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<SEC-DOCUMENT>0001121888-01-500011.txt : 20010522
<SEC-HEADER>0001121888-01-500011.hdr.sgml : 20010522
ACCESSION NUMBER:		0001121888-01-500011
CONFORMED SUBMISSION TYPE:	10QSB
PUBLIC DOCUMENT COUNT:		1
CONFORMED PERIOD OF REPORT:	20010331
FILED AS OF DATE:		20010521

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			BOVIE MEDICAL CORP
		CENTRAL INDEX KEY:			0000719135
		STANDARD INDUSTRIAL CLASSIFICATION:	INDUSTRIAL ORGANIC CHEMICALS [2860]
		IRS NUMBER:				112644611
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		10QSB
		SEC ACT:		
		SEC FILE NUMBER:	000-12183
		FILM NUMBER:		1644628

	BUSINESS ADDRESS:	
		STREET 1:		734 WALT WHITMAN ROAD
		CITY:			MELVILLE
		STATE:			NY
		ZIP:			11747
		BUSINESS PHONE:		5164215452

	MAIL ADDRESS:	
		STREET 1:		734 WALT WHITMAN ROAD
		CITY:			MELVILLE
		STATE:			NY
		ZIP:			11747

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	AN CON GENETICS INC
		DATE OF NAME CHANGE:	19920703
</SEC-HEADER>
<DOCUMENT>
<TYPE>10QSB
<SEQUENCE>1
<FILENAME>financialsa.html
<DESCRIPTION>BOVIE QUARTERLY FINANCIALS 03/31/01
<TEXT>

<HTML>
<head>
<TITLE>
</TITLE>
</head>
<body>
<H1 ALIGN=CENTER><FONT SIZE=3>U.S. SECURITIES AND EXCHANGE COMMISSION
</FONT></H1>

<H1 ALIGN=CENTER><FONT SIZE=3>Washington, D.C. 20549</FONT></H1>
<HR SIZE=1 WIDTH=15% ALIGN=CENTER>
<H1 ALIGN=CENTER><FONT SIZE=4>FORM 10-QSB</FONT></H1>
<H1 ALIGN=CENTER><FONT SIZE=2>(Mark One)</FONT></H1>
<HR SIZE=1 WIDTH=15% ALIGN=CENTER>
<H1 ALIGN=CENTER><FONT SIZE=3>[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE<BR>SECURITIES EXCHANGE ACT OF 1934</FONT></H1>

<P ALIGN=CENTER><FONT SIZE=3>For the quarterly period ended March 31,
2001</FONT></P>

<H1 ALIGN=CENTER><FONT SIZE=3>[&nbsp;&nbsp;] TRANSITION REPORT UNDER
SECTION 13 OR 15(d) OF THE<BR>EXCHANGE ACT</FONT></H1>

<HR SIZE=1 WIDTH=15% ALIGN=CENTER>

<P ALIGN=CENTER><FONT SIZE=2>For the Transition Period from<U> </U></FONT></P>

<P ALIGN=CENTER><FONT SIZE=2>Commission file number 0-12183</FONT></P>

<H1 ALIGN=CENTER><FONT SIZE=4>BOVIE MEDICAL CORPORATION</FONT></H1>
<H1 ALIGN=CENTER><FONT SIZE=1>(Exact name of small business issuer as specified
in its charter)</FONT></H1>

<P ALIGN=CENTER><FONT SIZE=2><U>Delaware&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No. 11-2644611
</U></FONT></P>

<P ALIGN=CENTER><FONT SIZE=1>(State or other jurisdiction of incorporation or
organization)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;(IRS&#151; Employer Identification No.)</FONT></P>

<HR SIZE=1 WIDTH=15% ALIGN=CENTER>

<P   ALIGN=CENTER><FONT   SIZE=3>734  Walt  Whitman  Rd.,  Melville,   New  York
11747</FONT></P>

<P ALIGN=CENTER><FONT SIZE=1>(Address of principal executive offices)</FONT></P>

<P ALIGN=CENTER><FONT SIZE=3>(516) 421-5452</FONT></P>
<P ALIGN=CENTER><FONT SIZE=1>(Issuer's telephone number)</FONT></P>

<HR SIZE=1 WIDTH=15% ALIGN=CENTER>

<P  ALIGN=CENTER><FONT  SIZE=1>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&nbsp;[X]&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No&nbsp;[&nbsp;&nbsp;] </FONT></P>

<P ALIGN=CENTER><FONT  SIZE=1>APPLICABLE ONLY TO CORPORATE ISSUERS</FONT></P> <P
ALIGN=CENTER><FONT  SIZE=1>Indicate  the number of shares outstanding of each of
the issuer's class of common stock, as of the latest practicable date:13,485,334
</FONT></P>


<H1 ALIGN=CENTER><FONT SIZE=3>BOVIE MEDICAL CORPORATION<BR>
INDEX TO FORM 10-QSB</FONT></H1>
<PRE>


Contents                                                                   Page

Part I.   Financial Information.................................................

