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


                                  FORM 10 - QSB


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

                For the Quarterly Period Ended February 28, 2005

                         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:  (801) 972-5555

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 the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practicable date.


              Class                         Outstanding as of February 28, 2005
-------------------------------------       -----------------------------------
   Common stock, $.001 Par Value                        20,135,333



Transitional Small Business Disclosure Format (Check one):    Yes [  ]   No [X]



<PAGE>

PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements


                             BSD MEDICAL CORPORATION
                             Condensed Balance Sheet
                                   (Unaudited)

<TABLE>
<CAPTION>

                                  Assets                                                 February 28,
                                  ------                                                     2005
                                                                                   ------------------------
<S>                                                                               <C>
Current assets:
    Cash and cash equivalents                                                     $        9,251,358
    Receivables, net                                                                         229,294
    Related party receivables                                                                561,746
    Inventories                                                                              894,642
    Deferred tax asset                                                                       829,000
    Other current assets                                                                     177,358
                                                                                   ------------------------
           Total current assets                                                           11,943,398
                                                                                   ------------------------

Property and equipment, net                                                                  165,213
Patents, net                                                                                  24,068
                                                                                   ------------------------
                                                                                  $       12,132,679
                                                                                   ------------------------

                 Liabilities and Stockholders' Equity
                 ------------------------------------

Current liabilities:
    Accounts payable                                                             $              262,588
    Accrued expenses                                                                            209,683
    Current portion of deferred revenue                                                          29,557
                                                                                  -------------------------

           Total current liabilities                                                            501,829
                                                                                  -------------------------

Long term liabilities
    Deferred tax liability                                                                       51,000
                                                                                  -------------------------

           Total liabilities                                                                    552,829
                                                                                  -------------------------

Stockholders' equity:
     Preferred stock, .001 par value; 10,000,000 authorized,
      no shares issued and outstanding                                                                -
    Common stock, $.001 par value; authorized 40,000,000 shares; issued
      20,148,745 and outstanding 20,135,333, shares
                                                                                                 20,136
    Additional paid-in capital                                                               23,300,280
    Deferred compensation                                                                       (34,050)
    Accumulated deficit                                                                     (11,706,281)
    Common stock in treasury 13,412 shares, at cost                                                (234)
                                                                                  -------------------------

           Net stockholders' equity                                                          11,579,850
                                                                                  -------------------------

                                                                                 $           12,132,679
                                                                                  =========================
</TABLE>


                 See accompanying notes to financial statements


                                       1
<PAGE>

                             BSD MEDICAL CORPORATION


                       Condensed Statements of Operations
                                   (Unaudited)
              Periods ended February 28, 2005 and February 29, 2004

<TABLE>
<CAPTION>

                                                                       Three Months                        Six Months
                                                                          Ended:                             Ended:
                                                             ---------------------------------  ---------------------------------
                                                               February 28      February 29     February 28      February 29
                                                                  2005              2004             2005              2004
                                                             ---------------  ----------------  ---------------  ----------------
<S>                                                         <C>                    <C>         <C>              <C>
Sales                                                       $     226,507          218,350     $     477,286    $     412,258
Related party sales                                               488,906          208,192           496,060          695,418
                                                             ---------------  ----------------  ---------------  ----------------

           Total revenues                                         715,413          426,542           973,346        1,107,676
                                                             ---------------  ----------------  ---------------  ----------------
Costs and expenses:
    Cost of product sales                                         184,629          206,765           450,693          315,186
    Cost of related party sales                                   190,330           61,969           194,637          283,676
    Research and development                                      191,283          166,733           374,880          329,290
    Selling, general, and administrative                          459,280          248,581           838,698          461,161
                                                             ---------------  ----------------  ---------------  ----------------

           Total costs and expenses                             1,025,522          684,048         1,858,908        1,389,313
                                                             ---------------  ----------------  ---------------  ----------------

           Operating loss                                        (310,109)        (257,506)         (885,562)        (281,637)

Other income
    Interest income                                                86,905            2,500           157,498            2,601
    Interest expense                                                    -             (245)                -             (353)
    Other income                                                1,094,406                -         1,094,929                -
                                                             ---------------  ----------------  ---------------  ----------------

           Total other income                                   1,181,311            2,255         1,252,426            2,248
                                                             ---------------  ----------------  ---------------  ----------------

           Income (loss) before income taxes                      871,202         (255,251)          366,865         (279,389)

Income tax benefit                                                      -                -                 -                -
                                                             ---------------  ----------------  ---------------  ----------------
           Net income  (loss)                               $     871,202         (255,251)    $     366,865    $    (279,389)
                                                             ===============  ================  ===============  ================

Net loss per common and common equivalent share,
   basic and diluted                                        $          .04             (.01)   $          .02             (.01)
                                                             ---------------  ----------------  ---------------  ----------------

Weighted average number of shares outstanding,
    Basic                                                      20,060,000        18,898,000       20,060,000        19,891,000
                                                             ---------------  ----------------  ---------------  ----------------

    Diluted                                                    21,495,000        18,898,000       21,254,000        19,891,000


</TABLE>



                 See accompanying notes to financial statements

                                       2
<PAGE>


                             BSD MEDICAL CORPORATION

                 Condensed Statements of Cash Flows (Unaudited)
            Six Months Ended February 28, 2005 and February 29, 2004
<TABLE>
<CAPTION>


