximately $179,000
and $7,000, respectively due from a stockholder.


--------------------------------------------------------------------------------
                                                                            F-15
<PAGE>
                                                         BSD MEDICAL CORPORATION
                                                   Notes to Financial Statements
                                                                       Continued

--------------------------------------------------------------------------------



9.   Supplemental Cash Flow Information

Actual amounts paid for interest and income taxes are as follows:


                                                    Years Ended
                                                    August 31,
                                        -----------------------------------
                                               2000             1999
                                        -----------------------------------

Interest expense                        $              654  $        3,631
                                        -----------------------------------

Income taxes                            $               -    $      32,827
                                        -----------------------------------



10.  Significant Unconsolidated Affiliate

Summarized financial information for the significant unconsolidated affiliate of
the Company,  at September 30, 2000 and 1999 (the  affiliate's  fiscal year runs
from October 1, through September 30) are as follows:


                                                   September 30
                                        -----------------------------------
                                               2000             1999
                                        -----------------------------------
Result for year:
     Gross revenues                     $                -  $             -
     Gross profit                                        -                -
     Net loss                           $       (1,389,353) $    (1,476,223)

Year-end financial position:
     Current assets                     $        4,371,813  $     5,432,408
     Non-current assets                          2,702,345        2,935,308
     Current liabilities                           168,167           72,372
     Non-current liabilities            $                -  $             -




--------------------------------------------------------------------------------
                                                                            F-16
<PAGE>
                                                         BSD MEDICAL CORPORATION
                                                   Notes to Financial Statements
                                                                       Continued

--------------------------------------------------------------------------------



11.  Commitments and Contingencies

The  Company  has an  employment  agreement  with the  Chairman  of the Board of
Directors of the Company.  The agreement provides that the Chairman of the Board
of  Directors's  salary  will  be  based  upon a  reasonable  mutual  agreement.
Additionally, in the case of nonvoluntary termination, the acting president will
receive severance pay for a six month period, which includes an extension of all
employee rights, privileges, and benefits,  including medical insurance. The six
month  severance  pay  would  be the  salary  at the  highest  rate  paid to the
president prior to such a nonvoluntary termination.  The agreement also requires
the Company to pay the acting  president  for any accrued  unused  vacation  and
bonuses.


The Company has an exclusive  worldwide license for a unique  temperature probe.
The  license  will  remain in effect as long as the  technology  does not become
publicly  known as a result of actions taken by the  licensor.  The Company pays
royalties based upon its sales of this probe. Royalties accrued as of August 31,
2000 and 1999,  are  approximately  $29,000  and $5,000,  respectively.  Royalty
expense amounted to  approximately  $7,000 and $5,000 for the years ended August
31, 2000 and 1999, respectively.


12.  Fair Value of Financial Instruments

None of the Company's financial  instruments are held for trading purposes.  The
Company estimates that the fair value of all financial instruments at August 31,
2000 and 1999, does not differ materially from the aggregate  carrying values of
its  financial  instruments  recorded in the  accompanying  balance  sheet.  The
estimated fair value amounts have been determined by the Company using available
market  information  and  appropriate  valuation   methodologies.   Considerable
judgement is  necessarily  required in  interpreting  market data to develop the
estimates of fair value,  and,  accordingly,  the estimates are not  necessarily
indicative  of the amounts that the Company  could  realize in a current  market
exchange.



--------------------------------------------------------------------------------
                                                                            F-17
<PAGE>
                                                   Notes to Financial Statements
                                                                       Continued

--------------------------------------------------------------------------------



13.  Earnings Per Share

Financial  accounting  standards require companies to present basic earnings per
share (EPS) and diluted  earnings per share along with additional  informational
disclosures. Information related to earnings per share is as follows:



                                                  Years Ended December 31,
                                            ------------------------------------
                                                   2000              1999
                                            ------------------------------------

Basic and EPS:
  Net loss available to
     common stockholders                    $          888,947  $    (1,928,050)
                                            ------------------------------------

  Weighted average common shares            $       17,047,000  $    16,468,000
                                            ------------------------------------

  Net loss per share                        $             (.05) $          (.12)

                                            ------------------------------------





--------------------------------------------------------------------------------
                                                                            F-16
<PAGE>