        Item 1:       Consolidated Financial Statements:........................

             Consolidated Balance Sheet - March 31, 2001 and December 31, 2000..
             Consolidated Statements of Operations for the
               three Months Ended March 31,  2001 and 2000......................
             Consolidated Statements of Cash Flows for the
               three Months Ended March 31, 2001 and 2000.......................

              Notes to Financial Statements ....................................

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

Part II.   Other
Information.....................................................................

 Item 1:  Legal
Proceedings.....................................................................

 Item 2:  Changes in Securities.................................................

 Item 3:  Defaults Upon Senior Securities.......................................

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

 Item 5:  Exhibits and Reports on Form 8-K......................................
</pre>




<PAGE>
PART I. FINANCIAL INFORMATION

ITEM 1: CONSOLIDATED FINANCIAL STATEMENTS


<H1 ALIGN=CENTER><FONT SIZE=2>BOVIE MEDICAL CORPORATION<BR>
CONSOLIDATED BALANCE SHEET<BR>
MARCH 31, 2001 AND DECEMBER 31, 2000</FONT></H1>

<PRE>
                                            (Unaudited)           (Audited)
                                          March 31, 2001      December 31, 2000
                                          --------------      -----------------
Current assets:

Cash                                      $  313,422            $   278,662
 Trade accounts receivable                  1,183,353              1,256,049
 Inventories                                2,116,767              1,994,564
 Prepaid expenses                              79,285                111,343
 Deferred tax asset                           175,010                175,010
 Other receivables                            112,379                111,179
                                            ---------              ---------
 Total current assets                       3,980,216              3,926,807

 Property and equipment, net                1,534,707              1,552,179

 Other assets:

 Repair parts                                 317,729                317,698
 Trade name                                 1,580,061              1,603,527
 Patent rights, net                           290,382                277,644
 Deposits                                      39,593                 35,719
 Investment - Joint Venture                   200,000                200,000
                                            ---------              ---------
                                            2,427,765              2,434,588
                                            ---------              ---------
                                           $7,942,688             $7,913,574
                                            =========              =========
</PRE>
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;The accompanying notes are an integral part of the
financial statements. </FONT></P>
<PAGE>

<H1 ALIGN=CENTER><FONT SIZE=2>BOVIE MEDICAL CORPORATION<BR>
CONSOLIDATED BALANCE SHEET<BR>
MARCH 31, 2001 AND DECEMBER 31, 2000<BR>
(CONTINUED)</FONT></H1>

<pre>
                      Liabilities and Stockholders' Equity

                                          (Unaudited)         (Audited)
                                         March 31, 2001   December 31, 2000
                                         --------------    ----------------
Current liabilities:

Accounts payable                        $   440,992            $   439,144
Accrued expense                             331,006                350,425
Notes payable - current portion             585,232                572,931
Due to shareholders                          42,648                 57,425
Due to Joint Venture                        100,000                100,000
                                          ---------              ---------
        Total current liabilities         1,499,878              1,519,925


Stockholders' equity:

Preferred Stock, par value $.001
 10,000,000 shares authorized
 0 issued and outstanding                        --                     --
 on March 31, 2001

Common stock par value $.001;
 40,000,000  shares authorized,
 issued and outstanding
 13,585,334 and 13,685,334 shares
 on March 31, 2001 and
 December 31, 2000 respectively              13,655                 13,756
Additional paid in capital               19,954,899             19,991,488
Accumulated deficit                     (13,525,744)           (13,611,595)
                                        -----------            -----------
         Total stockholders' equity       6,442,810              6,393,649
                                        -----------            -----------
            Total liabilities and
            stockholders' equity        $ 7,942,688           $  7,913,574
                                        ===========            ===========
</PRE>
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The accompanying notes are
an integral part of the financial statements. </FONT></P>
<PAGE>

<H1 ALIGN=CENTER><FONT SIZE=2>BOVIE MEDICAL CORPORATION<BR>
CONSOLIDATED STATEMENTS OF OPERATIONS<BR>
FOR THE THREE MONTHS ENDED MARCH 31, 2001 AND 2000<BR>
(UNAUDITED)</FONT></H1>

<pre>
                                                  2001                2000
                                                  ----                ----

Sales                                         $ 2,736,687         $ 2,174,324
Cost of sales                                   1,509,306           1,131,321
                                                ---------           ---------
Gross profit                                    1,227,381           1,043,003