                                                                                      Feb. 28,         Feb. 29,
                                                                                      2005                2004
                                                                                  -------------------------------
<S>                                                                              <C>             <C>
Cash flows from operating activities:
    Net Income (loss)                                                            $    366,865    $   (279,389)
    Adjustments to reconcile net income (loss) to net cash used in
      operating activities:
       Depreciation and amortization                                                   24,150          22,591
       Bad debt expense                                                                     -          61,805
       Stock compensation expense                                                      30,000          12,000
       Deferred compensation                                                            9,508           7,858
       (Increase) decrease in:
           Receivables                                                               (531,736)         11,899
           Inventories                                                               (154,226)         90,584
           Prepaid expenses and deposits                                             (126,293)         17,319
       Increase (decrease) in:
           Accounts payable                                                           163,457        (205,552)
           Accrued expenses                                                          (214,232)       (118,352)
           Deferred revenue                                                           (17,666)        (29,385)
                                                                                  -------------------------------
              Net cash used in operating activities                                  (450,172)       (408,622)
                                                                                  -------------------------------

Cash flows from investing activities:
    Purchase of property and equipment                                                (49,324)              -
                                                                                  -------------------------------
              Net cash used in investing activities                                   (49,324)              -
                                                                                  -------------------------------

Cash flows from financing activities:
    Proceeds from issuance of common stock options                                     53,700       2,099,908
                                                                                  -------------------------------
              Net cash provided by financing activities                                53,700       2,099,908
                                                                                  -------------------------------
Increase in cash and cash equivalents                                                  445,796       1,691,286
Cash and cash equivalents, beginning of period                                       9,697,154         136,003
                                                                                  -------------------------------

Cash and cash equivalents, end of period                                         $   9,251,358   $   1,827,289
                                                                                  ===============================

</TABLE>

Supplemental Disclosure of Cash Flow Information


         o    The  Company  paid no cash for  interest  and taxes for the period
              ended  February  28,  2005 and $353 for  interest  and no cash for
              taxes during the period ended February 28, 2004.

         o    The Company  issued 75,000  options for the periods ended February
              28 , 2005 and February 29, 2004,  which resulted in an increase to
              Deferred Compensation of $15,750 and $8,250, respectively.





                 See accompanying notes to financial statements

                                       3
<PAGE>

                             BSD MEDICAL CORPORATION
                     Notes to Condensed Financial Statements

Note 1.    Basis of Presentation

         The  Condensed  Balance  Sheet as of February 28, 2005,  the  Condensed
Statements  of Operations  for the three and six months ended  February 28, 2005
and February 29, 2004,  and the  Condensed  Statements of Cash Flows for the six
months ended  February 28, 2005, and February 29, 2004 have been prepared by the
Company  without  audit.  In the opinion of management,  all  adjustments to the
books and accounts (which include only normal recurring  adjustments)  necessary
to present fairly the financial position,  results of operations, and changes in
financial position of the Company as of February 28, 2005 have been made.

         Certain  information  and  footnote  disclosures  normally  included in
financial  statements  prepared  in  accordance  with  U.S.  generally  accepted
accounting  principles have been condensed or omitted. The results of operations
for the period ended  February 28, 2005, are not  necessarily  indicative of the
results to be expected for the full year.

Note 2.    Net Income (Loss ) Per Common Share

         Net income (loss) per common share for the periods  ended  February 28,
2005 and  February 29, 2004 is based on the  weighted  average  number of shares
outstanding during the respective periods.  Diluted earnings per share are based
upon the weighted average share per common stock  equivalent.  When common stock
equivalents are anti dilutive they are not included.

Note 3.    Related Party Transactions

         During the six months  ended  February  28, 2005 and February 29, 2004,
the Company had sales to an unconsolidated affiliate and an entity controlled by
a significant  stockholder  and member of the Board of Directors of $496,060 and
$608,798,  respectively.  These related party transactions represents 50.96% and
54.96 % of total  sales.  Related  party  revenue from  TherMatrx  was $0 in the
period ended  February 28, 2005 compared to $86,620 in period ended February 29,
2004.

         At February 28, 2005,  receivables  include $561,746 due from an entity
controlled by a significant stockholder and member of the Board of Directors.

Note 4.  Stock-Based Compensation

         The Company  accounts for stock options  granted to employees under the
recognition  and  measurement  principles of APB Opinion No. 25,  Accounting for
Stock  Issued to  Employees,  and related  Interpretations,  and has adopted the
disclosure-only provisions of Statement of Financial Accounting Standards (SFAS)
No.  123,  "Accounting  for  Stock-Based  Compensation."  Accordingly,  only the
intrinsic value has been recognized in the financial  statements as expense. Had
the  Company's  options  been  determined  based on the fair value  method,  the
results of operations would have been reduced to the pro forma amounts indicated
below for the six months ended February 28:


                                       4
<PAGE>
<TABLE>
<CAPTION>

                                                                Six Months Ended        Three Months Ended
                                                                 February 28/29           February 28/29
                                                                 2005         2004        2005       2004
                                                            -------------------------------------------------
<S>                                                         <C>          <C>          <C>        <C>
Net income (loss)  - as reported                            $    366,865 $  (279,389) $  871,202 $ (255,251)

Add:  Stock based employee compensation expense included
in reported net income (loss), net of related tax effects
                                                                   9,508       7,858)          -          -

Deduct:  Total stock based employee compensation expense
determined under fair value based method for all awards,
net of related taxes                                            (103,089)     (25000)          -    (25,000)
                                                            -------------------------------------------------
Net income (loss) - pro forma                               $    273,284 $  (296,531) $  871,202 $ (280,251)
                                                            -------------------------------------------------

