BSD Medical Corporation (“BSD”) is committed to the highest standards of legal and ethical business conduct. This Code of Business Conduct and Ethics summarizes the legal, ethical and regulatory standards that BSD Medical Corporation must follow and is a reminder to our directors, officers and employees, of the seriousness of that commitment. Compliance with this Code and high standards of business conduct is mandatory for every BSD employee.

Introduction
This Code is not intended to be a comprehensive guide to all of our policies or to all your responsibilities under law or regulation. It provides general parameters to help you resolve the ethical and legal issues you encounter in conducting our business. Think of this Code as a guideline, or a minimum requirement, that must always be followed. If you have any questions about anything in the Code or appropriate actions in light of the Code, you may contact the Ethics Officer, Ray Lauritzen, or the Chair of the Audit Committee who is Dr. Gerhard Sennewald.

We expect each of our directors, officers and employees to read and become familiar with the ethical standards described in this Code and to affirm your agreement to adhere to these standards by signing the Compliance Certificate that appears at the end of this Code. Violations of the law, our corporate policies, or this Code may lead to disciplinary action, including dismissal.

I. We Insist on Honest and Ethical Conduct By All of Our Directors, Officers, Employees and Other Representatives
We place the highest value on the integrity of our directors, our officers and our employees and demand this level of integrity in all our dealings. We insist on not only ethical dealings with others, but on the ethical handling of actual or apparent conflicts of interest between personal and professional relationships.

Fair Dealing
Directors, officers and employees are required to deal honestly and fairly with our customers, suppliers, competitors and other third parties. In our dealings with customers and suppliers, we:

• prohibit our directors, officers and employees from accepting any bribe, kickback or improper payment from anyone;
• prohibit gifts or favors of more than nominal value to or from our customers or suppliers;
• limit marketing and client entertainment expenditures to those that are necessary, prudent, job-related and consistent with our policies;
• require clear and precise communication in our contracts, our advertising, our literature, and our other public statements and seek to eliminate misstatement of fact or misleading impressions;
• protect all proprietary data our customers or suppliers provide to us as reflected in our agreements with them;

Conflicts of Interest; Corporate Opportunities
Our directors, officers and employees should not be involved in any activity that creates or gives the appearance of a conflict of interest between their personal interests and the interests of BSD. In particular, without the specific permission of our Ethics Officer, no director, officer or employee shall:

• be a consultant to, or a director, officer or employee of, or otherwise operate an outside business that:
• markets products or services in competition with our current or potential products and services;
• supplies products or services to BSD; or
• purchases products or services from BSD;
• have any financial interest, including significant stock ownership, in any entity with which we do business that might create or give the appearance of a conflict of interest;
• seek or accept any personal loan or services from any entity with which we do business, except from financial institutions or service providers offering similar loans or services to third parties under similar terms in the ordinary course of their respective businesses;
• accept any personal loan or guarantee of obligations from BSD, except to the extent such arrangements are legally permissible; or
• conduct business on behalf of BSD with immediate family members, which include spouses, children, parents, siblings and persons sharing the same home whether or not legal relatives.

Confidentiality and Corporate Assets
Our directors, officers and employees are entrusted with our confidential information and with the confidential information of our suppliers, customers or other business partners. This information may include (1) technical or scientific information about current and future products, services or research, (2) business or marketing plans or projections, (3) earnings and other internal financial data, (4) personnel information, (5) supply and customer lists and (6) other non-public information that, if disclosed, might be of use to our competitors, or harmful to our suppliers, customers or other business partners. This information is our property, or the property of our suppliers, customers or business partners and in many cases was developed at great expense. Our directors, officers and employees shall:

• Not discuss confidential information with or in the presence of any unauthorized persons, including family members and friends;
• Use confidential information only for our legitimate business purposes and not for personal gain;
• Not disclose confidential information to third parties.