Costs and expenses:
Research and development                          112,408             109,268
Professional services                              81,591             107,741
Salaries and related costs                        466,977             395,241
Selling, general and administrative               472,791             373,769
                                                ---------            --------
                                                1,133,767             986,019
                                                ---------            --------

Gain (Loss) from operations                        93,614              56,984

Other income (expense):
Interest                                      (     7,763)          (   4,713)
Miscellaneous                                          --               4,565
                                               ----------            --------
                                              (     7,763)          (     148)
                                               ----------            --------

Income                                             85,851              56,836

Provision for income tax                           30,047              19,892
Realized benefit of loss carryforward          (   30,047)         (   19,892)
                                                ---------           ---------
Net income                                   $     85,851         $    56,836
                                                =========           =========
Earnings per share

Net income:
      Basic                                         .01                 .01
      Diluted                                       .01                 .01

Weighted average number of shares outstanding    13,635,334       14,007,834
Weighted average number of shares adjusted for
  dilutive securities                            13,635,334       14,007,834

</PRE>
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The  accompanying notes are
an integral part of the financial statements. </FONT></P>
<PAGE>

<H1 ALIGN=CENTER><FONT SIZE=2>BOVIE MEDICAL CORPORATION AND SUBSIDIARIES<br>
CONSOLIDATED STATEMENT OF CASH FLOWS<br>
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS<br>
FOR THE THREE MONTHS ENDED MARCH 31, 2001 AND 2000<br>
(UNAUDITED)</FONT></H1>
<pre>
                                                      2001            2000
                                                      ----            ----
Cash flows from operating activities
Net income                                        $   85,851       $  56,836
Adjustments to reconcile net income
  to net cash provided by (used in)
  operating activities:
Depreciation and amortization                         87,529          66,002

Changes in current assets and liabilities:
Receivables                                           72,696         168,240
Inventories and repair parts                        (122,234)       (129,501)
Prepaid expenses                                      32,059          10,874
Accounts payable                                       1,848          68,038
Accrued expense                                      (19,419)         19,180
Other assets                                         ( 1,200)          8,534
                                                     -------         -------
Net cash provided by operating activities            137,130         268,203
                                                     -------         -------
Cash flows from investing activities
Increase in fixed assets                            ( 28,394)       ( 39,043)
Increase in patents                                 ( 30,938)       ( 36,250)
Increase in deposits                                (  3,874)             --
                                                     -------         -------
Net cash used in investing activities               ( 63,206)       ( 75,293)
                                                     -------         -------
Cash flows from financing activities
Borrowing - line of credit                            25,000          50,000
Decrease in obligations to shareholders             ( 14,776)       (  3,457)
Increase in notes payable                           ( 12,699)       ( 22,165)
Common shares issued                                      --          18,750
Common shares purchased                             ( 36,690)       ( 55,832)
                                                     -------         -------

Net cash used in financing activities               ( 39,165)       ( 12,704)
                                                     -------         -------
Net increase (decrease) in cash
 and cash equivalents                                 34,759         180,206

Cash and cash equivalents, beginning of period       278,662         415,074
                                                     -------         -------
Cash and cash equivalents, end of period         $   313,421     $   595,280
                                                     =======         =======

The accompanying notes are an integral part of the financial statements.
</pre>

<PAGE>
<H1 ALIGN=CENTER><FONT SIZE=2>BOVIE MEDICAL CORPORATION AND SUBSIDIARIES<br>
CONSOLIDATED STATEMENT OF CASH FLOWS<br>
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS<br>
FOR THE THREE MONTHS ENDED MARCH 31, 2001 AND 2000</FONT></H1>

Cash paid during the three months ended March 31:
<pre>
                                    2001               2000
                                    ----               ----

Interest paid                    $ 12,086           $ 15,054
Income Taxes                       - 0 -              - 0 -
</pre>

SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:<br><br>

FOR THE THREE MONTHS ENDED MARCH 31, 2001 AND 2000<br><br>

There were no non-cash  investing and financing  activities in the first quarter
of the year 2001 or 2000.
<PAGE>




<H1 ALIGN=CENTER><FONT SIZE=2>BOVIE MEDICAL CORPORATION<br>
NOTES TO FINANCIAL STATEMENTS</FONT></H1>


PART I.  FINANCIAL INFORMATION (CONTINUED)<br><br>

NOTE 1. INTERIM CONSOLIDATED FINANCIAL STATEMENTS<br><br>

<P Align=justify>The  consolidated  financial statements include the accounts of
Bovie  Medical  Corporation  and  its  wholly  owned  subsidiary  Aaron  Medical
Industries,  Inc. In the opinion of management, the interim financial statements
reflect all adjustments,  consisting of only normal  recurring items,  which are
necessary  for a fair  presentation  of the  results  for  the  interim  periods
presented.</P>