Basic and Diluted income (loss) per share - as reported
                                                            $        .02 $      (.01) $      .04 $     (.01)
                                                            -------------------------------------------------

Basic and Diluted income (loss) per share -  pro-forma
                                                            $        .01 $      (.02) $      .04 $     (.02)
                                                            -------------------------------------------------
</TABLE>


         The fair value of each option granted for the six months ended February
28,  2005 and  February  29,  2004 is  estimated  on the date of grant using the
Black-Scholes option pricing model with the following assumptions:

                                         ----------------------------------
                                                     2005             2004
                                         ----------------------------------

Expected dividend yield                   $             - $              -
Expected stock price volatility                       84%             114%
Risk-free interest rate                             3.32%             4.2%
Expected life of options                         10 years          5 years

         The  weighted  average fair value of options  granted  during the three
months ended February 28, 2005 and 2004 was $1.20 and $.64, respectively.

Note 5.  Gain on Sale of Investment in TherMatrx

         On July 15, 2004,  the  Company's  investment  in TherMatrx was sold to
American  Medical  Systems,  Inc.  (AMS).  The Company's  portion of the initial
payment  from this sale,  received in fiscal 2004,  was nearly $9 million,  with
additional  payments  contingent on the quarterly sales of TherMatrx through the
fourth calendar quarter of 2005. During the quarter ended February 28, 2005, the
Company  received  additional  payments from the sale of TherMatrx  that totaled
$1,094,406.  This  amount  was  recorded  as a gain and is  reflected  in "Other
income" in the statement of operations.  The Company is scheduled to receive its
next  payment  in May,  2005;  however,  the  amount of such  payment  cannot be
determined at this time.

Item 2.  Management's Discussion and Analysis of Financial Condition and Results
of Operations

         This  Management's  Discussion and Analysis of Financial  Condition and
Results of  Operations  and other parts of this report  contain  forward-looking
statements that involve risks and uncertainties.  Forward-looking statements can
also be  identified  by  words  such as  "anticipates,"  "expects,"  "believes,"
"plans,"  "predicts,"  and similar  terms.  Forward-looking  statements  are not
guarantees of future performance and our actual results may differ significantly
from the results discussed in the forward-looking statements. Factors that might
cause such differences  include,  but are not limited to, those discussed in the
subsections   entitled   "Forward-Looking   Statements"   below.  The  following
discussion  should  be read  in  conjunction  with  our  consolidated  financial
statements and notes thereto included in this report. All information  presented
herein  is based on the six  months  ended  February  28,  2005.  We  assume  no
obligation to revise or update any  forward-looking  statements  for any reason,
except as required by law.

                                       5
<PAGE>

General
-------

         We  develop,  manufacture,  market and  service  systems  that  deliver
focused  electromagnetic  energy for use in a variety of medical  therapies  and
applications.  Our  objective is to  commercialize  our  developed  products and
further expand the application of our technology into new markets.  We pioneered
the  use of  microwave  thermal  therapy  for  the  treatment  of  the  symptoms
associated  with  enlarged  prostate,  and  are  responsible  for  much  of  the
technology that has created a substantial  medical  industry using that therapy.
Our longest-term development has been the application of focused electromagnetic
energy for the treatment of cancer.

         One of our  significant  contributions  to the  advancement  of medical
therapy  has been our  pioneering  efforts in  developing  a new  treatment  for
conditions associated with enlargement of the prostate that afflicts most men as
they age. As the prostate  enlarges it constricts  urine flow.  The condition is
known  medically  as  benign  prostatic  hyperplasia  or  BPH.  We  developed  a
technology that allows men to be treated for BPH through an outpatient procedure
as an alternative to surgery or a lengthy regimen of medication.

         We  determined  early  in our  planning  that we  would  treat  our BPH
development  as a spin-off  business  with the intent of providing an asset that
could  help fund our  other  business  plans.  As a result,  we  introduced  the
opportunity to investment  groups and  subsequently  on October 31, 1997 entered
into an agreement with investors  Oracle  Strategic  Partners,  L.P. and Charles
Manker.   Together  we   established  a  new  company,   TherMatrx,   which  was
independently managed.

         On July 15, 2004, TherMatrx was sold to American Medical Systems,  Inc.
(AMS).  Our portion of the initial payment from this sale was nearly $9 million,
with additional  payments contingent on the quarterly sales of TherMatrx through
the fourth calendar  quarter of 2005. We received  additional  payment  totaling
$1,094,406  during the quarter ended  February 28, 2005. We have  estimated that
our  portion  of the total  payout  from this  sale  will be  approximately  $40
million.  If TherMatrx sales exceed our projections,  the maximum payout that we
could receive from the sale is $62.5 million.  If TherMatrx sales fall under our
projections,  there is no guarantee of any further payment beyond those payments
already received.

         Since the inception of our company we have engineered  systems designed
to increase the  effectiveness  of cancer  treatment  through the use of focused
electromagnetic  energy.  From this development our current BSD-500 and BSD-2000
systems  have  emerged.  We have also  developed  enhancements  to our  BSD-2000
system,  including the BSD-2000/3D  that is designed to allow three  dimensional
steering of deep focused  energy and heat to targeted  tumors and tissue and the
BSD-2000/3D/MR that includes an interface for magnetic resonance imaging.  These
systems  are sold with  supporting  software  and may also be sold with  support
services.

