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<SEC-DOCUMENT>0001121888-02-000054.txt : 20020814
<SEC-HEADER>0001121888-02-000054.hdr.sgml : 20020814
<ACCEPTANCE-DATETIME>20020814174503
ACCESSION NUMBER:		0001121888-02-000054
CONFORMED SUBMISSION TYPE:	10QSB
PUBLIC DOCUMENT COUNT:		1
CONFORMED PERIOD OF REPORT:	20020630
FILED AS OF DATE:		20020814

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:		02737279

	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>qsbjune.htm
<DESCRIPTION>QUARTERLY 06/30/02
<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,
2002</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>(631) 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:13,204,755 </FONT></P>




<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>BOVIE MEDICAL CORPORATION<BR>
INDEX TO FORM 10-QSB</FONT></H1>


<pre>
Contents

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

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

             Consolidated Balance Sheet - June 30, 2002
                and December 31, 2001..........................................
             Consolidated Statements of Operations for the
               six Months Ended June 30,  2002 and 2001........................
             Consolidated Statements of Operations for the
               three Months Ended June 30,  2002 and 2001......................
             Consolidated Statements of Cash Flows for the
               six Months Ended June 30, 2002 and 2001
         Consolidated statement of Operations for the six
            Months ended June 30, 2002.........................................

              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>



<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>INDEPENDENT AUDITORS' REPORT</FONT></H1>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Board of Directors<br>
Bovie Medical Corp.<br>
Melville, New York</FONT></P>


<P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>We have reviewed the
accompanying balance sheet of Bovie Medical Corp., as of June 30, 2002, and the
related statements of operations, and cash flows for the six months ended June
30, 2002 and 2001. These financial statements are the responsibility of the
Company&#146;s management. </FONT></P>

<P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>We conducted our review in
accordance with standards established by the American Institute of Certified
Public Accountants. A review of interim financial information consists
principally of applying analytical procedures to financial data and making
inquiries of persons responsible for financial and accounting matters. It is
substantially less in scope than an audit conducted in accordance with auditing
standards generally accepted in the United States of America, the objective of
which is the expression of an opinion regarding the financial statements taken
as a whole. Accordingly, we do not express such an opinion. </FONT></P>

<P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Based on our review, we are
not aware of any material modifications that should be made to the accompanying
financial statements in order for them to be in conformity with accounting
principles generally accepted in the United States of America. </FONT></P>


<P align=left><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Bloom &amp; Co., LLP.<br>
Hempstead, New York<br>
August 5, 2002</FONT></P>

<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>PART I. FINANCIAL INFORMATION<br>
ITEM 1: CONSOLIDATED FINANCIAL STATEMENTS</FONT></H1>

<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>BOVIE MEDICAL CORPORATION<BR>
CONSOLIDATED BALANCE SHEET<BR>
JUNE 30, 2002 AND DECEMBER 31, 2001</FONT></H1>

<pre>

                                     Assets

                                               (Unaudited)        (Audited)
                                              June 30, 2002    December 31, 2001
                                               ---------------------------------

Current assets:

Cash                                         $    229,434         $    578,354
Trade accounts receivable                       1,454,936            1,200,933
Inventories                                     2,494,602            2,419,827
Prepaid expenses                                  219,724              128,045
Deferred tax asset                                386,200              386,200
Other receivables                                       -                  779
                                               ----------            ---------

Total current assets                            4,784,896            4,714,138

Property and equipment, net                     1,534,979            1,531,658

Other assets:

Repair parts                                      299,680              300,272
Trade name                                      1,509,662            1,509,662
Patent rights, net                                281,542              314,691
Deposits                                            8,125                8,124
Investment - Joint Venture                        200,000              200,000
                                                ---------            ---------

                                                2,299,009            2,332,749
                                                ---------            ---------

                                             $  8,618,884         $  8,578,545
                                                =========            =========

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

<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>BOVIE MEDICAL CORPORATION<br>
CONSOLIDATED BALANCE SHEET<br>
JUNE 30, 2002 AND DECEMBER 31, 2001<BR>
(CONTINUED)</FONT></H1>
<pre>
                      Liabilities and Stockholders' Equity

                                                  (Unaudited)         (Audited)
                                               June 30, 2002   December 31, 2001
                                                --------------------------------
Current liabilities:

Accounts payable                            $     455,559         $    373,375
Accrued expense                                   361,222              499,850
Notes payable - current portion                   445,036              228,977
Due to shareholders                                36,087               32,705
                                                ---------            ---------

     Total current liabilities                  1,297,904            1,134,907

Long Term Liabilities                             427,497              443,332

Stockholders' equity:

Preferred Stock, par value $.001
 10,000,000 shares authorized
 0 issued and outstanding                              --                  --
 on March 31, 2002

Common stock par value $.001;
 40,000,000 shares authorized,
 issued and outstanding 13,204,755
 shares and 13,204,755 shares
 on June 30, 2002 and December 31,
 2001 respectively                                 13,274              13,274
 Additional paid in capital                    19,817,115          19,814,334
 Accumulated deficit                          (12,936,906)        (12,827,302)
                                               ----------          ----------

    Total stockholders' equity                  6,893,483           7,000,306
                                               ----------          ----------

  Total liabilities and stockholders'
    equity                                  $   8,618,884    $      8,578,545
                                             ============         ===========

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

<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>BOVIE MEDICAL CORPORATION.<br>
CONSOLIDATED STATEMENTS OF OPERATIONS<br>
FOR THE SIX MONTHS ENDED JUNE 30, 2002 AND 2001<br>
(UNAUDITED)</FONT></H1>

<pre>
                                                      2002              2001
                                                --------------------------------

Sales                                           $ 6,231,467       $ 5,555,178
Cost of sales                                     3,688,365         3,395,038(1)
                                                  ---------         ---------

Gross profit                                      2,543,102         2,160,140

Costs and expenses:
Research and development                            502,078           210,690
Professional services                               188,053           156,925
Salaries and related costs                          648,222           633,984
Selling, general and administrative               1,292,374           947,289
                                                 ----------         ---------

                                                  2,630,727         1,948,888(1)
                                                 ----------         ---------

Gain (Loss) from operations                     (    87,625)          211,252

Other income (expense):
Interest                                        (    21,980)       (   22,800)
Miscellaneous                                            --                --
                                                 -----------         ---------

                                                (    21,980)       (   22,800)
                                                 ----------         ----------

Income (loss)                                    (  109,605)          188,452

Provision for income tax                                 --        (   65,954)
Realized benefit of loss carryforward                    --            65,954
                                                  ---------         -----------

Net income                                     $  ( 109,605)     $    188,452
                                                  ==========        ===========

Earnings per share

Net income (loss):
      Basic                                         ( .01)              .01
      Diluted                                       ( .01)              .01

Weighted average number of shares outstanding     13,204,755         13,600,890
Weighted average number of shares adjusted for
  dilutive securities                             16,201,755         13,600,890

(1) Certain accounts have been reclassified to conform to current years
presentation.


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

<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>BOVIE MEDICAL CORPORATION.<br>
CONSOLIDATED STATEMENTS OF OPERATIONS<br>
FOR THE THREE MONTHS ENDED JUNE 30, 2002 AND 2001<br>
(UNAUDITED)</FONT></H1>

<pre>
                                                             Quarter
                                              ----------------------------------
                                                 2002                2001


Sales                                         $ 3,202,868         $ 2,818,041
Cost of sales                                   1,983,853           1,764,957(1)
                                                ---------           ---------

Gross profit                                    1,219,015           1,053,084

Costs and expenses:
Research and development                          202,542              80,034
Professional services                              90,033              75,334
Salaries and related costs                        318,435             305,580
Selling, general and administrative               652,642             474,498
                                              -----------           ---------

                                                1,263,652             935,446(1)
                                               ----------           ---------

Gain (Loss) from operations                   (    44,637)            117,638

Other income (expense):
Interest                                      (    10,512)         (   15,037)
Miscellaneous                                          --                  --
                                               ----------          ----------

                                              (    10,512)         (   15,037)
                                               ----------          ----------

Income (loss)                                 (    55,149)            102,601

Provision for income tax                               --          (   35,906)
Realized benefit of loss carryforward                  --              35,906
                                                ---------          ----------

Net income                                  $  (   55,149)       $    102,601
                                                ==========         ==========

Earnings per share

Net income (loss):
      Basic                                         NIL               .01
      Diluted                                       NIL              .01

Weighted average number of shares outstanding   13,204,755        13,552,367
Weighted average number of shares adjusted for
  dilutive securities                           16,201,755        13,552,367

(1)Certain accounts have been reclassified to conform to current years
presentation.