BSD Medical Corporation 2000 10-KSB                                      Page 14
<PAGE>

ITEM  8.  CHANGES  IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
FINANCIAL DISCLOSURE

     None.
BSD Medical Corporation 2000 10-KSB                                      Page 15
<PAGE>


                                    PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(a) OF THE EXCHANGE ACT

     Information regarding directors of the Company are contained under Election
of Directors in the  registrant's  1998 Proxy  Statement,  which is incorporated
herein by reference.  The current directorship positions resulted from vacancies
and were filled by a majority of the directors then in office, and the directors
so chosen  hold  office  until  their  successors  have been  duly  elected  and
qualified. The Company does not presently have a nominating committee. Executive
officers of the Company are appointed by the Board of Directors and serve at the
discretion of the Board.  There are no family  relationships  between any of the
directors  or  executive  officers of the Company and none of these  individuals
have been involved in any reportable legal proceedings.

     The following table sets forth certain information concerning the directors
and executive officers of the Company.
<TABLE>
<CAPTION>

--------------------------------------------------------------------------------------------------------------------------
                                                                                                        Initial Date as
         Name                            Age                          Position                        Officer or Director
--------------------------------------------------------------------------------------------------------------------------

<S>                                      <C>      <C>                                                         <C>
Paul F. Turner*                          53       Chairman of the Board, Senior Vice President, and            1986
                                                    Chief Technology Officer

Hyrum A. Mead*                           53       President and Member of the Board of Directors               1999

Dixie Toolson Sells                      50       Vice President of Regulatory Affairs and Corporate           1987
                                                    Secretary

Ray Lauritzen                            50       Vice President of Field Service                              1988

Gerhard W. Sennewald, Ph.D.              64       Member of the Board of Directors                             1994

J. Gordon Short, M.D.                    69       Member of the Board of Directors                             1994
Michael Nobel, Ph.D.                     60       Member of the Board of Directors                             1997

--------------------------------------------------------------------------------------------------------------------------
</TABLE>


     *Executive officers of the Company.

     Mr.  Turner  has been with BSD for 22 years.  He served as Staff and Senior
Scientist  from 1978 to  September  1986;  as Vice  President  of Research  from

BSD Medical Corporation 2000 10-KSB                                      Page 16
<PAGE>

September  1986, to January 1989;  and as Senior Vice President of Research from
January 1989, to October  1993.  In October  1993,  Mr. Turner  resigned as Vice
President of Research,  and he served as Senior  Scientist  from October 1993 to
December  1994. In December  1994,  Mr. Turner was  re-appointed  as Senior Vice
President  of Research and was elected to the Board of  Directors.  From October
1995, to August 1999, Mr. Turner served as Acting President.  Since August 1999,
Mr. Turner has served as Senior Vice President and Chief Technology Officer.

     Mr. Mead was  appointed as President  and elected to the Board of Directors
in August 1999. He has served as VP of Business  Development at ZERO Enclosures,
a  leading  manufacturer  in  the  telecommunications,  computer  and  aerospace
industry  and as  President  of Electro  Controls,  a  manufacturer  of computer
controlled power systems that have significant  technological  overlaps with the
BSD systems. Mr. Mead began his career in sales and marketing with IBM.

     Ms.  Sells  has been with BSD for 21 years.  She  served as  Administrative
Director  from 1978 to 1984;  as Director  of  Regulatory  Affairs  from 1984 to
September 1987; and as Vice President of Regulatory Affairs from September 1987,
to October  1993.  In October  1993,  Ms.  Sells  resigned as Vice  President of
Regulatory  Affairs,  and she served as  Director  of  Regulatory  Affairs  from
October 1993 to December 1994. In December 1994, Ms. Sells was  re-appointed  as
Vice President of Regulatory Affairs and was appointed as Corporate Secretary by
the Board of  Directors.  Ms. Sells also serves on the Board of Directors of the
Utah Intermountain Biomedical Association.

     Mr.  Lauritzen  has been with BSD for 17 years.  He served as Field Service
Manager  from  1982 to  January  1988 and as Vice  President  of  Field  Service
Operations since January 1988.

     Dr. Gerhard Sennewald was appointed to BSD's Board of Directors in December
1994. He has been the key BSD European  representative  and  distributor  for 15
years and has been  instrumental  in  obtaining  the  majority of BSD's  foreign
sales.  Dr.   Sennewald  is  the  President  and  Chief  Executive   Officer  of
Medizin-Technik GmbH of Munich, Germany.