         Our accumulated  deficit since inception  decreased from $20,750,923 as
of February  29, 2004 to  $11,706,281  as of February 28, 2005 due to net income
recorded  during our fiscal year ended August 31, 2004 and during the six months
ending  February 28, 2005, as a result of our sale of our interest in TherMatrx.
We recorded a net profit for the first six months of fiscal 2005 of $366,865.

         We recognize  revenue from the sale of cancer  treatment  systems,  the
sale of parts and accessories related to the cancer treatment systems,  the sale
of software license rights,  providing  manufacturing  services,  training,  and
service  support  contracts.  Product sales were $861,417 and $1,052,042 for the
six months ending February 28, 2005 and 2004, respectively.  Service revenue was
$111,929  and  $55,633  for the six months  ending  February  28, 2005 and 2004,
respectively.

         We derived  $496,060,  or  50.96%,  of our  revenue  for the six months
ending February 28, 2005, from sales to a related party,  Medizin-Technik  GmbH.
Dr. Gerhard Sennewald, one of our directors, is a stockholder, executive officer
and a director of Medizin-Technik GmbH. We also had sales to unrelated parties.

                                       6
<PAGE>

         In the six months  ending  February 28, 2005, we derived  $477,286,  or
49.04%, of our revenue from sales to unrelated parties. These revenues consisted
of product sales of approximately $365,357, consulting services of approximately
$84,107,  service contracts of approximately  $26,239,  and other  miscellaneous
revenue of approximately $1,583.

         Cost of sales for the six months ending February 28, 2005, included raw
material and labor costs. Research and development expenses include expenditures
for  new  product  development  and  development  of  enhancements  to  existing
products.

Critical Accounting Policies and Estimates
------------------------------------------

         The following is a discussion of our critical  accounting  policies and
estimates  that  management  believes  are material to an  understanding  of our
results of operations and which involve the exercise of judgment or estimates by
management.

         Revenue Recognition.  Revenue from the sale of cancer treatment systems
is  recognized  when a  purchase  order has been  received,  the system has been
shipped,  the  selling  price  is  fixed  or  determinable,  and  collection  is
reasonably  assured.  Most system sales are F.O.B.  shipping  point;  therefore,
shipment  is  deemed to have  occurred  when the  product  is  delivered  to the
transportation  carrier.  Most  system  sales do not  include  installation.  If
installation  is included  as part of the  contract,  revenue is not  recognized
until installation has occurred, or until any remaining installation  obligation
is deemed to be perfunctory.  Some sales of cancer treatment systems may include
training as part of the sale. In such cases,  the portion of the revenue related
to the  training,  calculated  based on the amount  charged  for  training  on a
stand-alone  basis,  is  deferred  and  recognized  when the  training  has been
provided.  The sales of our cancer  treatment  systems do not  require  specific
customer acceptance  provisions and do not include the right of return except in
cases where the product  does not  function as  guaranteed  by BSD. We provide a
reserve  allowance  for  estimated  returns.  To  date,  returns  have  not been
significant.

         Revenue from manufacturing  services is recorded when an agreement with
the customer  exists for such  services,  the services have been  provided,  and
collection is  reasonably  assured.  Revenue from training  services is recorded
when an  agreement  with the  customer  exists for such  training,  the training
services have been provided, and collection is reasonably assured.  Revenue from
service support  contracts is recognized on a straight-line  basis over the term
of the contract, which approximates recognizing it as it is earned.

         Our revenue  recognition  policy is the same for sales to both  related
parties and non-related parties. We provide the same products and services under
the same  terms  for  non-related  parties  as with  related  parties.  Sales to
distributors  are recognized in the same manner as sales to end-user  customers.
Deferred  revenue and customer  deposits  payable  include  amounts from service
contracts as well as cash  received  for the sales of  products,  which have not
been shipped.

         Inventory Reserves.  As of February 28, 2005, we had recorded a reserve
for  potential  inventory  impairment  of $80,000.  We  periodically  review our
inventory levels and usage, paying particular  attention to slower-moving items.
We have projected no orders to be placed with us for TherMatrx  systems,  and do
not project a requirement for any inventory impairment based on this decline.

         Product  Warranty.  We provide  product  warranties  on our BSD-500 and
BSD-2000 systems. These warranties vary from contract to contract, but generally
consist  of parts and labor  warranties  for one year from the date of sale.  To
date, expenses resulting from such warranties have not been material.  We record
a warranty  expense at the time of each sale. This reserve is estimated based on
prior history of service expense associated with similar units sold in the past.

                                       7
<PAGE>

         Allowance for Doubtful Accounts.  We provide our customers with payment
terms that vary from contract to contract.  Our allowance for doubtful  accounts
at February 28, 2005 was $0. Bad debt expense for the period ending February 28,
2005 was  approximately  $9,000.  We perform  ongoing credit  evaluations of our
customers and maintain  allowances for possible losses.  Allowance estimates are
recorded on a customer-by-customer  basis and are determined based on the age of
the receivable,  compliance with payment terms,  and prior history with existing
clients.  The  non-payment  of a receivable  related to the sale of a BSD-500 or
BSD-2000 could have a material adverse impact on our results of operations.