<P Align=justify>The  results for interim periods are not necessarily indicative
of  results  for the full year.  These  financial  statements  should be read in
conjunction with the significant  accounting policies and the other notes to the
financial statements included in the Corporation's 1998 Annual Report to the SEC
on Form 10-KSB.</p>


NOTE 2.  SIGNIFICANT ACCOUNTING POLICIES<br><br>

Use of Estimates in the Preparation of Financial Statements<br><br>

<P  Align=justify>The  preparation  of  consolidated  financial  statements,  in
conformity with generally accepted accounting principles, requires management to
make estimates and assumptions that affect the amounts reported in the financial
statements  and  accompanying  notes.  Actual  results  could  differ from those
estimates.</p>


Fair Values of Financial Instruments<br><br>

<P   Align=justify>Cash   and  cash  equivalents.   Holdings  of  highly  liquid
investments  with  maturity  of  three  months  or  less,  when  purchased,  are
considered to be cash  equivalents.  The carrying amount reported in the balance
sheet for cash and cash equivalents approximates its fair values.</p>

<P  Align=justify>Accounts  receivable and accounts payable. The carrying amount
of accounts  receivable and accounts  payable on the balance sheet  approximates
fair value.</p>

<P Align=justify>Short term and long term debt. The carrying amount of the bonds
and notes payable and amounts due to shareholders approximates fair value.</p>

Inventories<br><br>

<P Align=justify>Inventories  are stated at the lower of cost or market. Cost is
determined principally on the average cost method. Inventories at March 31, 2001
and December 31, 2000 were as follows:</p>

<PRE>
                    March 31, 2001            December 31, 2000
                    --------------            -----------------

 Raw materials        $1,178,338                $1,269,110
 Work in process         745,262                   490,620
 Finished goods          193,167                   234,834
                       ---------                 ---------

        Total         $2,116,767                $1,994,564
                       =========                 =========
</PRE>

<H1 ALIGN=CENTER><FONT SIZE=2>BOVIE MEDICAL CORPORATION<br>
NOTES TO FINANCIAL STATEMENTS</FONT></H1>


PART I.  FINANCIAL INFORMATION (CONTINUED)<br><br>

NOTE 2.  SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)<br><br>

<P  Align=justify>Repair  Parts.  The Company  acquired the  inventory of repair
parts in conjunction with the purchase of the Bovie line of generators and Bovie
trade name, on May 8, 1998.  The Company has maintained the inventory to service
the previously sold generators.  The useful life of repair parts is estimated to
be five to seven years and the Company  has set up an  allowance  for excess and
obsolete parts.
</P>

<P   Align=justify>As  of  March  31,  2001,  the  inventory  of  parts  was  as
follows:</p>

<pre>

   Raw materials                                        $ 537,948
   Allowance for excess or obsolete parts                (220,219)
                                                          -------

                                                        $ 317,729
                                                          =======
</pre>
Long-Lived Assets<br>

<P Align=justify>Long-lived and assets consist of property, plant and equipment,
and intangible assets.</p>

<P  Align=justify>Property,  plant  and  equipment  are  recorded  at cost  less
depreciation and  amortization.  Depreciation and amortization are accounted for
on the straight-line method based on estimated useful lives. The amortization of
leasehold  improvements is based on the shorter of the lease term or the life of
the  improvement.  Betterment and large  renewals,  which extend the life of the
asset,  are capitalized  whereas  maintenance and repairs and small renewals are
expenses, as incurred.  The estimated useful lives are: machinery and equipment,
7-15 years;  buildings,  30 years;  and  leasehold  improvements;  10-20  years.
</P>

<P  Align=justify>Intangible  assets  consist  of patent  rights  and  goodwill.
Goodwill  represents the excess of the cost of assets of the acquired  companies
over the values  assigned to net tangible  assets.  These  intangibles are being
amortized by the straight-line method over a 5 to 20 year period. </P>

<P Align=justify>Effective January 1, 1996, the Company adopted the Statement of
Financial Accounting  Standards (SFAS) No.121,  Accounting for the Impairment of
Long-Lived  Assets and for  Long-Lived  Assets to be Disposed Of. In  accordance
with SFAS No.121, the Company reviews long-lived assets for impairment  whenever
events or  changes  in  business  circumstances  occur  that  indicate  that the
carrying amount of the assets may not be recovered. </P>

<P  Align=justify>The  Company assesses the  recoverability of long-lived assets
held,  and to be  used,  based on  undiscounted  cash  flows  and  measures  the
impairment, if any, using discounted cash flows. Adoption of SFAS No.121 did not
have a material impact on the Company&#146;s  consolidated  financial  position,
operating results or cash flows.</P>