     Dr. J. Gordon  Short was  appointed to BSD's Board of Directors in December
1994,  after  extensive  participation  in the  initial  development  and market
establishment of the Company's  products as Medical Director for BSD, as well as
previous service on the Company's  Medical Advisory Board. Dr. Short is Chairman
of Brevis Corporation, a medical products company that specializes in consumable
specialty supplies.

     Dr.  Michael  Nobel was  appointed to the Board of Directors on January 13,
1998.  Dr Nobel is  Chairman  of the Board of the Nobel  Family  Society.  He is
Chairman  of the  American  Non-Violence  Project  inc.,  and  has  served  as a
consultant to Unesco in Paris and the United Nations Social Affairs  Division in
Geneva. Dr. Nobel participated in the introduction of magnetic resonance imaging
as European  Vice  President  for Fonar Corp.  Dr.  Nobel is the CEO of the MRAB
Group which provides diagnostic imaging services

     Pursuant to Section  16(a) of the  Securities  Act of 1934,  the  Company's
directors,  executive officers,  and any persons holding more than 10 percent of
the Company's  stock,  are required to report their ownership and any changes in
beneficial  ownership  of the  Company's  stock to the  Securities  and Exchange
Commission. To the Company's knowledge,  based solely on review of the copies of
such  reports  furnished to the  Company,  all of such persons  subject to these
reporting  requirements filed the required reports with respect to the Company's
most recent fiscal year.


ITEM 10.  EXECUTIVE COMPENSATION

     The  following   tables  set  forth  certain   information   regarding  all

BSD Medical Corporation 2000 10-KSB                                      Page 17
<PAGE>

compensation earned during the last three fiscal years and fiscal year-end stock
option  values for the person  acting in a similar  capacity to chief  executive
officer of the  Company  in the fiscal  year  ended  August 31,  2000.  No stock
options were granted to or exercised by the Acting  President during fiscal year
2000. No other executive officers of the Company received compensation exceeding
$100,000.
<TABLE>
<CAPTION>


                                                         SUMMARY COMPENSATION TABLE

------------------------------------------------------------------------------------------------------------------------
                                                                       Long Term Compensation Awards
                                          Annual Compensation
                                 --------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------

                                                         Other Annual   Restricted                       All Other
       Name and        Fiscal       Salary               Compen-sation(Stock Awards                   Compen-sation($)
       Position          Year        ($)      Bonus ($)                     ($)        Options(#)
========================================================================================================================

<S>                     <C>      <C>            <C>           <C>            <C>        <C>               <C>
Hyrum A. Mead,          2000     $125,000       $100          -0-            -0-         200,000          -0-
President (1)           1999       $5,689          0           0              0          200,000           0
------------------------------------------------------------------------------------------------------------------------
                                 $143,757
Paul F. Turner,         2000     $140,000       $100          -0-            -0-             -0-          -0-
Sr. VP and Chief        1999     $128,543       $100          -0-            -0-             -0-          -0-
Technology Officer      1998                                  -0-            -0-             -0-          -0-

------------------------------------------------------------------------------------------------------------------------

(1)  Mr. Mead began employment with BSD as of August 10, 1999.
</TABLE>




<TABLE>
<CAPTION>

                                         OPTION/SAR GRANTS IN LAST FISCAL YEAR - Individual Grants

---------------------------------------------------------------------------------------------------------------------
                                                              Percent of Total     Exercise or
                                                             Options Granted to     Base Price
                  Name and                       Options     Employees in Fiscal      ($/Sh)
                  Position                         (#)              1999                           Expiration Date
=====================================================================================================================
=====================================================================================================================

<S>                                              <C>                <C>               <C>        <C>
Hyrum A. Mead,                                   200,000            54.05%            $.81       January 18, 2010
President
---------------------------------------------------------------------------------------------------------------------
</TABLE>


BSD Medical Corporation 2000 10-KSB                                      Page 18
<PAGE>

<TABLE>
<CAPTION>

                                            AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
                                                   AND FISCAL YEAR-END OPTION/SAR VALUES

