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 November 30, 2004

                         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 November 30, 2004
--------------------------------------      -----------------------------------
    Common stock, $.001 Par Value                       20,057,333



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



<PAGE>

Item 1.  Financial Statements

                             BSD MEDICAL CORPORATION
                             Condensed Balance Sheet
                                   (Unaudited)

           Assets                                                November 30,
           ------                                                    2004
                                                               -----------------
Current assets:
    Cash and cash equivalents                                   $     9,025,386
    Receivables, net                                                    239,612
    Related party receivables                                            71,594
    Inventories                                                         794,088
    Other current assets                                                883,416
                                                               -----------------
           Total current assets                                      11,014,096
                                                               -----------------

Property and equipment, net                                             151,567
Patents, net                                                             24,537
                                                               -----------------
                                                               $     11,190,200
                                                               -----------------

          Liabilities and Stockholders' Equity
Current liabilities:
    Accounts payable                                           $        133,883
    Accrued expenses                                                    272,008
    Current portion of deferred revenue                                  37,109
                                                               -----------------

           Total current liabilities                                    443,000
                                                               -----------------

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

           Total liabilities                                            494,000
                                                               -----------------

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 20,070,745 and
      outstanding 20,057,333, shares
                                                                         20,058
    Additional paid-in capital                                       23,287,908
    Deferred compensation                                               (34,050)
    Accumulated deficit                                             (12,577,482)
    Common stock in treasury 13,412 shares, at cost                        (234)
                                                               -----------------

           Net stockholders' equity                                  10,696,200
                                                               -----------------

                                                               $     11,190,200
                                                               =================

                 See accompanying notes to financial statements


                                       1
<PAGE>
                             BSD MEDICAL CORPORATION


                       Condensed Statements of Operations
                                   (Unaudited)
<TABLE>
<CAPTION>


                                                                 Three Months
                                                                    Ended:
                                                    ----------------------------------------
                                                         November              November
                                                         30, 2004              30, 2003
                                                    ------------------    ------------------

<S>                                                 <C>                   <C>
Sales                                               $    250,779          $    193,909
Sales to related parties                                   7,154               487,225
                                                    ------------------    ------------------

           Total revenues                                257,933               681,134
                                                    ------------------    ------------------
Costs and expenses:
    Cost of product sales                                266,063               123,450
    Cost of sales to related parties                       4,308               206,680
    Research and development                             182,513               162,558
    Selling, general and administrative                  380,500               212,575
                                                    ------------------    ------------------

           Total costs and expenses                      833,384               705,263
                                                    ------------------    ------------------

           Operating loss                               (575,451)              (24,129)

Other income (expense):
    Interest income                                       70,592                   101
    Interest expense                                           -                  (108)
    Other income/expense                                     523                     -
                                                    ------------------    ------------------

           Total other income                             71,115                    (7)
                                                    ------------------    ------------------

 Loss before taxes                                      (504,336)              (24,136)
                                                    ------------------    ------------------
     Income tax provision                                      -                     -
                                                    ------------------    ------------------
           Net Loss                                 $   (504,336)         $    (24,136)
                                                    ==================    ==================

Net Loss per common share
Basic and diluted                                   $       (.03)         $        .00
                                                    ------------------    ------------------

Weighted average number of shares outstanding         20,041,000            17,896,000
     Basic
                                                    ------------------    ------------------
       Diluted                                        20,041,000            17,896,000
                                                    ------------------    ------------------

</TABLE>

See accompanying notes to financial statements

                                       2
<PAGE>


                             BSD MEDICAL CORPORATION

                 Condensed Statements of Cash Flows (Unaudited)
                  Three months ended November 30, 2004 and 2003
<TABLE>
<CAPTION>

                                                                                       2004              2003
                                                                                 -----------------------------------
<S>                                                                             <C>                <C>
Cash flows from operating activities:
    Net loss                                                                    $   (504,336)      $    (24,136)
    Adjustments to reconcile net loss to net cash used in operating
      activities:
       Depreciation and amortization                                                   9,043             11,675
       Stock compensation expense                                                     30,000             12,000
       Deferred compensation                                                           9,508              7,858
       (Increase) decrease in:
           Receivables                                                               (51,902)            59,223
           Inventories                                                               (53,672)            92,746
           Prepaid expenses and deposits                                              (3,350)             6,148
       Increase (decrease) in:
           Accounts payable                                                           34,752            (59,943)
           Accrued expenses                                                         (151,907)          (177,321)
           Deferred revenue                                                          (10,114)           (14,877)
                                                                                 -----------------------------------
              Net cash used in operating activities                                 (691,978)           (86,627)
                                                                                 -----------------------------------

Cash flows used in investing activities-
    Purchase of property and equipment                                               (21,040)                 -
                                                                                 -----------------------------------

Cash flows provided by financing activities-
     Proceeds from sale of common stock                                               41,250          2,002,000
                                                                                 -----------------------------------

(Decrease) increase in cash and cash equivalents                                    (671,768)         1,915,373
Cash and cash equivalents, beginning of period                                     9,697,154            136,003
                                                                                  ----------------------------------
Cash and cash equivalents, end of period                                        $  9,025,386      $   2,051,376
                                                                                 ===================================
</TABLE>

Supplemental Disclosure of Cash Flow Information
------------------------------------------------

         o    The  Company  paid no cash for  interest  and taxes for the period
              ended  November  30,  2004 and $108 for  interest  and no cash for
              taxes during the period ended November 30, 2003.

         o    The Company  issued 75,000  options for the periods ended November
              30,  2004 and 2003,  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 November 30, 2004 and the Condensed
Statements of Operations and the Condensed Statements of Cash Flow for the three
months ended November 30, 2004 and November 30, 2003,  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 November 30, 2004, have been made.