II. We Provide Full, Fair, Accurate, Timely and Understandable Disclosure
We are committed to providing our shareholders and investors with full, fair, accurate, timely and understandable disclosure in the reports that we file with the Securities and Exchange Commission. To this end, our directors, officers and employees shall:

• not make false or misleading entries in our books and records for any reason;
• not condone any undisclosed or unrecorded bank accounts or assets established for any purpose;
• comply with generally accepted accounting principles at all times;
• notify our Accountant if there is an unreported transaction;
• maintain a system of internal accounting controls that will provide reasonable assurances to management that all transactions are properly recorded;
• maintain books and records that accurately and fairly reflect our transactions;
• prohibit the establishment of any undisclosed or unrecorded funds or assets;
• maintain a system of internal controls that will provide reasonable assurances to our management that material information about BSD is made known to management, particularly during the periods in which our periodic reports are being prepared;
• present information in a clear and orderly manner and avoid the use of unnecessary legal and financial language in our periodic reports; and

III. We Comply With all Laws, Rules and Regulations
We will comply with all laws and governmental regulations that are applicable to our activities, and expect all our directors, officers and employees to obey the law. Specifically, we are committed to:

• maintaining a safe and healthy work environment;
• promoting a workplace that is free from discrimination or harassment based on race, color, religion, sex, age, national origin, disability or other factors that are unrelated to the Company’s business interests;
• supporting fair competition and laws prohibiting restraints of trade and other unfair trade practices;
• conducting our activities in full compliance with all applicable environmental laws;
• keeping the political activities of our directors, officers and employees separate from our business;
• prohibiting any illegal payments, gifts, or gratuities to any government officials or political party;
• prohibiting the unauthorized use, reproduction, or distribution of any third party’s trade secrets, copyrighted information or confidential information;
• complying with all applicable state and federal securities laws.

REPORTING AND EFFECT OF VIOLATIONS
Compliance with this code of conduct is, first and foremost, the individual responsibility of every director, officer and employee. We attempt to foster a work environment in which ethical issues and concerns may be raised and discussed with supervisors or with others without the fear of retribution. It is our responsibility to provide a system of reporting and access when you wish to report a suspected violation, or to seek counseling, and the normal chain of command cannot, for whatever reason, be used.

Administration
Our Board of Directors and Audit Committee have established the standards of business conduct contained in this Code and oversees compliance with this Code. They have also created the position of Ethics Officer to ensure adherence to the Code. While serving in this capacity, the Ethics Officer reports directly to the Board of Directors.

Reporting Violations and Questions
Directors, officers, and employees must report, in person or in writing, any known or suspected violations of laws, governmental regulations or this Code to either the Ethics Officer or the Chair of the Audit Committee of our Board of Directors. Additionally, directors, officers, and employees may contact the Ethics Officer or the Chair of the Audit Committee with a question or concern about this Code or a business practice. Any questions or violation reports will be addressed immediately and seriously, and can be made anonymously.

We will not allow any retaliation against a director, officer or employee who acts in good faith in reporting any violation.

Our Ethics Officer will investigate any reported violations and will determine an appropriate response, including corrective action and preventative measures, involving the Chair of the Audit Committee or Chief Executive Officer when required. All reports will be treated confidentially to every extent possible.

Consequences of a Violation
Directors, officers and employees who violate any laws, governmental regulations or this Code will face appropriate, case specific disciplinary action, which may include demotion or immediate discharge.

One committee of the board of directors will be known as the audit committee, comprising at least two members. A majority of the members of the audit committee shall be independent directors.

The primary function of the audit committee is to assist the board in fulfilling its oversight responsibilities by reviewing the financial information that will be provided to the shareholders and others, the systems of internal controls management and the board of directors have established and all audit processes.

General responsibilities

1. The audit committee provides open avenues of communication with the independent accountant and the board of directors.
   
   
2. The audit committee must report committee actions to the full board of directors and may make appropriate recommendations.
   