----------------------------------------------------------------------------------------------------------------------
                         Shares
                      Acquired on                 Number of Securities Underlying         Value of Unexercised
                        Exercise       Value     Unexercised Options at FY-end (#)   In-the-Money Options at FY-end
      Name and                       Realized                                                      ($)
                                                 =====================================================================
                                                 ---------------------------------------------------------------------
      Position            (#)           ($)        Exercisable      Unexercisable     Exercisable     Unexercisable
======================================================================================================================

<S>                        <C>           <C>           <C>            <C>               <C>             <C>
Hyrum A. Mead,             0             0              40,000         360,000           $34,000         $218,000
President
----------------------------------------------------------------------------------------------------------------------

Paul F. Turner, 0 0 180,953 0 $202,667 0 Sr. VP and Chief Technology Officer (1)
----------------------------------------------------------------------------------------------------------------------
(1) Paul Turner has received  options from  Thermatrx to purchase  shares of its
common  stock.  The options  were issued at  estimated  fair market  value.  The
options granted total less than 1% of the outstanding shares of the common stock
of Thermatrx.
</TABLE>


COMPENSATION OF DIRECTORS

     The 1998 Director Stock Plan provides for annual compensation in the amount
of $12,000  for each  non-employee  director - $4,000 to be paid in cash and the
balance  of the  retainer  to be paid in the form of  restricted  shares  of BSD
Common  Stock.  In  addition  to the  annual  compensation  to  directors,  each
Non-Employee  Director  shall  receive  an  annual  option  to  purchase  25,000
restricted  shares of BSD Common  Stock at a  purchase  price of 85% of the Fair
Market Value at the date the Option is granted.The options vest over 5 years and
expire in 10 years.. On September 1, 1999, Michael Nobel,  Gerhard W. Sennewald,
and J. Gordon Short were each awarded  25,000  options to purchase the Company's
restricted  common  stock at $.39 per  share.  These  directors  were  also paid
$2,000,  and awarded 8,633 shares of restricted common stock based on service to
the Company for the prior six months.  On September 1, 1999,  S. Lewis Meyer was
awarded 2,065 shares of restricted common stock and paid $478.26 for his service
to the Company from March 1, 1999, through April 13, 1999, when he resigned from
his position on the Board of Directors. On March 1, 2000, Michael Nobel, Gerhard
W. Sennewald,  and J. Gordon Short were paid $2,000, and awarded 1,587 shares of
restricted  common  stock  based on  service  to the  Company  for the prior six
months. On September 1, 2000, Michael Nobel, Gerhard W. Sennewald, and J. Gordon
Short were each  awarded  25,000  options to purchase the  Company's  restricted
common stock at $1.11 per share.  These  directors  were also paid  $2,000,  and
awarded 3,053 shares of restricted  common stock based on service to the Company
for the prior six months.

EMPLOYMENT CONTRACTS

     The Company has an employment  contract with the President,  Mr. Mead, that
was signed August 10, 1999. This agreement  provides that Mr. Mead shall receive
a base salary of  $125,000,  which  shall be  reviewed  annually by the Board of
Directors.  Additionally,  in the case of  non-voluntary  termination,  Mr. Mead
shall receive all  compensation  for a period of six months,  which  includes an
extension of all  benefits and  perquisites.  The six month  severance  shall be
salary at the highest  rate paid to Mr. Mead prior to such  termination  and the
total amount of bonuses  paid or payable  during the  preceding  12 months.  The
agreement also requires the Company to vest any options  granted to Mr. Mead for
the  purchase  of the  Company's  stock  with a 90 day period to  exercise  such
options.  Mr. Mead's agreement includes a period of non-competition for one year
following termination of employment.

     The Company has an employment  contract with the Senior Vice  President and
Chief  Technology  Officer,  Mr. Turner that was signed  November 2, 1988.  This
agreement  provides  that Mr.  Turner's  salary will be based upon a  reasonable
mutual agreement.  Additionally,  in the case of non-voluntary termination,  Mr.