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

<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" 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, 2002 AND 2001<br>
(UNAUDITED)</FONT></H1>
<pre>
                                                         2002           2001
                                                --------------------------------
Cash flows from operating activities
Net income (loss)                                  $ (  109,605)   $   188,452
Adjustments to reconcile net income
  to net cash provided by (used in)
operating activities:
Depreciation and amortization                           129,876        334,502

Changes in current assets and liabilities:
Receivables                                           ( 254,003)       113,058
Inventories and repair parts                          (  74,183)      (126,270)
Prepaid expenses                                      (  91,679)      (115,214)
Accounts payable                                         82,184       ( 42,224)
Accrued expense                                       ( 138,628)      ( 63,679)
Other assets                                                770       (  1,200)
Obligations to shareholders                               3,382             --
                                                     ----------      ---------
Net cash provided (applied) by
operating activities                                  (451,886)        287,425
                                                     ----------      ---------
Cash flows from investing activities

Increase in fixed assets                             (  95,520)      ( 81,888)
Increase in patents                                  (   4,519)      (234,998)
Increase in deposits                                        --       (  7,748)
                                                     ----------      ---------

Net cash used in investing activities                ( 100,039)      (324,634)
                                                      ---------      ---------

Cash flows from financing activities
Borrowing - line of credit/Insurance
 Premium Financing                                     260,651             --
(Decrease) in obligations to shareholders                   --      (  24,720)
(Decrease) in notes payable                          (  60,427)     ( 160,606)
Common shares purchased                                  2,381      (  73,358)
Increase in notes payable                                   --        438,783
                                                     ---------      ---------

Net cash used in financing activities                  203,005        180,099
                                                     ---------      ---------

Net increase (decrease) in cash
 and cash equivalents                                 (348,920)       142,890

Cash and cash equivalents, beginning of period         578,354        278,662
                                                      --------       --------
Cash and cash equivalents, end of period           $   229,434     $  421,552
                                                     =========       ========

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

<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" 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, 2002 AND 2001</FONT></H1>

<Pre>
Cash paid during the six months ended June 30:

                             2002             2001
                             ----             ----

Interest paid             $ 24,790          $ 27,430
Income Taxes                 - 0 -             - 0 -

</pre>

<H1 ALIGN=left><FONT FACE="Times New Roman, Times, Serif" SIZE=2>SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:<br>
FOR THE SIX MONTHS ENDED JUNE 30, 2002 AND 2001</FONT></H1>

<P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>There were no non-cash
investing and financing activities in the first six months of the year 2002 or
2001. </FONT></P>

<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>BOVIE MEDICAL CORPORATION<br>
NOTES TO FINANCIAL STATEMENTS</FONT></H1>

<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>PART I.  FINANCIAL INFORMATION (CONTINUED)</FONT></H1>

<H1 ALIGN=left><FONT FACE="Times New Roman, Times, Serif" SIZE=2>NOTE 1. INTERIM CONSOLIDATED FINANCIAL STATEMENTS</FONT></H1>

<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>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. </FONT></P>

<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>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&#146;s 1998 Annual Report to the SEC on Form 10-KSB. </FONT></P>

<H1 ALIGN=left><FONT FACE="Times New Roman, Times, Serif" SIZE=2>NOTE 2.  SIGNIFICANT ACCOUNTING POLICIES</FONT></H1>

<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Use of Estimates in the Preparation of Financial Statements</FONT></P>

<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>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. </FONT></P>

<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Fair Values of Financial Instruments</FONT></P>

<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>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. </FONT></P>

<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Accounts receivable and
accounts payable. The carrying amount of accounts receivable and accounts
payable on the balance sheet approximates fair value. </FONT></P>

<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Short term and long term
debt. The carrying amount of the bonds and notes payable and amounts due to
shareholders approximates fair value. </FONT></P>