         Certain  information  and  footnote  disclosures  normally  included in
financial statements prepared in accordance with accounting principles generally
accepted in the United  States of America have been  condensed  or omitted.  The
results  of  operations  for  the  period  ended  November  30,  2004,  are  not
necessarily indicative of the results to be expected for the full year.

Note 2. Net Loss Per Common Share

         Net loss per common share for the quarters  ended November 30, 2004 and
2003, is based on the weighted average number of shares  outstanding  during the
respective  periods.  Diluted  earnings  per  share is 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 periods  ended  November 30, 2004 and 2003,  the Company had
sales to an  unconsolidated  affiliate and an entity controlled by a significant
stockholder   of  $7,154  and  $487,225,   respectively.   These  related  party
transactions  represents 3% and 72 % of total sales.  Related party revenue from
TherMatrx  was $0 in the period ended  November 30, 2004  compared to $20,572 in
period ended November 30, 2003.

         At November 30, 2004,  receivables  includes $71,594 due from an entity
controlled by a significant stockholder.

Note 4. Common Stock

         During the period ended  November 30, 2003,  the Company  completed the
sale of an aggregate of 1,820,000 shares of common stock to three  institutional
investors.  The shares of common stock were sold for cash consideration of $1.10
per share,  or a total of  $2,002,000,  pursuant to the terms of the  Securities
Purchase  Agreement.  These gross  proceeds  were off-set by $165,653 of accrued
offering costs and commissions.  In connection with this sale the Company issued
a three-year  warrant to the placement  agent to purchase up to 91,000 shares of
the Company's common stock at an exercise price per share of $1.80 per share.

Note 5. 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 three months ended November 30:


                                       4
<PAGE>


                                                        2004          2003
                                                 -------------------------------

Net loss - as reported                           $    (504,336)  $    (24,136)

Add: Stock-based employee compensation
expense included in reported
net income, net of related tax effects                  15,750          8,250

Deduct total stock based employee
compensation expense determined under
fair value based method for all awards,
net of related taxes                                  (103,089)       (33,250)
                                                 -------------------------------

Net loss - pro forma                             $    (591,675)  $    (49,136)
                                                 -------------------------------

Basic and Diluted income (loss) per
share - as reported                              $        (.03)  $        .00
                                                 -------------------------------

Basic and Diluted income (loss ) per
share -  pro-forma                               $        (.03)  $        .00
                                                 -------------------------------

         The fair  value of each  option  granted  for the  three  months  ended
November  30,  2004  and  2003 is  estimated  on the  date of  grant  using  the
Black-Scholes option pricing model with the following assumptions:


                                         ----------------------------------
                                                     2004             2003
                                         ----------------------------------

Expected dividend yield                   $             - $              -
Expected stock price volatility                       83%             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 November 30, 2004 and 2003 were $1.20 and $.64, respectively.

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 our quarter ended  November 30, 2004. We assume no obligation
to revise or update any  forward-looking  statements  for any reason,  except as
required by law.

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

                                       5
<PAGE>

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 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 the  initial  payment,  which is
non-refundable.

         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 $20,570,242 as
of November  30, 2003 to  $12,577,482  as of November 30, 2004 due to net income
recorded during our fiscal year ended August 31, 2004 as a result of our sale of
our  interest  in  TherMatrx.  We  recorded a net loss for the first  quarter of
fiscal 2005 of $504,336.

         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  $215,458 and $633,820 for the
first  quarters  of fiscal  2005 and 2004,  respectively.  Service  revenue  was
$42,475  and   $47,314  for  the  first   quarters  of  fiscal  2005  and  2004,
respectively.

         We  derived  $7,154,  or 3%, of our  revenue  for the first  quarter of
fiscal 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.

         In the first  quarter of fiscal 2005, we derived  $250,779,  or 97%, of
our revenue from sales to unrelated parties. These revenues consisted of product
sales of approximately  $207,000,  consulting services of approximately $29,000,
service contracts of approximately  $13,000, and other miscellaneous  revenue of
approximately $2,000.

                                       6
<PAGE>

         Cost of sales  for the  first  quarter  of fiscal  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 November 30, 2004, 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.
If projected  sales for fiscal 2005 do not  materialize  or if our  hyperthermia
systems do not  receive  increased  market  acceptance,  we may be  required  to
increase  the reserve for  inventory  in future  periods.  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.  In the past we
have purchased inventory only after receiving orders for TherMatrx systems,  and
only in quantities  sufficient to fulfill those orders. We have no inventory for
TherMatrx  systems that is currently at risk,  whether or not future  orders are
placed with us for TherMatrx systems.