Results of Operations
---------------------

Three Months Ended February 28, 2005 compared to the Three Months Ended February
29, 2004

         Revenue.  Revenue  for the three  months  ended  February  28, 2005 was
$715,413  compared to $426,542  for the quarter  ended  February  29,  2004,  an
increase of $288,871,  or  approximately  68%. The increase in total revenue was
primarily   due  to  an  increase  in  sales  to  related   parties.   Sales  to
Medizin-Technik  totaled  $488,906  in the  quarter  ending  February  28,  2005
compared to $140,180 in the  corresponding  quarter of fiscal 2004.  Dr. Gerhard
Sennewald,  one of our  directors,  is a  stockholder,  executive  officer and a
director  of  Medizin-Technik  GmbH.  Sales  to  Medizin-Technik  may  fluctuate
significantly  depending on  Medizin-Technik's  anticipated sales and ability to
place orders in Europe.  Our revenue can fluctuate  significantly from period to
period  because  our sales,  to date,  have been based upon a  relatively  small
number of systems,  the sales price o each being  substantial  enough to greatly
impact revenue levels in the periods in which they occur. Sales of a few systems
can cause a large  change in the  revenue  from period to period as noted in the
increase in sales to  Medizin-Technik  from the second quarter of fiscal 2005 to
the second  quarter of fiscal  2004.  Product  sales  increased  to  $645,960 as
compared to $407,426 in the corresponding quarter of fiscal 2004, an increase of
$238,534, or 59%.

         Related Party Revenue.  We derived $488,906,  or 68%, of our revenue in
the three  months  ending  February  28,  2005 from sales to related  parties as
compared to $208,192 or 49%, in the corresponding quarter of fiscal 2004. All of
the  related  party  revenue in the 2005  period  was from sales of systems  and
component parts to Medizin-Technik. For the period ending February 29, 2004, the
related party revenue  $140,180 for sales to  Medizin-Technik  and the remaining
sales of $68,028 was to TherMatrx was from services provided to TherMatrx. Since
the sale of TherMatrx in July 2004,  TherMatrx is no longer considered a related
party.  Sales to  Medizin-Technik  may  fluctuate  significantly  from period to
period due to the high cost of a BSD-2000 or BSD-500 system.  Sales increases of
one or two systems can have a material effect on our revenue.

         Non-related  Party  Revenue.  In the three months  ending  February 28,
2005,  we  derived  $226,507,  or  31.66%  of our total  revenue  from  sales to
non-related parties, as compared to approximately  $218,350,  or 51.19%, for the
corresponding  period of fiscal 2004. Our fiscal 2005 non-related  party revenue
consisted of product sales of  approximately  $158,637,  consulting  services of
approximately $54,751, and service contracts of approximately $13,119.

         Gross  Profit.  Gross profit for the three months  ending  February 28,
2005 was $340,454 or 47.58% as compared to $154,808, or 36.29%, of total product
sales for the corresponding  period in fiscal 2004. The increase in gross profit
margin was primarily due to improved  utilization  of labor  resulting  from the
increase  in  sales.  Because  we  have  not  had  employee  layoffs  due to the
specialized  nature of our employees  and because of the fixed costs  associated
with  production,  as our sales  declined in the 2004  period,  it resulted in a
decline in gross profit percentage. As sales volumes increase, our employees are
more utilized, thus increasing the gross profit percentage.

         Selling,  General and  Administrative  Expenses.  Selling,  general and
administrative  expenses  increased  to  $459,280  in the  three  months  ending
February 28, 2005, from $248,581 for the corresponding period of fiscal 2004, an
increase of $210,699 or 84.76%.  This  increase was primarily due to an increase

                                       8
<PAGE>

in sales and marketing  costs  supporting new product sales from $34,744 for the
three  months  ended  February  29, 2004 to $136,168  for the three months ended
February 28, 2005.  Legal and accounting costs increased from $4,128 in the 2004
period to $51,531 in the 2005 period.  We also incurred higher  consulting costs
related to  marketing  and  preparation  of FDA  submissions.  Consulting  costs
increased  from $35,960 to $54,970 in the 2004 and 2005  periods,  respectively.
Payroll costs also  increased  from  $223,623 to $330,940,  a result of wage and
salary raises,  the addition of new employees and fewer BSD employees working as
consultants for TherMatrx..

         Research and Development  Expenses.  Research and development  expenses
were  $191,283 for the three  months  ending  February 28, 2005,  as compared to
$166,733 for the corresponding  period in fiscal 2004 an increase of $24,550, or
14.72%,  primarily due to an increase in payroll and consulting costs.  Research
and  development  expenses  for the  period  ended  February  28,  2005  related
primarily  to the  conversion  of  systems  software  to foreign  languages  for
international  use and to new  developments  in the areas of thermal therapy and
thermal ablation.

         Interest  income.  Interest  income  increased to $86,905 for the three
months  ended  February  28, 2005 as  compared  to $2,500 for the  corresponding
period in fiscal 2004 due to the  significantly  higher levels of cash resulting
from the sale of TherMatrx.

         Net income.  The net income for the three  months  ended  February  28,
2005, was $871,202 as compared with a net loss of $255,251 for the corresponding
period of fiscal  2004.  The  increase  in the net profit was  primarily  due to
payments of $1,094,406  received  during the period ended February 28, 2005 from
the sale of our investment in TherMatrx and the increase in interest income.

