-----BEGIN PRIVACY-ENHANCED MESSAGE-----
Proc-Type: 2001,MIC-CLEAR
Originator-Name: webmaster@www.sec.gov
Originator-Key-Asymmetric:
 MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen
 TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB
MIC-Info: RSA-MD5,RSA,
 HzpMJMzazyRfkhPfZCOpXePdAFBTkQxZDiNrNiHSk19d4Q+gGggTA48XsM2mD4/1
 9v4/jsFWZB5lpTcWy1giPA==

<SEC-DOCUMENT>0001121888-01-500040.txt : 20010820
<SEC-HEADER>0001121888-01-500040.hdr.sgml : 20010820
ACCESSION NUMBER:		0001121888-01-500040
CONFORMED SUBMISSION TYPE:	10QSB
PUBLIC DOCUMENT COUNT:		1
CONFORMED PERIOD OF REPORT:	20010630
FILED AS OF DATE:		20010817

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:		1934 Act
		SEC FILE NUMBER:	000-12183
		FILM NUMBER:		1718019

	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>q063001.htm
<DESCRIPTION>10QSB 06/30/01
<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 June 30,
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;(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 - June 30, 2001 and December 31, 2000..
             Consolidated Statements of Operations for the
               three Months Ended June 30,  2001 and 2000......................
             Consolidated Statements of Operations for the
               six Months Ended June 30,  2001 and 2000......................
             Consolidated Statements of Cash Flows for the
               six Months Ended June 30, 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>
JUNE 30, 2001 AND DECEMBER 31, 2000</FONT></H1>

<PRE>
                                            (Unaudited)           (Audited)
                                          June 30, 2001       December 31, 2000
                                          --------------      -----------------
Current assets:

Cash                                     $   421,552            $   278,662
 Trade accounts receivable                  1,142,991              1,256,049
 Inventories                                2,121,018              1,994,564
 Prepaid expenses                             226,557                111,343
 Deferred tax asset                           175,010                175,010
 Other receivables                            112,379                111,179
                                            ---------              ---------
 Total current assets                       4,199,507              3,926,807

 Property and equipment, net                1,537,826              1,552,179

 Other assets:

 Repair parts                                 317,614                317,698
 Trade name                                 1,556,594              1,603,527
 Patent rights, net                           321,294                277,644
 Deposits                                      43,467                 35,719
 Investment - Joint Venture                   200,000                200,000
                                            ---------              ---------
                                            2,438,969              2,434,588
                                            ---------              ---------
                                           $8,176,302             $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>
JUNE 30, 2001 AND DECEMBER 31, 2000<BR>
(CONTINUED)</FONT></H1>

<pre>
                      Liabilities and Stockholders' Equity

                                          (Unaudited)         (Audited)
                                         June 30, 2001   December 31, 2000
                                         --------------    ----------------
Current liabilities:

Accounts payable                        $   396,920            $   439,144
Accrued expense                             286,746                350,425
Notes payable - current portion             851,109                572,931
Due to shareholders                          32,705                 57,425
Due to Joint Venture                        100,000                100,000
                                          ---------              ---------
        Total current liabilities         1,667,480              1,519,925


Stockholders' equity:

Preferred Stock, par value $.001
 10,000,000 shares authorized
 0 issued and outstanding                        --                     --
 on June 30, 2001

Common stock par value $.001;
 40,000,000  shares authorized,
 issued and outstanding
 13,485,334 and 13,685,334 shares
 on June 30, 2001 and
 December 31, 2000 respectively              13,555                 13,756
Additional paid in capital               19,918,330             19,991,488
Accumulated deficit                     (13,423,063)           (13,611,595)
                                        -----------            -----------
         Total stockholders' equity       6,508,822              6,393,649
                                        -----------            -----------
            Total liabilities and
            stockholders' equity        $ 8,176,302           $  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 JUNE 30, 2001 AND 2000
(UNAUDITED)</FONT></H1>

<pre>

                                                  2001               2000

Sales                                          $2,818,491        $ 2,430,641
Cost of sales                                   1,678,987          1,358,504
                                                ---------          ---------
Gross profit                                    1,139,504          1,072,137
                                                ---------          ---------

Costs and expenses:
Research and development                           99,046             89,566
Professional services                              75,014            112,600
Salaries and related costs                        462,774            365,144
Selling, general and administrative               385,044            245,942
                                                ---------          ---------
                                                1,021,878            813,252
                                                ---------          ---------