<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Inventories</FONT></P>

<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Inventories are stated at
the lower of cost or market. Cost is determined principally on the average cost
method. Inventories at June 30, 2002 and December 31, 2001 were as follows: </FONT></P>
<PRE>
                               June 30, 2002             December 31, 2001
                               -------------             -----------------

   Raw materials                 $1,245,507                $1,222,349
   Work in process                  585,330                   614,342
   Finished goods                   663,765                   583,136
                                  ---------                 ---------

          Total                  $2,494,602                $2,419,827
                                  =========                 =========

</PRE>

<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>BOVIE MEDICAL CORPORATION<BR>
NOTES TO FINANCIAL STATEMENTS</FONT></H1>

<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>PART I.  FINANCIAL INFORMATION (CONTINUED)</FONT></H1>

<H1 ALIGN=left><FONT FACE="Times New Roman, Times, Serif" SIZE=2>NOTE 2.  SIGNIFICANT ACCOUNTING POLICIES(CONTINUED)</FONT></H1>

<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>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. </FONT></P>

<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>As of June 30, 2002, the inventory of parts was as follows:</FONT></P>
<PRE>
    Raw materials                                        $ 564,641
    Allowance for excess or obsolete parts                (264,961)
                                                           -------
                                                         $ 299,680
                                                          ========
</PRE>

<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Long-Lived Assets</FONT></P>

<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Long-lived and assets consist of property, plant and equipment, and intangible assets.</FONT></P>

<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>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. </FONT></P>

<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>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. </FONT></P>

<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>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. </FONT></P>

<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>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. </FONT></P>

<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Accounting Pronouncements</FONT></P>

<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>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.</FONT></P>


<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>BOVIE MEDICAL CORPORATION<BR>
NOTES TO FINANCIAL STATEMENTS</FONT></H1>

<H1 ALIGN=left><FONT FACE="Times New Roman, Times, Serif" SIZE=2>PART I.  FINANCIAL INFORMATION (CONTINUED)</FONT></H1>

<H1 ALIGN=left><FONT FACE="Times New Roman, Times, Serif" SIZE=2>NOTE 2.  SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)</FONT></H1>

<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Revenue Recognition and Product Warranty</FONT></P>

<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>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. However, a special reserve has been set up for future delivery of
certain disposables based on a promotion which ended in April of 2002. </FONT></P>

<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>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. </FONT></P>

<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Environmental Remediation</FONT></P>

<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>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. </FONT></P>

<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Earnings Per Common and Common Equivalent Share</FONT></P>

<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>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. </FONT></P>

<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Research and Development Costs</FONT></P>

<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Only the development costs
that are purchased from another enterprise and have alternative future use are
capitalized and amortized over five years. </FONT></P>

<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Income Taxes</FONT></P>

<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Company and its wholly-owned subsidiary file a consolidated federal income tax return.</FONT></P>

<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>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. </FONT></P>


<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>BOVIE MEDICAL CORPORATION<BR>
NOTES TO FINANCIAL STATEMENTS</FONT></H1>

<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>PART I.  FINANCIAL INFORMATION (CONTINUED)</FONT></H1>
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>NOTE 2.  SIGNIFICANT ACCOUNTING POLICIES(CONTINUED)</FONT></H1>

<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Non-monetary Transactions</FONT></P>

<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>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. </FONT></P>

<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Stock-Based Compensation</FONT></P>

<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Company has adopted
Accounting Principles Board Opinion 25 for its accounting for stock based
compensation. Under this policy:</FONT></P>

<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1.  Compensation costs are recognized as an expense over the period of employment attributable to the employee stock options.</FONT></P>

<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>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. </FONT></P>

<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>New Accounting Standards</FONT></P>

<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>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. </FONT></P>

<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Management believes the
application of SFAS 130 has not had a material effect on the Company&#146;s
financial statements. </FONT></P>

<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In April 1998, the FASB
issued SOP 98-5, &#147;Reporting on the Costs of Start-up Activities,&#148;
which will became 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. </FONT></P>

<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>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. </FONT></P>


<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>BOVIE MEDICAL CORPORATION</FONT></H1>

<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>PART I.  FINANCIAL INFORMATION (CONTINUED)</FONT></H1>

<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>New Accounting Standards (continued)</FONT></P>

<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Management believes the
application of SFAS 131 has not had a material effect on the Company&#146;s
financial statements. </FONT></P>