         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.

         Allowance for Doubtful Accounts.  We provide our customers with payment
terms that vary from contract to contract.  Our allowance for doubtful  accounts
at November 30, 2004 was $0. Bad debt expense for the quarter ended November 30,

                                       7
<PAGE>

2004 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 November 30, 2004 compared to the Three Months Ended November
30, 2003

         Revenue.  Revenue  for the first  quarter of fiscal  2005 was  $257,933
compared  to  $681,134  for the first  quarter of fiscal  2004,  a  decrease  of
$423,201,  or approximately 62%. The decrease in total revenue was primarily due
to a decrease  in sales to related  parties.  Sales to  Medizin-Technik  totaled
$7,154 in the first  quarter of fiscal  2005  compared  to $466,633 in the first
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 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  first
quarter  of fiscal  2004 to the first  quarter  of fiscal  2005.  Product  sales
decreased to $215,458 in the first  quarter of fiscal 2005 from  $633,820 in the
first quarter of fiscal 2004, a decrease of $418,362, or 66%.

         Related Party Revenue.  We derived $7,154, or 3%, of our revenue in the
first  quarter  of fiscal  2005 from sales to related  parties  as  compared  to
$487,225,  or 72%, in the first quarter of fiscal 2004. All of the related party
revenue in the 2005 period was from sales of component parts to Medizin-Technik.
During the 2004 period,  $466,633 of the related party revenue was from sales to
Medizin-Technik.  The  remaining  amount of  related  party  revenue in the 2004
period was from services  provided to TherMatrx.  Since the sale of TherMatrx in
July 2004,  TherMatrx is no longer  considered a related party.  The significant
decrease in sales to Medizin-Technik in the first quarter of fiscal 2005 was due
to the sale of one  BSD-2000  system in the 2004 period  compared to none in the
2005 period. 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 first  quarter of fiscal 2004,  we
derived  $250,779,  or 97%, of our total  revenue as  compared to  approximately
$193,909,  or 29%, for the first quarter of fiscal 2004 from  non-related  party
sales. Our first quarter of fiscal 2004 non-related  party revenue  consisted of
product sales of approximately  $207,000.  The balance of our non-related  party
revenue  consisted of  consulting  services of  approximately  $29,000,  service
contracts  of  approximately   $13,000,   and  miscellaneous  other  revenue  of
approximately $2,000.

         Gross  Profit.  Gross  profit for the first  quarter of fiscal 2005 was
$(12,438),  or (5)%, as compared to $351,004, or 52%, of total product sales for
the first  quarter  of fiscal  2004.  The  decline  in gross  profit  margin was
primarily  due to the cost of excess  production  employees  resulting  from the
decrease in sales.  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 $380,500 in the first  quarter of fiscal
2005, from $212,575 for the first quarter of fiscal 2004 an increase of $167,925
or 79%. This increase was primarily due to higher sales and marketing  costs due
to greater  emphasis on marketing,  higher legal and  accounting  costs,  higher
consulting  costs related to marketing and preparation of FDA submissions and an
increase in payroll costs.

                                       8
<PAGE>

         Research and Development  Expenses.  Research and development  expenses
were  $182,513 for the first quarter of fiscal 2005, as compared to $162,558 for
the first quarter of fiscal 2004 an increase of $19,955,  or 12%,  primarily due
to an  increase  in payroll  and  consulting  costs.  Research  and  development
expenses  for  the  first  quarter  of  fiscal  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 $70,592 for the first
quarter of fiscal 2005 as compared to $101 for the first  quarter of fiscal 2004
due to the  significantly  higher  levels  of cash  resulting  from  the sale of
TherMatrx.

         Net  loss.  The net loss for the first  quarter  of  fiscal  2005,  was
$504,336 as compared  with a net loss of $24,136 for the first quarter of fiscal
2004.  The increase in the net loss was  primarily due to lower sales volume and
an increase in the general and administrative expenses as described above.

         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.

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

         Our accumulated  deficit since inception  decreased from $20,570,242 as
of November  30, 2003 to  $12,577,482  as of November 30, 2004 due to net income
recorded during our fiscal year ended August 31, 2004 as a result of our sale of
our interest in TherMatrx.  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  $691,978 in cash from  operating  activities  during the first
quarter of fiscal 2005 compared to $86,827 for the first quarter of fiscal 2004.
Cash flow from  operating  activities  decreased  for the quarter of fiscal 2005
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 $21,040  relating to the  purchase of certain  property  and  equipment.
Total cash  decreased  from  $9,697,154  at August  31,  2004 to  $9,025,386  at
November 30, 2004.

         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  commercial
introduction  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

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<PAGE>

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 the cash
raised in our November and December  2003 private  placements  and with the cash
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.

                           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.

                                       10
<PAGE>

         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.

         During the quarter ended November 30, 2004, 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.


                                       11
<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

         None.

Item 5: Other Information

         None.

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


                                       12
<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:    January 14, 2005                     /s/ Hyrum A. Mead
                                     -----------------------------------------
                                     President (principal executive officer)

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




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