Gain (Loss) from operations                       117,626            258,885

Other income (expense):
Interest income                                     5,660              5,867
Interest expense                               (   20,697)         (  16,750)
Miscellaneous                                          --             11,142
                                                ---------           --------
                                               (   15,037)               259
                                                ---------           --------

Income (loss) before extraordinary items          102,589            259,144

Provision for income tax                       (   35,906)         (  93,860)
Realized benefit of loss carryforward              35,906             93,860
                                                ---------          ---------
Net income                                    $   102,589      $     259,144
                                                =========          =========
Earnings per share
Net income:
      Basic                                       $.001                $ .02
      Diluted                                     $.001                $ .02

Weighted average number of shares
 outstanding                                   13,552,367         13,920,334

Weighted average number of shares
 adjusted for dilutive securities              13,552,367         13,920,334

</pre>

<H1 ALIGN=CENTER><FONT SIZE=2>BOVIE MEDICAL CORPORATION<BR>
CONSOLIDATED STATEMENTS OF OPERATIONS<BR>
FOR THE SIX MONTHS ENDED JUNE 30, 2001 AND 2000<BR>
(UNAUDITED)</FONT></H1>

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

Sales                                         $ 5,555,178         $ 4,604,965
Cost of sales                                   3,188,293           2,489,825
                                                ---------           ---------
Gross profit                                    2,366,885           2,115,140
                                                ---------           ---------
Costs and expenses:
Research and development                          211,454             198,834
Professional services                             156,605             220,341
Salaries and related costs                        929,751             760,385
Selling, general and administrative               857,835             619,711
                                                ---------           ---------
                                                2,155,645           1,799,271
                                                ---------           ---------

Gain (Loss) from operations                       211,240             315,869

Other income (expense):
Interest income                                     5,660              18,400
Interest expense                              (    28,460)          (  33,996)
Miscellaneous                                          --              15,707
                                               ----------            --------
                                              (    22,800)                111
                                               ----------            --------

Income                                            188,440             315,980

Provision for income tax                           65,954             113,752
Realized benefit of loss carryforward          (   65,954)         (  113,752)
                                                ---------           ---------
Net income                                   $    188,440         $   315,980
                                                =========           =========
Earnings per share

Net income:
      Basic                                         .01                 .02
      Diluted                                       .01                 .02

Weighted average number of shares outstanding    13,600,890       13,957,834

Weighted average number of shares adjusted for
  dilutive securities                            13,600,890       13,957,834

</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 SIX MONTHS ENDED JUNE 30, 2001 AND 2000<br>
(UNAUDITED)</FONT></H1>
<pre>
                                                       2001            2000
                                                       ----            ----
Cash flows from operating activities
Net income                                       $   188,440       $ 315,980
Adjustments to reconcile net income
  to net cash provided by (used in)
  operating activities:
Depreciation and amortization                        334,514         163,868

Changes in current assets and liabilities:
Receivables                                          113,058        ( 13,474)
Inventories and repair parts                        (126,270)       (194,522)
Prepaid expenses                                    (115,214)       ( 41,429)
Accounts payable                                    ( 42,224)        100,487
Accrued expense                                     ( 63,679)         28,290
Other assets                                        (  1,200)         15,139
                                                     -------         -------
Net cash provided by operating activities            287,325         374,339
                                                     -------         -------
Cash flows from investing activities
Increase in fixed assets                            ( 81,888)       (144,574)
Increase in patents                                 (234,998)       ( 82,971)
Increase in deposits                                (  7,748)       ( 21,706)
                                                     -------         -------
Net cash used in investing activities               (324,634)       (249,251)
                                                     -------         -------
Cash flows from financing activities

Decrease in notes payable                           (160,606)       (196,874)
Increase in notes payable                            438,783         323,565
Common shares purchased                             ( 73,358)       ( 76,000)
Exercise of stock options                                 --          18,650
Decrease in loans from shareholders                 ( 24,720)       ( 28,410)
Decrease in subscription receivable                       --        (  1,416)
                                                     -------         -------

Net cash used in financing activities                180,099         39,515
                                                     -------         -------
Net increase (decrease) in cash
 and cash equivalents                                142,890         164,603

Cash and cash equivalents, beginning of period       278,662         415,074
                                                     -------         -------
Cash and cash equivalents, end of period         $   421,552     $   579,677
                                                     =======         =======

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 SIX MONTHS ENDED JUNE 30, 2001 AND 2000</FONT></H1>

Cash paid during the six months ended June 30:
<pre>
                                    2001               2000
                                    ----               ----

Interest paid                    $ 27,430           $ 29,622
Income Taxes                       - 0 -              - 0 -
</pre>