BSD Medical Corporation 2000 10-KSB                                      Page 19
<PAGE>

Turner will  receive  severance  pay for a one-year  period,  which  includes an
extension of all employee rights,  privileges,  and benefits,  including medical
insurance.  The one-year severance pay will be an average of Mr. Turner's salary
for the immediate  twelve-month period prior to termination.  The agreement also
requires the Company to pay Mr. Turner any accrued  unused  vacation at the time
of  termination.  BSD is  also  obligated  to pay  Mr.  Turner  $1,000  (or  the
equivalent  value in stock options) for newly issued patents (this  compensation
is halved if multiple inventors are involved). Mr. Turner's agreement includes a
period of non-competition for one year following termination of employment. This
non-competition  agreement may be extended by BSD for up to an  additional  four
years  by  written  notification  and  continuing  severance  payments  for  the
additional   years  of  extension  (as  defined  for  the  first  year)  if  the
non-competition obligation is extended.

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The following table sets forth certain  information as of November 1, 2000,
with respect to the beneficial  ownership of the outstanding Common Stock by (i)
each person known to management of the Company to own beneficially  more than 5%
of the outstanding Common Stock, (ii) all directors and named executive officers
of the Company, and (iii) all executive officers and directors as a group:
<TABLE>
<CAPTION>

Name and Address of                               Shares of Common Stock            Percentage of Common Stock
Beneficial Owner                                  Beneficially Owned (1)                  Ownership (2)
--------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------

<S>                                                       <C>                                 <C>
Dr. Gerhard W. Sennewald                                  6,784,459(3)                        38.59%
   c/o Medizin-Technik GmbH
   Augustenstrasse 27
   D-80333 Munich, Germany

Paul F. Turner                                            1,995,871(4)                        11.31%
   4466 Sunset Circle
   Bountiful, UT  84010

John E. Langdon                                           1,295,010(5)                        7.42%
   2501 Parkview Drive, Suite 500
   Fort Worth, TX  76102

Hyrum A. Mead                                                40,000(6)                          *
   202 Coventry Lane
   North Salt Lake, UT  84054

Michael Nobel                                                63,873(7)                          *
   Magnetkameran MRAB
   Skeppsbron 28
   S-111 30 Stockholm, Sweden

J. Gordon Short, M.D.                                       125,873(8)                          *
   c/o Brevis Corporation
   3310 South 2700 East
   Salt Lake City, UT  84109

All executive officers and directors as                   9,010,076(9)                        50.40%
   a group (5) persons)
</TABLE>

BSD Medical Corporation 2000 10-KSB                                      Page 20
<PAGE>

*    Less than 1.0%.

(1)  Unless  otherwise  noted and  subject to  community  property  laws,  where
applicable,  the  persons  named in the table  above  possess  sole  voting  and
investment  power with respect to all shares shown to be  beneficially  owned by
them.

(2) Shares not outstanding but deemed  beneficially owned by virtue of the right
of a person or member of a group to acquire  them  within 60 days are treated as
outstanding only when determining the amount and percent owned by such person or
group.

(3) Includes 117,065 shares subject to options.  Does not include 500,000 shares
held by Dr. Sennewald's spouse, for which he disclaims beneficial ownership.

(4) Includes 180,953 shares subject to options.

(5) Includes 351,862 shares owned directly by Mr. Langdon.  The remaining shares
are held in trusts for which Mr.  Langdon is Trustee.  Does not  include  50,000
shares  held  by  Mr.  Langdon's  spouse,  for  which  he  disclaims  beneficial
ownership.

(6) All 40,000 shares are subject to options

(7) Includes 20,000 shares subject to options.

(8) Includes 55,000 shares subject to options.

(9) Includes 413,018 shares subject to options.


ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

None.


ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K

(a)   Exhibits

     The  following  exhibits  are filed as part of this  report  or are  hereby
incorporated by reference as indicated:

Exhibit
Number                                                    Description

3.1       Certificate of Incorporation. Incorporated by reference to Exhibit 3.1
          of the BSD Medical  Corporation  Registration  Statement  on Form S-1,
          filed October 16, 1986.

3.2       By-Laws.  Incorporated  by reference to Exhibit 3.2 of the BSD Medical
          Corporation  Registration  Statement  on Form S-1,  filed  October 16,
          1986.

4.1       Specimen  Common  Stock  Certificate.  Incorporated  by  reference  to
          Exhibit 4 of the BSD Medical  Corporation  Registration  Statement  on
          Form S-1, filed October 16, 1986.