Results of Operations
---------------------

Six Months Ended February 28, 2005 compared to the Six Months Ended February 29,
2004

         Revenue.  Revenue  for the six  months  ended  February  28,  2005  was
$973,346 compared to $1,107,676 for the  corresponding  period in fiscal 2004, a
decrease of $134,330,  or  approximately  12%. The decrease in total revenue was
primarily   due  to  a  decrease   in  sales  to  related   parties.   Sales  to
Medizin-Technik totaled $496,060 in the period ending February 28, 2005 compared
to $606,798 in the corresponding  period of fiscal 2004. Dr. Gerhard  Sennewald,
one of our  directors,  is a  stockholder,  executive  officer and a director of
Medizin-Technik  GmbH.  Sales to  Medizin-Technik  may  fluctuate  significantly
depending on Medizin-Technik's  anticipated sales and ability to place orders in
Europe. Our revenue can fluctuate significantly from period to period because we
have  historically  sold  relatively  few BSD-2000 and BSD-500  systems as these
systems are  expensive.  Sales of a few systems can cause a large  change in the
revenue   from  period  to  period  as  noted  in  the   decrease  in  sales  to
Medizin-Technik from the six month period ended February 28, 2005 as compared to
the corresponding  period of fiscal 2004. Product sales increased to $645,960 as
compared to $407,426 in the corresponding  period of fiscal 2004, an increase of
$238,534, or 59%.

         Related Party Revenue.  We derived $496,060,  or 50.96%, of our revenue
in six months ended February 28, 2005 from sales to related  parties as compared
to $695,418 or 62.78%,  in the  corresponding  period of fiscal 2004. All of the
related  party  revenue in the 2005  period was from  sales of BSD  systems  and
component parts to Medizin-Technik.  For the six months ended February 29, 2004,
the related  party  revenue was  $606,798 for sales to  Medizin-Technik  and the
remaining  sales of $88,620 was from services  provided to TherMatrx.  Since the
sale of  TherMatrx  in July 2004,  TherMatrx  is no longer  considered a related
party.  Sales to  Medizin-Technik  may  fluctuate  significantly  from period to
period due to the high cost of a BSD-2000 or BSD-500 system.  Sales increases of
one or two systems can have a material effect on our revenue.


                                       9
<PAGE>

         Non-related  Party Revenue.  In the six months ended February 28, 2005,
we derived  $477,286,  or 49.03% of our total revenue from sales to  non-related
parties,  as compared to $412,258,  or 37.21%,  for the corresponding  period of
fiscal 2004.  Our fiscal 2005  non-related  party  revenue  consisted of product
sales of approximately  $365,357.  The balance of our non-related  party revenue
consisted of consulting services of approximately  $84,107 and service contracts
of approximately $27,822.

         Gross Profit.  Gross profit for the six months ended  February 28, 2005
was $328,016 or 33.69% of product  sales as compared to  $508,814,  or 45.93% of
total product sales for the corresponding  period in fiscal 2004. The decline in
gross profit margin was primarily due to the cost of excess production employees
resulting  from the  significant  decrease  in sales  during  our  first  fiscal
quarter. Because we have not had employee layoffs and because of the fixed costs
associated with production,  as our sales declined,  it resulted in the costs of
sales exceeding the sales during the first quarter of fiscal 2005.

         Selling,  General and  Administrative  Expenses.  Selling,  general and
administrative  expenses  increased to $838,698 in the six months ended February
28, 2005, from $461,161 for the corresponding period of fiscal 2004, an increase
of $377,537 or 81.86%.  This  increase  was  primarily  due to higher  sales and
marketing  costs due to greater  emphasis on marketing.  Our sales and marketing
costs increased from approximately  $27,000 in the six months ended February 29,
2004 to approximately  $125,000 in the six months ended February 28, 2005 due to
higher sales and marketing costs due to greater emphasis on marketing. Legal and
accounting  costs  increased  from  approximately  $36,000 in the 2004 period to
approximately $88,000 in the 2005 period, reflecting the use of legal counsel in
preparation for the  shareholders  meeting and the review of the Form 10-QSB and
proxy statements, as well as fees incurred in connection with tax consulting and
planning.  Shareholder  relations costs increased from approximately  $10,000 in
the 2004 period to  approximately  $42,000 in the 2005 period  reflecting  costs
incurred in connection with our annual shareholders  meeting and the issuance of
various press releases.  Consulting costs increased from approximately $1,000 to
approximately  $46,000  from the 2004 period to the 2005  period,  respectively.
This is due to the use of  consultants  in  marketing  efforts and in efforts to
complete the FDA approval process.

         Research and Development  Expenses.  Research and development  expenses
were  $374,880  for the six months  ended  February  28,  2005,  as  compared to
$329,290 for the corresponding  period in fiscal 2004 an increase of $45,590, or
13.84%,  primarily due to an increase in payroll and consulting costs.  Research
and  development  expenses  for the  period  ended  February  28,  2005  related
primarily  to the  conversion  of  systems  software  to foreign  languages  for
international  use and to new  developments  in the areas of thermal therapy and
thermal ablation.

         Interest  income.  Interest  income  increased  to $157,498 for the six
months  ended  February  28, 2005 as  compared  to $2,601 for the  corresponding
period  in  fiscal  2004  due to the  significantly  higher  levels  of  cash on
resulting from the sale of TherMatrx.

         Net income.  The net income for the six months ended February 28, 2005,
was  $366,865 as  compared  with a net loss of  $279,389  for the  corresponding
period of fiscal  2004.  The  increase  in the net profit was  primarily  due to
payments  of  $1,094,406  received  during the 2005  period from the sale of our
investment in TherMatrx and the increase in interest income.