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

FOR THE SIX MONTHS ENDED JUNE 30, 2001 AND 2000<br><br>

There were no non-cash  investing and financing  activities in the first half
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 2000 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 June 30, 2001
and December 31, 2000 were as follows:</p>

<PRE>
                    June 30, 2001            December 31, 2000
                    --------------           -----------------

 Raw materials        $1,314,844                $1,269,110
 Work in process         523,560                   490,620
 Finished goods          282,614                   234,834
                       ---------                 ---------

        Total         $2,121,018                $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 June 30, 2001 and December 31, 2000,  the  inventory of
parts was as follows:</p>

<pre>
                                                    2001            2000

   Raw materials                                $ 537,833      $ 537,917
   Allowance for excess or obsolete parts         (220,219)      (220,219)
                                                   -------        -------

                                                 $ 317,614      $ 317,698
                                                   =======        =======
</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 ; 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>

Prospective Accounting Pronouncements

<P Align=justify>In  June 2001, the Financial  Accounting Standards Board issued
Statement of Financial Accounting Standards No. 141, Business Combinations,  and
Statement  of  Financial  Accounting  Standards  No.  142,  Goodwill  and  Other
Intangible  Assets.   Statement  No.  141  requires  all  business  combinations
initiated  after June 30, 2001, to be accounted for using the purchase method of
accounting.  Under  Statement  No.  142,  goodwill  will no longer be subject to
amortization over its estimated useful life. Rather, goodwill will be subject to
at least an annual  assessment  for  impairment  by applying a  fair-value-based
test. In addition,  Statement No. 142 requires separate  recognition for certain
acquired  intangible assets that will continue to be amortized over their useful
lives.</P>

<P  Align=justify>Implementation  of Statement  No. 142,  which is effective for
fiscal 2002, is currently expected to increase the company's annual net earnings
by  approximately  $187,732  due to  the  cessation  of  goodwill  (trade  name)
amortization.  In addition,  the company does not currently  expect any material
impairment of goodwill to result from implementation of Statement No. 142.</P>


Foreign Currency Translation

<P  Align=justify>Local  currencies are considered the functional currencies for
most  of  the  company's  operations  outside  the  United  States.  Assets  and
liabilities are translated  into U.S.  dollars at the rate of exchange in effect
at the balance  sheet date.  Revenues  and  expenses  are  translated  into U.S.
dollars at average monthly exchange rates prevailing during the year.</P>


2001 Statutory and Non-Statutory Stock Option Plan


<P  Align=justify>On  July 16, 2001 the Company filed a registration  statement,
under  Securities Act of 1933, to register  1,200,000  underlying  shares of the
Company   to  be   issued   upon   exercise,   to   employees   or   consultants
("Participants"),  pursuant to the Company's "2001  Statutory and  Non-statutory
Stock Option Plan".</P>

<P  Align=justify>According  to the Plan,  the exercise  price of the any option
shall not be less than 100% of the fair  market  value of a share on the date of
grant.  The  exercise  price for those who possess  more than ten percent of the
total  voting  shares  of the  Company  shall  not be less than 110% of the fair
market value per share at the date the grant.  The term of each option shall not
exceed  ten  years  from  the  date of the  grant  and  five  years  for any 10%
Shareholder.  Under the plan,  the  aggregate  fair  market  value of the shares
granted to each participant in any calendar year shall not exceed $100,000.</P>

<P  Align=justify>Options  granted to participants shall either vest immediately
or if a participant has served the Company for a period of less than five years,
options  shall vest at the rate of 20% for each year served and 20% per year for
each  additional  year  thereafter  until a total of five years has been served.
Options  are not  transferable  except  by will or by the  laws of  descent  and
distribution.</P>

<P  Align=justify>All  certificates  for shares  delivered  upon the exercise of
Options under the plan shall be subject to such  restrictions as the Company may
deem  advisable  or  the  rules,  regulations  and  other  requirements  of  the
Securities  and  Exchange   Commission  and  any  applicable  federal  or  state
securities laws. Unless otherwise specified by the Company,  upon termination of
the employment or consultancy,  any  unexercised  option  previously  granted is
cancelled.</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 six months ended June 30,
2001 show increased sales and decreased profitability,  as compared to the first
six  months  of 2000.  The  Company's  sales  revenues  increased  by 21%,  from
$4,604,965 to $5,555,178.  For the first six months of 2001 and 2000,  cauteries
accounted  for  42%  and  44% of  sales,  respectively.  For  the  same  period,
electro-surgical devices accounted for 25% and 17%, respectively.</P>