<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND  RESULTS OF OPERATIONS</FONT></H1>

<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><u>FOR THE SIX MONTHS ENDED JUNE 30, 2002</U></FONT></H1>


<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Results of Operations</FONT></P>

<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The results of operations
over the six months ended June 30, 2002 show increased sales and decreased
profitability, as compared to the first six months of 2001. As part of operating
revenues, for the first six months of 2002, a one-time development fee of
$177,500 was included which was not considered in determining the gross profit
percentage for 2002. The Company&#146;s sales revenues increased by 12%, from
$5,555,178 to $6,231,467. Gross profit percentage of 39% was the same for the
same period in 2001. The Company projects the gross profit percentage to decline
as electrosurgical sales grow and other sales remain relatively constant.
Overall margin percentages will decline since margins on electrosurgical
products are less than other product margins. Gross profit increased from
$2,106,140 to $2,543,102. Increased gross profit was mainly attributable to
increased sales of cauteries and electrosurgical devices. For the first half of
2002 and 2001, cauteries accounted for 38% and 42% of sales, respectively. For
the same periods, electrosurgical devices accounted for 28% and 25% of sales,
respectively. </FONT></P>

<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Operating salaries and
related expenses had no significant increase and went from $633,984 to $648,222
in the six months ended June 30, 2002 as compared to the same period in 2001. </FONT></P>

<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Research and development
costs increased by 138% from $210,690 to $502,078 from the six months ended June
30, 2001 as compared to the six months ending June 30, 2002. The increase was
mainly attributable to engineering costs on new generator models being developed
and the cost of the continued development of the J Plasma device. </FONT></P>

<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Expenses for professional
services increased by 20% to $188,053 in the six months ended June 30, 2002, as
compared to $156,925 in the same period of the previous year. The main reason
for this increase was professional fees associated with standard legal matters,
audit fees for the year 2001 and consulting services. </FONT></P>

<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Selling, General and
Administrative expenses increased by $345,085 (36%). These expenses were
$947,289 in the six month period ended June 30, 2001 as compared to $1,292,374
for the six months ended June 30, 2002. The Company had significant increases in
the following areas: advertising, sales commissions, show fees and costs, rent,
repairs to buildings, regulatory testing and the write down of obsolete
inventory. The previous items accounted for increases of $452,961 which were
offset by decreases in European operations and the amortization of goodwill
associated with the purchase of the Bovie name from Maxxim in 1998 of $74,355. </FONT></P>

<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Interest expense decreased
from $22,800 in the six months ended June 30, 2001 to $21,980 in 2002. The
majority of the interest the Company pays is on its building mortgage and its
line of credit. </FONT></P>

<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The operating loss was
$87,625 for the first six months of 2002 as compared to an operating gain of
$211,252 in the same period in 2001. </FONT></P>


<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>BOVIE MEDICAL CORPORATION</FONT></H1>

<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>PART I.  FINANCIAL INFORMATION (CONTINUED)</FONT></H1>

<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND  RESULTS OF OPERATIONS  (CONTINUED)</FONT></H1>

<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Results of Operations (continued)</FONT></P>

<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Company had a net loss
of $109,605 for the six months ended June 30, 2002 as compared to net gain of
$188,452 in 2001 for the same period. The main reason for the decrease in income
of $298,057 for the first six months of 2002, from the first six months of 2001,
was an increase in selling, general and administrative expenses of $291,388 and
an increase in research and development costs of $210,690. These were offset by
an increase in gross profit of $382,962. </FONT></P>

<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>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. </FONT></P>

<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Company has
distributors in all major markets in Europe. The Company intends to continue
marketing its products internationally, concentrating on major markets for
increased market exposure and the introduction of new products. </FONT></P>

<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>During the first six months
of 2002, international sales increased by 23%. Sales in 2001 were $990,859,
which represented 18% of total sales, while in 2002 total international sales
were $1,222,048 which represented 20% of total sales. The Company expects
international sales to continue to increase since it received its ISO 9000
certification in 1998. </FONT></P>

<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Financial Condition</FONT></P>