         Fluctuation  in  Operating  Results.  Our  results of  operations  have
fluctuated in the past and may fluctuate in the future from year to year as well
as from  quarter  to  quarter.  Revenue  may  fluctuate  as a result of  factors
relating to the demand for thermotherapy systems and component parts supplied by
us to TherMatrx,  market acceptance of our BSD hyperthermia systems,  changes in
the medical  capital  equipment  market,  changes in order mix and product order
configurations,   competition,   regulatory   developments  and  other  matters.
Operating  expenses  may  fluctuate  as a result  of the  timing  of  sales  and
marketing activities,  research and development and clinical trial expenses, and
general and  administrative  expenses  associated with our potential growth. For
these and other reasons  described  elsewhere,  our results of operations  for a
particular  period may not be  indicative  of  operating  results  for any other
period.

                                       10
<PAGE>

Liquidity and Capital Resources
-------------------------------

         Our accumulated  deficit since inception  decreased from $20,750,923 as
of February 29, 2004 to  $11,706,281  as of February 28, 2005, due to net income
recorded during our fiscal year ended August 31, 2004 as a result of our sale of
our  interest in TherMatrx  and net income  recorded for the first six months of
fiscal 2005.  We have  historically  financed our  operations  through cash from
operations,  licensing of technological  assets and issuance of common stock and
through the sale of our TherMatrx shares. We have projected substantial payments
yet to be made to us as a result of the sale of our TherMatrx  shares.  However,
these  payments are  contingent  on the product  sales that  TherMatrx  achieves
through  December  31,  2005.  We believe  these  payments,  if  received,  will
contribute significantly to our future capital resources.

         We used  $450,172  in cash from  operating  activities  during  the six
months ended February 28, 2005 compared to $408,622 for the corresponding period
of fiscal 2004.  Cash flow from  operating  activities  increased for the period
primarily  because of lower sales volume compared to the prior year period.  Our
investing  activities  for the first quarter of fiscal 2005 resulted in net cash
used of $49,324  relating to the  purchase of certain  property  and  equipment.
Total cash  decreased  from  $9,697,154  at August  31,  2004 to  $9,251,358  at
February 28, 2005.

         We expect to use the payments  from the sale of our  TherMatrx  shares,
including any contingent payments, for general corporate purposes, including the
sales  and  marketing  effort  for our FDA  approved  cancer  therapy  products,
supporting  the  FDA   application   for  our  cancer  therapy   products  under
investigational  status, the development of new products used in medical therapy
and the possibility of acquiring new companies or technology.

         We expect to incur additional expenses related to the commercialization
of our BSD-500  systems,  which will  precede any revenue  from the sale of such
systems.  Due to  additional  participation  at  trade  shows,  expenditures  on
publicity,  additional  travel,  higher  sales  commissions  and  other  related
expenses, we project that our sales and marketing expenses will be approximately
$500,000  higher in fiscal 2005 than in the prior year to support the commercial
introduction  of the BSD-500  systems.  In addition,  we anticipate that we will
incur expenses of approximately $200,000 related to governmental and regulatory,
including  FDA,  approvals  during  fiscal 2005 in excess of fiscal 2004. We are
making these investments in sales and marketing and on government and regulatory
activities  to increase our revenue from sales of our BSD-500  system and,  upon
receipt  of FDA  approval,  from the sale of our  BSD-2000  system in the United
States.  These increased  marketing and regulatory expenses are an investment in
generating  offsetting  revenue  against the decline in TherMatrx  sales that we
have projected, and to provide future revenue growth over the long term. We also
project that we will incur approximately  $250,000 in additional new development
expenses  associated  with  developments  for  the  treatment  of  non-cancerous
diseases and medical conditions.

         We believe any cash  shortfall  during  fiscal 2005 that results from a
decrease  in revenues  and  increase in  expenses  can be covered  through  cash
received from the sale of our TherMatrx shares. We believe we can cover any cash
shortfall with cost cutting or available  cash. If we cannot cover any such cash
shortfall  with  cost  cutting  or  available  cash,  we  would  need to  obtain
additional financing.  We cannot be certain that any financing will be available
when needed or will be available on terms acceptable to us.  Insufficient  funds
may require us to delay,  scale back or  eliminate  some or all of our  programs
designed to facilitate the commercial  introduction of our systems or entry into
new markets.

                                       11
<PAGE>

                           FORWARD-LOOKING STATEMENTS

         With the exception of historical  facts,  the  statements  contained in
sections entitled  "Management's  Discussion and Analysis of Financial Condition
and Results of Operations" are forward-looking  statements within the meaning of
the Private Securities  Litigation Reform Act of 1995, which reflect our current
expectations and beliefs regarding our future results of operations, performance
and  achievements.  These statements are subject to risks and  uncertainties and
are based upon  assumptions and beliefs that may or may not  materialize.  These
forward-looking   statements  include,   but  are  not  limited  to,  statements
concerning:

         o    our anticipated financial performance and business plan;

         o    our  expectations  regarding the  commercial  introduction  of the
              BSD-500 system;

         o    our  expectations and efforts  regarding  receipt of FDA approvals
              relating to the BSD-2000 system;

         o    our  technological   developments  to  the  BSD-500  and  BSD-2000
              systems;

         o    our  ability  to  successfully  develop  our  technology  for  new
              applications and the expense of such developments;

         o    our development or acquisition of new technologies;

         o    our  expectation  that sales to  TherMatrx  may decline to zero in
              future periods;

         o    the  amount  of  expenses   we  will  incur  for  the   commercial
              introduction of the BSD-500 system;

         o    the  amount  of  expenses  we  will  incur  for  governmental  and
              regulatory, including FDA, approvals;

         o    our  expectation  that related party revenue will continue to be a
              significant portion of our total revenue;

         o    our  belief  that  sales of  BSD-500  and  BSD-2000  systems  will
              increase through our future sales and marketing efforts;

         o    our  belief  that  our  current  working  capital  and  cash  from
              operations will be sufficient to fund our  anticipated  operations
              for fiscal 2005;

         o    our assumption that we will receive contingent  payments,  and the
              amount  of such  payments,  in  connection  with  the  sale of our
              ownership in TherMatrx to AMS; and

         o    our  anticipated use of proceeds from the sale of our ownership in
              TherMatrx to AMS.