Revenue Recognition and Product Warranty

<P  Align=justify>Revenue  from sales of products is generally  recognized  upon
shipment to  customers.  The Company  warrants its  products  for one year.  The
estimated future costs of warranties are not material.</P>

<H1 ALIGN=CENTER><FONT SIZE=2>BOVIE MEDICAL CORPORATION<br>
NOTES TO FINANCIAL STATEMENTS</FONT></H1>


PART I.  FINANCIAL INFORMATION (CONTINUED)<br><br>

NOTE 2.  SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)<br><br>

Revenue Recognition and Product Warranty (continued)<br><br>

<P  Align=justify>Income  is  recognized in the  financial  statements  (and the
customer  billed) when products are shipped from stock. Net sales are arrived at
by deducting discounts from and adding freight out to gross sales. </P>

Environmental Remediation

<P Align=justify>The  Company accrues  environmental  remediation costs if it is
probable  that an  asset  has  been  impaired  or a  liability  incurred  at the
financial   statement   date  and  the  amount  can  be  reasonably   estimated.
Environmental compliance costs are expenses, as incurred.  Certain environmental
costs are  capitalized  based on  estimates  and  depreciated  over their useful
lives.</P>

Earnings Per Common and Common Equivalent Share

<P  Align=justify>In  February 1997, the Financial  Accounting  Standards  Board
issued  SFAS 128,  &#147;Earnings  Per  Share.&#148;  SFAS 128  establishes  new
standards  for computing and  presenting  earnings per share  (&#147;EPS&#148;).
Specifically,  SFAS 128 replaces the previously required presentation of primary
EPS with a presentation  of basic EPS,  requires dual  presentation of basic and
diluted EPS on the face of the income  statement  for all entities  with complex
capital  structures,   and  requires  a  reconciliation  of  the  numerator  and
denominator of the basic EPS computation to the financial  statements issued for
periods ending after  December 15, 1997. In 1997, the Company  adopted SFAS 128.
</P>

Research and Development Costs

<P  Align=justify>Only  the  development  costs that are purchased  from another
enterprise and have  alternative  future use are  capitalized and amortized over
five years.
</P>

Income Taxes

<P Align=justify>The Company and its wholly-owned subsidiary file a consolidated
federal income tax return.</p>

<P  Align=justify>Income  taxes are  accounted for under the asset and liability
method.  Deferred tax assets and  liabilities  are recognized for the future tax
consequences   attributable  to  differences  between  the  financial  statement
carrying  amounts of existing assets and  liabilities  and their  respective tax
bases and operating loss and tax credit  carryforwards.  Deferred tax assets and
liabilities  are measured  using enacted tax rates  expected to apply to taxable
income in the years in which  those  temporary  differences  are  expected to be
recovered  or settled.  The effect on deferred tax assets and  liabilities  of a
change in tax rates is  recognized  in income in the period  that  includes  the
enactment date. </P>

Non-monetary Transactions

<P  Align=justify>The  accounting for  non-monetary  assets is based on the fair
values of the assets involved. Cost of a non-monetary asset acquired in exchange
for another non-monetary asset is recorded at the fair value of &lt;page&gt; the
asset  surrendered  to obtain  it.  The  difference  in the costs of the  assets
exchanged is recognized as a gain or loss.  The fair value of the asset received
is used to measure the cost,  if it is more clearly  evident than the fair value
of asset surrendered.</P>

<H1 ALIGN=CENTER><FONT SIZE=2>BOVIE MEDICAL CORPORATION<br>
NOTES TO FINANCIAL STATEMENTS</FONT></H1>


PART I.  FINANCIAL INFORMATION (CONTINUED)<br><br>

NOTE 2.  SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)<br><br>

Stock-Based Compensation

<P Align=justify>The  Company has adopted Accounting Principles Board Opinion 25
for its accounting for stock-based compensation. Under this policy: </P>

<P  Align=justify>1.  Compensation  costs are  recognized as an expense over the
period of employment attributable to the employee stock options.</p>

<P  Align=justify>2.  Shares issued in accordance with a plan for past or future
services  of an employee  are  allocated  between  the expired  costs and future
costs.  Future  costs are  charged  to the  periods  in which the  services  are
performed.  The pro forma amounts of the difference  between  compensation  cost
included  in net  income,  and  related  cost,  measured by the fair value based
method including tax effects, are disclosed. </P>