BSD Medical Corporation 2000 10-KSB                                      Page 21
<PAGE>

10.1      Transfer of Trade Secrets  Agreement dated December 7, 1979, among BSD
          Medical  Corporation,   Vitek,  Incorporated  and  Ronald  R.  Bowman.
          Incorporated   by  reference  to  Exhibit  10.6  of  the  BSD  Medical
          Corporation  Registration  Statement  on Form S-1,  filed  October 16,
          1986.

10.2      Volume  Purchase  Agreement  dated June 6, 1986,  between  BSD Medical
          Corporation  and Luxtron  Corporation.  Incorporated  by  reference to
          Exhibit 10.9 of the BSD Medical Corporation  Registration Statement on
          Form S-1, filed October 16, 1986.

10.3      Second Addendum to Exclusive Transfer of Trade Secrets Agreement dated
          April 2,  1987.  Incorporated  by  reference  to Exhibit 10 of the BSD
          Medical Corporation Form 10-K, filed April 8, 1988.

10.4      License Agreement between BSD Medical  Corporation and EDAP Technomed,
          Inc.,  dated July 3, 1996.  Incorporated by reference to Exhibit 10 of
          Form 8-K, filed August 7, 1996.

10.5      Terms of  Engagement  between  BSD  Medical  Corporation  and  Ambient
          Capital dated November 26, 1996.  Incorporated by reference to Exhibit
          10 of Form 10-QSB filed February 27, 1997.

10.6      Stock  Purchase  Agreement  dated  October  31,  1997,  by  and  among
          TherMatrx,  Inc., BSD Medical Corporation,  Oracle Strategic Partners,
          L.P., and Charles Manker. filed

10.7      BSD Medical  Corporation  1998 Director  Stock Plan.  Incorporated  by
          reference to Exhibit A of the BSD Medical  Corporation  Schedule  14A,
          filed July 27, 1998.

10.8      BSD Medical  Corporation  1998 Stock Incentive  Plan.  Incorporated by
          reference to Exhibit B of the BSD Medical  Corporation  Schedule  14B,
          filed July 27, 1998.

10.9      Consulting  agreement  between de Jong &  Associates  and BSD  Medical
          Corporation  dated July 1, 2000.  Incorporated by reference to Exhibit
          10 on Form 8-K, filed July 19, 2000.

16        Letter on changes in certifying accountant.  Incorporated by reference
          to  Exhibit  16 of the  BSD  Medical  Corporation  Form  8-K/A,  filed
          September 23, 1997.

27        Financial Data Schedule.

99        The financial statements for the fiscal year ended September 30, 2000,
          of TherMatrx,  Inc., a significant  subsidiary  reported on the equity
          method, and the report of independent certified public accountants.

 (b)  Reports on Form 8-K

          The  Company  filed a  report  on Form  8-K on July  19,  2000,  which
          reported a consulting agreement between BSD Medical Corporation and de
          Jong & Associates.
BSD Medical Corporation 2000 10-KSB                                      Page 22
<PAGE>

SIGNATURES


     Pursuant  to the  requirements  of  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, thereunto duly authorized.


                                  BSD MEDICAL CORPORATION


Date: November 24, 1999           By:    /s/   Hyrum A. Mead
                                  __________________________
                                  Hyrum A. Mead
                                  President and Member of the Board of Directors



     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
report  has  been  signed  below  by the  following  persons  on  behalf  of the
registrant and in the capacities and on the dates indicated.


Date: November 24, 1999           By:    /s/   Paul F. Turner
                                         ________________________
                                  Paul F. Turner
                                  Chairman of the Board,  Chief  Technology
                                  Officer,  and Senior Vice  President of
                                  Research


Date: November 24, 1999           By:    /s/   Hyrum A. Mead
                                         ________________________
                                  Hyrum A. Mead
                                  President and Member of the Board of Directors


Date: November 24, 1999           By:    /s/   Gerhard W. Sennewald
                                         ________________________
                                  Dr. Gerhard W. Sennewald
                                  Member of the Board of Directors


Date: November 24, 1999           By:    /s/   J. Gordon Short
                                         ________________________
                                  Dr. J. Gordon Short
                                  Member of the Board of Directors


Date: November 24, 1999           By:    /s/   Michael Nobel
                                         ________________________
                                  Dr. Michael Nobel
                                  Member of the Board of Directors