   
3. The audit committee has the power to conduct or authorize investigations into matters within the committee's scope of responsibilities. The committee is authorized to retain independent counsel, accountants or others it needs to assist in an investigation.
   
   
4. The audit committee will meet at least one time each year, more frequently if circumstances make that preferable. The audit committee chairman has the power to call an audit committee meeting whenever he or she thinks there is a need.
   
   An audit committee member should not vote on any matter in which he or she is not independent. The audit committee may ask members of management or others to attend the meeting and is authorized to receive all pertinent information from management.
   
   
5. The audit committee will do whatever else the law, the company's charter or bylaws or the board of directors require.

Responsibilities for engaging independent accountants and appointing the internal auditor

1. The audit committee will select the independent accountants for company audits. The committee's selection is subject to approval by the full board of directors. The audit committee also will review and set any fees paid to the independent accountants and review and approve dismissal of the independent accountants.
   
   
2. The audit committee will confirm and assure the independence of the independent accountant, including a review of consulting services provided by the independent accountant and the fees paid for them.
   
   
3. The audit committee will consider, in consultation with the independent accountant the audit scope and procedural plans made by the independent accountant.
   
   
4. The audit committee will listen to management and the primary independent auditor if either thinks there might be a need to engage additional auditors. The audit committee will decide whether to engage an additional firm and, if so, which one.

Responsibilities for reviewing internal audits, the annual external audit and the review of quarterly and annual financial statements

1. The audit committee will ascertain that the independent accountant views the board of directors as its client, that it will be available to the full board of directors at least annually and that it will provide the committee with a timely analysis of significant financial reporting issues.
   
   
2. The audit committee will ask management and the independent accountant about significant risks and exposures and will assess management's steps to minimize them.
   
   
3. The audit committee will review the following with the independent account:
   
   
1. The adequacy of the company's internal controls, including computerized information system controls and security.
   
   
2. Any significant findings and recommendations made by the independent accountant, together with management's responses to them.
   
   
4. Shortly after the annual examination is completed, the audit committee will review the following with management and the independent accountant:
   
   
1. The company's annual financial statements and related footnotes.
   
   
2. The independent accountant's audit of and report on the financial statements.
   
   
3. The auditor's qualitative judgments about the appropriateness, not just the acceptability, of accounting principles and financial disclosures and how aggressive (or conservative) the accounting principles and underlying estimates are.
   
   
4. Any serious difficulties or disputes with management encountered during the course of the audit.
   
   
5. Anything else about the audit procedures or findings that GAAS requires the auditors to discuss with the committee.
   
   
5. The audit committee will review annual filings with the SEC and other published documents containing the company's financial statements and will consider whether the information in the filings is consistent with the information in the financial statements.
   
   
6. The audit committee will review the interim financial reports with management and the independent accountant before those interim reports are released to the public or filed with the SEC or other regulators.
   
   
7. The audit committee will prepare a letter for inclusion in the annual report that describes the committee's composition and responsibilities and how the responsibilities were fulfilled.
   

Periodic responsibilities

1. Review and update the audit committee's charter annually.
   
2. Review, with the independent accountant, the results of their examination of compliance with the company's code of conduct.
   
3. Review legal and regulatory matters that may have a material effect on the organization's financial statements, compliance policies and programs and reports from regulators.
   
4. Meet with the independent accountant and management in separate executive sessions to discuss any matters the audit committee or these groups believe should be discussed privately with the audit committee.
   
   

Certain statements in the web site that relate to the future performance of BSD Medical Corporation or therapies performed on our equipment are "forward-looking" and are subject to risks and uncertainties inherent in our business that could cause actual results to differ materially from the statements. BSD Medical Corp. does not undertake responsibility to update such forward-looking statements. A detailed discussion of risks and uncertainties may be found in our Annual Report on Form 10-K and other documents filed with the Securities and Exchange Commission. Our recent SEC filings are available from this web site. BSD Medical Corporation is not responsible for nor do we endorse claims made on links included on our website.

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