         We wish to caution readers that the forward-looking  statements and our
operating  results are  subject to various  risks and  uncertainties  that could
cause our actual results and outcomes to differ  materially from those discussed
or  anticipated,  including the factors set forth in the section  entitled "Risk
Factors"  included in our Annual Report on Form 10-KSB for the year ended August
31, 2004 and our other filings with the Securities and Exchange  Commission.  We
also  wish  to  advise   readers  not  to  place  any  undue   reliance  on  the
forward-looking  statements  contained in this report, which reflect our beliefs
and expectations  only as of the date of this report. We assume no obligation to
update or revise  these  forward-looking  statements  to  reflect  new events or
circumstances  or any  changes  in our  beliefs or  expectations,  other than as
required by law.

Item 3.  Controls and Procedures

         Under the  supervision  and with the  participation  of our management,
including our principal  executive officer and principal  financial officer,  we
evaluated  the  effectiveness  of the design  and  operation  of our  disclosure
controls and  procedures  (as defined in Rule  13a-15(e) or 15d-15(e)  under the
Securities  Exchange  Act  of  1934  (the  "Exchange  Act")).  Based  upon  that
evaluation,  the principal  executive  officer and principal  financial  officer
concluded  that,  as of the  end of the  period  covered  by  this  report,  our
disclosure  controls and procedures  were  effective and adequately  designed to
ensure that information required to be disclosed by us in the reports we file or
submit under the Exchange Act is recorded,  processed,  summarized  and reported
within the time periods specified in applicable rules and forms.

                                       12
<PAGE>

         During the six months ended  February 28, 2005 there has been no change
in our internal control over financial  reporting that has materially  affected,
or is  reasonably  likely  to  materially  affect,  our  internal  control  over
financial reporting.



                                       13
<PAGE>

PART II - OTHER INFORMATION

Item 1.       Legal Proceedings

         None.

Item 2.       Unregistered Sales of Equity Securities and Use of Proceeds

         None.

Item 3:       Defaults Upon Senior Securities

         None.

Item 4:       Submission of Matters to a Vote of Security Holders

         The Company's  Annual Meeting of  Shareholders  was held on January 14,
2005. Of the 20,057,333  shares of common stock outstanding and entitled to vote
at the meeting,  10,197,495  shares were present,  either in person or by proxy.
The following describes the matters considered by the Company's  shareholders at
the  Annual  Meeting,  as well as the  results  of the votes  cast at the Annual
Meeting:

                       Proposal # 1 Election of Directors
                       ----------------------------------
                                          For                Withheld
                                          ---                --------
             Paul F. Turner             9,975,971             221,524
             Hyrum A. Mead              9,975,971             221,524
             Gerhard W. Sennewald       9,975,971             221,524
             J. Gordon Short           10,185,595              11,900
             Michael Nobel             10,185,595              11,900

   Proposal # 2 Amend Company's 1998 Stock Incentive Plan to increase shares.
   -------------------------------------------------------------------------

               For                  Against                   Abstain
           ----------               -------                   -------
           10,159,148                29,547                   8,400

       Proposal # 3 Ratify Tanner & Company as independent public Accounts
       -------------------------------------------------------------------

               For                  Against                   Abstain
           ----------               -------                   -------
           10,185,770                6,725                    5,000

      Proposal #4 Transact Business as may properly come before the meeting
      ---------------------------------------------------------------------

             For                    Against                   Abstain
           ---------                -------                   -------
           9,962,615                231,855                   3,025


Item 5:       Other Information

         None.

                                       14
<PAGE>

Item 6.       Exhibits

         The following exhibits are filed as part of this report:

    Exhibit No.     Description of Exhibit
    -----------     ----------------------

      31.1    Certification   Required   Pursuant   to   Section   302   of  the
              Serbanes-Oxley Act of 2002

      31.2    Certification   Required   Pursuant   to   Section   302   of  the
              Serbanes-Oxley Act of 2002

      32.1    Certification   Required   Pursuant   to   Section   902   of  the
              Serbanes-Oxley Act of 2002

      32.2    Certification   Required   Pursuant   to   Section   902   of  the
              Serbanes-Oxley Act of 2002



                                       15
<PAGE>

                                    SIGNATURE


         Pursuant to the requirements of the Securities Exchange Act of 1934,
BSD Medical Corporation, the registrant, has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.




                                    BSD MEDICAL CORPORATION



Date:    April 14, 2005             /s/ Hyrum A. Mead
                                    ----------------------------------------
                                    President (principal executive officer)

Date:    April 14, 2005             /s/ Dennis E. Bradley
                                    ----------------------------------------
                                    Controller (principal financial officer)




                                       16