New Accounting Standards<br><br>

<P Align=justify>In  June 1997, the Financial  Accounting Standards Board issued
SFAS  130,  &#147;Reporting  Comprehensive  Income&#148;.  SFAS 130  establishes
standards for reporting and display of  comprehensive  income and its components
(revenues,  expenses,  gains,  and  losses)  in a full  set of  general  purpose
financial statements.  Specifically,  SFAS 130 requires that all items that meet
the definition of components of comprehensive  income be reported in a financial
statement for the period in which they are  recognized.  However,  SFAS 130 does
not  specify  when  to  recognize  or how to  measure  the  items  that  make up
comprehensive  income.  SFAS 130 is effective for fiscal years  beginning  after
December 15, 1997 and early application is permitted. </P>

<P Align=justify>Management believes the application of SFAS 130 will not have a
material effect on the Company&#146;s future financial statements. </P>

<P Align=justify>In April 1998, the FASB issued SOP 98-5, &#147;Reporting on the
Costs of Start-up Activities,&#148;  which will become effective for the Company
in fiscal 2000. It requires costs of start-up  activities and organization costs
to be expressed,  as incurred.  The Company  currently follows this approach and
such costs have been minimal in the past. </P>

<P Align=justify>In  June 1997, the Financial  Accounting Standards Board issued
SFAS 131, &#147;Financial  Reporting for Segments of Business  Enterprise.&#148;
SFAS 131 supersedes the &#147;industry  segment&#148;  concept of SFAS 14 with a
&#147;management approach&#148;  concept as the basis for identifying reportable
segments.  SFAS 131 is effective for fiscal years  beginning  after December 15,
1997 and early application is permitted.  Management believes the application of
SFAS 131 will not have a material effect on the Company&#146;s  future financial
statements.</P>


<H1 ALIGN=CENTER><FONT SIZE=2>BOVIE MEDICAL CORPORATION</FONT></H1>


PART I.  FINANCIAL INFORMATION (CONTINUED)<br><br>

ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS<br><br>

Results of Operations<br><br>

<P Align=justify>The results of operations over the three months ended March 31,
2001 show increased sales and increased profitability,  as compared to the first
three months of 2000. The  Company&#146;s  sales revenues increased by 26%, from
$2,174,324 to $2,736,687.  Gross profit  percentage of 45% was down from 48% for
the same period in 2000. The reason for the 3% decrease in gross profit was that
as electrosurgical sales grow and other sales remain relatively the same overall
margins will go down because margins on  electrosurgical  products are less than
margins on other products. Gross profit increased from $1,043,003 to $1,227,381.
Increased  gross profit was mainly  attributable to increased sales of cauteries
and increased sales of  electrosurgical  devices.  For the first quarter of 2001
and 2000,  cauteries accounted for 45% and 46% of sales,  respectively.  For the
same period,  electrosurgical  devices  accounted for 17% and 8%,  respectively.
</P>

<P Align=justify>Operating  salaries and related expenses increased by 18%, from
$395,241 to  $466,977,  in the three  months ended March 31, 2001 as compared to
the same period in 2000. A significant  area of increase was in quality  control
and administrative personnel, as well as employee raises. </P>

<P Align=justify>Research and development costs increased by 3% from $109,268 to
$112,408 from the quarter  ended March 31, 2000 to the quarter  ending March 31,
2001.  The  increase was mainly  attributable  to  engineering  costs on the new
generator  models being  developed and the cost of the continued  development of
the J Plasma device.</P>

<P Align=justify>Expenses  for professional services decreased by 24% to $81,591
in the three months  ended March 31,  2001,  as compared to $107,741 in the same
period of the previous year. The main reason for this decrease was  professional
fees associated with legal matters.</P>

<P  Align=justify>Selling,  General and  Administrative  expenses  increased  by
$99,022  (26%).  These  expenses  were  $373,769 in the three month period ended
March 31,  2000 as compared to  $472,791  for the three  months  ended March 31,
2001. The increase was mainly  attributable to the expense of twenty  additional
personnel and the cost associated with establishing an office in Europe. </P>

<P  Align=justify>Interest  expense  decreased  from $15,084 in the three months
ended March 31, 2000 to $12,367 in 2001.  The $2,717 (18%)  decrease in interest
expense was mainly  attributable  to the  decrease  in  interest  expense on the
Company's  line of credit.  The term loan to the Company's  commercial  bank was
paid off in the first quarter of 2000.</p>

<P Align=justify>The  operating gain was $93,614 in the first quarter of 2001 as
compared to an operating gain of $56,984 in the same period in 2000. </P>

<P  Align=justify>The  Company  had a net gain of $85,851  for the three  months
ended  March 31,  2001 as compared to a net gain of $56,836 in 2000 for the same
period.  The main reason for the increase of $36,630 in the operating income and
$29,015 in net income is:  $184,378  increase in gross profit,  attributable  to
cautery and electrosurgical product sales. </P>