<P  Align=justify>Gross   profit  increased  from  $2,115,140  to  $2,366,885.
Increased   gross  profit  was  mainly   attributable   to  increased  sales  of
electro-surgical  devices.  The more rapid  growth  rate of  lower-profit-margin
electro-surgical products resulted in a decrease in gross profit percentage from
46% to 43%, for the same period in 2000.</P>

<P Align=justify>Operating  salaries and related expenses increased by 22%, from
$760,385 to  $929,751,  in the six months ended June 30, 2001 as compared to the
same period in 2000. The recruitment of additional quality control  ("Regulatory
Staff"), and administrative personnel to meet the total quality control policies
of the Company and  employee  incentive  raises were the  principal  reasons for
$169,366 increase in salaries.</P>

<P Align=justify>Research and development costs increased by 6% from $198,834 to
$211,454  from the six months ended June 30, 2000 to the six months  ending June
30, 2001. The increase was mainly  attributable to engineering  costs on the new
electrosurgical generator development and the J Plasma device.</P>

<P Align=justify>Expenses for professional services decreased by 29% to $156,605
in the six months  ended June 30,  2001,  as  compared  to  $220,341 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
$238,124 (38%).  These expenses were $619,711 in the six month period ended June
30, 2000 as compared to $857,835  for the six months  ended June 30,  2001.  The
increase was mainly attributable to the expense of additional  personnel and the
cost associated with establishing an office in Europe. </P>

<P Align=justify>Interest expense decreased from $33,996 in the six months ended
June 30, 2000 to $28,460 in 2001. The $5,536 (16%) 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 $211,240 in the first six months of 2001
as compared to an operating gain of $315,869 in the same period in 2000. </P>

<P Align=justify>The Company had a net gain of $188,440 for the six months ended
June 30, 2001 as compared to a net gain of $315,980 in 2000 for the same period.
The main  reason  for the  decrease  of  $104,629  in the  operating  income and
$127,540  in  net  income  is  the  increased   initial   manufacturings   costs
attributable to new electrosurgical generator 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  six  months  of 2001,  international  sales
increased  by 7%.  These sales were  $990,859,  which  represented  18% of total
sales,  while in 2000 total  international  sales were $928,452 and 20% of total
sales.  The Company expects  international  sales to continue to increase due to
it's increased marketing efforts in electrosurgery.</P>

Financial Condition<br><br>

<P  Align=justify>As  of June 30,  2001,  the  amount  of cash was  $421,552  as
compared to $579,677 at June 30, 2000. Cash provided by operating activities was
$287,425 in the first six months of 2001 as  compared  to  $374,339  provided by
operations  in 2000.  Net  working  capital of the  Company on June 30, 2001 was
$2,532,027 as compared to $2,541,972 on June 30, 2000.</P>

<P Align=justify>Investing activities utilized $324,634 in cash during the first
six months of 2001,  compared to  $249,251  in the first six 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 six months of 2001. For the same
period of 2000, the ten largest  customers  accounted for  approximately  56% of
outstanding accounts receivable.</P>

<P Align=justify>The  amount of cash provided by financing activity was $180,099
and $39,515,  respectively,  in the first six months of 2001 and 2000.  The most
significant  financing activities in the six months ended June 30, 2001 were the
purchase  of  Company  shares  from a former  major  shareholder  ($73,358)  and
borrowing $340,000 on the Company's new 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>


<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 <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  recently  introduced,  the  Aaron  2100  high  frequency
generators. </P>

<P  Align=justify>From  the first six  months of 2000 to the first six months of
2001, the Company&#146;s  electrosurgical sales increased by 62% from $1,026,265
to  $1,667,283.  This increase was mainly  attributable  to an additional  O.E.M
manufacturing agreement.  With the introduction of new electrosurgical products,
the Company  expects  future  electrosurgical  sales to  increase.  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  worldwide
approximate 800 million.</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 expanded its  manufacturing  facilities due to
increased  sales and the need for  additional  sales for  developmental  work in
electrosurgery.</P>

<P  Align=justify>The  Company's  joint venture has made  substaintial  progress
towards   the    commercialization   of   J-Plasma:   an   innovative   patented
electrosurgical  technology  that uses an inert gas to affect  precise  surgical
procedures.</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 June  30,  2001,  the
Company had paid off $175,000 on its former line of credit and borrowed $340,000
against it's new line of credit.  </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>
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 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, 2000, 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>August 15, 2001</u><br>


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

</body>
</html>

</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