<H1 ALIGN=CENTER><FONT SIZE=2>BOVIE MEDICAL CORPORATION</FONT></H1>


PART I.  FINANCIAL INFORMATION (CONTINUED)<br><br>

ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)<br><br>

Results of Operations (continued)<br><br>

<P Align=justify>The  Company sells its products mostly through distributors and
independent   representatives   who  service  the  distributors,   both  in  the
international market and in the USA. Distributors are contacted through response
to company  advertising  in  international  medical  journals  or at domestic or
international  trade  shows.  The main focus for export  sales has been  Western
Europe. </P>

<P  Align=justify>The  Company has  distributors in all major markets in Europe.
The Company  intends to continue  marketing its products  internationally  while
concentrating   on  major  markets  for  increased   market   exposure  and  the
introduction of new products. </P>

<P  Align=justify>During  the first three  months of 2001,  international  sales
increased by 14%.  These sales were  $505,048,  which  represented  18% of total
sales,  while in 2000 total  international  sales were $441,431 and 19% of total
sales. The Company expects  international sales to continue to increase since it
received its ISO 9000 certification in 1998.</P>

Financial Condition<br><br>

<P  Align=justify>As  of March 31,  2001,  the  amount of cash was  $313,421  as
compared to $595,280 at March 31, 2000.  Cash  provided by operating  activities
was  $137,130 in the first  quarter of 2001 as compared to $268,203  provided by
operations  in 2000.  Net  working  capital of the Company on March 31, 2001 was
$2,480,338 as compared to $2,375,867 on March 31, 2000.</P>

<P Align=justify>Investing  activities utilized $63,206 in cash during the first
three months of 2001,  compared to $75,293 in the first three months of 2000. In
2001,  the Company  continued  its policy of investing  in  property,  plant and
equipment  needed  for future  business  requirements,  including  manufacturing
capacity. </P>

<P   Align=justify>The   Company&#146;s  ten  largest  customers  accounted  for
approximately  58% of net revenues for the first three months of 2001.  At March
31, 2001, the same ten customers  accounted for approximately 68% of outstanding
accounts receivable.</P>

<P  Align=justify>The  amount of cash utilized in financing activity was $39,165
and $12,704,  respectively, in the first three months of 2001 and 2000. The most
significant  financing  activities in the three months ended March 31, 2001 were
the purchase of Company  shares from a former major  shareholder  ($36,690)  and
borrowing $25,000 on the Company credit line. </P>

<P Align=justify>The Company believes that it has the financial resources needed
to meet business  requirements  in the  foreseeable  future,  including  capital
expenditures  for the  expansion  of its  manufacturing  site,  working  capital
requirements, and product development programs. </P>

Outlook

<P  Align=justify>The  statements contained in this Outlook are based on current
expectations.  These  statements  are forward  looking,  and actual  results may
differ materially. </P>


<H1 ALIGN=CENTER><FONT SIZE=2>BOVIE MEDICAL CORPORATION</FONT></H1>


PART I.  FINANCIAL INFORMATION (CONTINUED)<br><br>

ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)<br><br>

Outlook (continued)<br>

<P  Align=justify>The  Company  believes  that the world  market for  disposable
medical products, such as the Company&#146;s  battery-operated  cauteries,  have
significant  growth potential because these products have not been affordable or
effectively  marketed  outside  the U.S.  cautery  market  and does not expect a
dramatic growth in sales of cautery-related products domestically. </P>

<P   Align=justify>The   Company   has   focused  on   expanding   its  line  of
electrosurgical  products.  Electrosurgical products sold by the Company include
the standard  stainless steel electrodes,  the Aaron 800, Aaron 900, Aaron 1200,
and  Aaron  1250,  and soon to be  introduced,  the Aaron  2100  high  frequency
generators. </P>

<P  Align=justify>From  the First  Quarter of 2000 to the First Quarter of 2001,
the  Company&#146;s  electrosurgical  sales  increased  by 64% from  $416,425 to
$683,250.  This increase was mainly attributable to a contract  purchaser.  With
the  introduction  of  new   electrosurgical   products,   the  Company  expects
electrosurgical  sales to increase  significantly in 2001. The Company,  through
its private label capability,  anticipates opportunities in the domestic market.
The electrosurgical product market is larger than the Company&#146;s traditional
market and is  dominated  by two main  competitors,  ValleyLab  and Conmed.  The
Company  believes  combined  markets  for these  products  exceed  $100  million
annually. </P>

Reliance on Collaborative, Manufacturing and Selling Arrangements<br>

<P  Align=justify>The  Company is dependent on certain contractual  partners for
manufacturing and product  development.  Should a collaborative  partner fail to
develop and manufacture  products,  the Company&#146;s future business and value
of related assets could be negatively affected. No assurance can be given that a
collaborative  partner may give sufficient  high priority to the  Company&#146;s
products.  In addition,  disagreements or disputes may arise between the Company
and its  contractual  partners which could  adversely  affect  production of its
products. </P>

Liquidity and Future Plans<br>

<P  Align=justify>The  Company has recently changed its direction from acquiring
ownership  interest  in  companies  to  developing  and  acquiring  new  product
technology and expanding  manufacturing  capabilities.  The  Company&#146;s  new
electrosurgical  generators are examples of this new  direction.  Other products
and technologies are being evaluated for future development. </P>

<P  Align=justify>In  order to resume  strong  international  sales  growth  and
maintain  its ability to sell in Europe,  management  has  implemented  and been
certified as  ISO9001/EN46001  quality system compliant and has been granted its
CE mark (International Quality control).</P>

<P  Align=justify>The  Company  has  obtained a new line of credit  with a local
commercial  bank for $1,500,000 in the Second  Quarter of 2001.  Interest on the
loan is to be paid at the  bank&#146;s  base  rate.  As of March 31,  2001,  the
Company  had  $175,000  outstanding  on its former  line of credit.  The Company
believes it is in compliance with its former commercial bank&#146;s covenants at
March 31, 2001.
</P>

<P Align=justify>The  Company&#146;s  future results of operations and the other
forward-looking   statements   contained  herein   particularly  the  statements
regarding growth in the medical products  industry,  capital spending,  research
&lt;page&gt;</P>

<H1 ALIGN=CENTER><FONT SIZE=2>BOVIE MEDICAL CORPORATION<br>
NOTES TO FINANCIAL STATEMENTS</Font></H1>


PART I.  FINANCIAL INFORMATION (CONTINUED)<br><br>

ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)<br><br>

Outlook (continued)<br><br>

<P Align=justify>and  development,  and marketing and general and administrative
expenses,  involve a number  of risks  and  uncertainties.  In  addition  to the
factors discussed above, other factors that could cause actual results to differ
materially,  are the following:  business  conditions  and the general  economy;
competitive factors such as rival  manufacturers&#146;  availability of products
at  reasonable  prices;  risk  of  nonpayment  of  accounts  receivable;   risks
associated  with  foreign  operations;  and  litigation  involving  intellectual
property and consumer issues. </P>

<P  Align=justify>The  management of Bovie Medical Corporation  believes that it
has the product  mix,  facilities,  personnel,  and  competitive  and  financial
resources for business success, but future revenues, costs, margins, product mix
and  profits  are all  subject  to the  influence  of a number  of  factors,  as
discussed above. </P>


<H1 ALIGN=CENTER><FONT SIZE=2>BOVIE MEDICAL CORPORATION</FONT></H1>


PART II.  OTHER INFORMATION<br><br>

ITEM 1.  LEGAL PROCEEDINGS<br>

<P  Align=justify>The  Company has  instituted  an action for breach of contract
against  Advanced   Refractory   Technology,   Inc.  (ART)  -  (A  former  major
shareholder) to recover a deposit of $125,000.</p>

<P Align=justify>Also see Form 10-KSB for the year ended December 31, 2001, Part
I, Item 3.</p>


ITEM 2.  CHANGES IN SECURITIES<br>

<P  Align=justify>There  have been no changes in the  instruments  defining  the
rights or rights evidenced by any class of registered securities. </P>

There have been no dividends declared.<br><br>


ITEM 3.  DEFAULTS UPON SENIOR SECURITIES<br>

<P Align=justify>In February of 1997, the 10-year notes came due and the Company
offered  each bond holder 2,200 shares of common stock for their $1,000 bond and
accrued  interest  of  $550.  Nineteen   bondholders   accepted  the  offer  and
forty-three  bondholders received cash for their bonds and accrued interest. The
balance of the bondholders  have not redeemed their bonds or accepted the shares
offered. </P>

ITEM 4.  SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS<br>

<P Align=justify>There  has not been a meeting of shareholders and therefore, no
matters have been submitted to a vote of security holders. </P>

ITEM 5.  EXHIBITS AND REPORTS ON FORM 8-K<br><br>

A)  Exhibits<br>
28  None<br><br>


SIGNATURES:<br>


<P  Align=justify>In  accordance with the  requirements of the Exchange Act, the
registrant  caused  this  report to be signed on its behalf by the  undersigned,
thereunto duly authorized.</p>


Bovie Medical Corporation.<br>
(Registrant)<br>


Date:  <u>May 19, 2001</u><br>


<u>/s/Andrew Makrides</u><br>
Chief Executive Officer - Andrew Makrides,

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