<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>As of June 30, 2002, we had
$229,434 in cash as compared to $421,522 at June 30, 2001. Cash applied to
operating activities was $451,876 in the first six months of 2002 as compared to
$287,325 provided by operations in 2001. Net working capital of the Company on
June 30, 2002 was $3,486,992 as compared to $2,532,027 on June 30, 2001. </FONT></P>

<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Investing activities
utilized $100,039 in cash during the first six months of 2002, compared to
$324,634 in the first six months of 2001. In 2002, the Company continued its
policy of investing in property, plant and equipment needed for future business
requirements, including manufacturing capacity. </FONT></P>

<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Company&#146;s ten
largest customers accounted for approximately 59% of net revenues for the first
six months of 2002. At June 30, 2002, the ten largest customer receivables accounted for
approximately 60% of outstanding accounts receivable. </FONT></P>

<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The amount of cash provided
by financing activity was $203,005 and $180,099, in the first six months of 2002
and 2001, respectively. The most significant financing activity in the six
months ended June 30, 2002 was borrowing $100,000 additional funds on the
Company credit line, and financing the Company&#146;s insurance premium for
$160,651. </FONT></P>


<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>BOVIE MEDICAL CORPORATION</FONT></H1>

<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>PART I.  FINANCIAL INFORMATION (CONTINUED)</FONT></H1>

<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)</FONT></H1>

<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Financial Condition (continued) </FONT></P>

<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>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. </FONT></P>

<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Outlook</FONT></P>

<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The statements contained in
this Outlook are based on current expectations. These statements are forward
looking, and actual results may differ materially. </FONT></P>

<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Company believes that
the world market for disposable medical products, such as the Company&#146;s
battery-operated cauteries, have growth potential since these products have not
heretofore been affordable or effectively marketed outside the U.S., while we do
not expect a dramatic growth in sales of cautery-related products domestically. </FONT></P>

<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Company continues to
expand its line of electrosurgical products. Electrosurgical products sold by
the Company include standard stainless steel electrodes, Bovie/Aaron 800, 900,
1200, 1250, and the 2100 high frequency generators. </FONT></P>

<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>From the first six months
of 2001 to the first six months of 2002, the Company&#146;s electrosurgical
sales increased by 31% from $1,667,283 to $2,178,706. This increase was mainly
attributable to contract purchasers and a one time promotion. With the
introduction of new electrosurgical products, the Company expects
electrosurgical sales to increase significantly in 2002 and 2003. The Company,
through its private label capability, anticipates new 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
exceeds $100 million worldwide, annually. </FONT></P>

<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Reliance on Collaborative, Manufacturing and Selling Arrangements</FONT></P>

<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>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. </FONT></P>


<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>BOVIE MEDICAL CORPORATION</FONT></H1>

<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>PART I.  FINANCIAL INFORMATION (CONTINUED)</FONT></H1>

<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)</FONT></H1>

<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Liquidity and Future Plans</FONT></P>

<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Company continues its
efforts to develop and acquire new product technology and expanding
manufacturing capabilities. Continued emphasis on new product development in
electrosurgery, together with new technology evaluation, illustrates our shift
in direction. </FONT></P>

<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>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). </FONT></P>

<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Company has a line of
credit with a local commercial bank for $1,500,000. Interest on the loan is paid
at the bank&#146;s base rate. As of June 30, 2002, the Company had $250,000
outstanding on its line of credit. </FONT></P>

<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>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. </FONT></P>

<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>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. </FONT></P>

<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>FOR THE THREE MONTHS ENDED JUNE 30, 2002</FONT></H1>


<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Results of Operations</FONT></P>

<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The results of operations
over the three months ended June 30, 2002 show increased sales and decreased
profitability, as compared to the same period of 2001. The Company&#146;s
sales revenues increased by 14%, from $2,818,041 to $3,202,868. Gross profit
percentage for three months ended June 30, 2002 was 38% as compared to 37% for
the same period in 2001. Gross profit increased from $1,053,084 to $1,219,015.
Increased gross profit was mainly attributable to increased sales of cauteries
and electrosurgical devices. </FONT></P>

<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Operating salaries and
related expenses had no significant increase and went from $305,580 to $318,435,
in the three months ended June 30, 2002 as compared to the same period in 2001. </FONT></P>

<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Research and development
costs increased by 153% from $80,034 to $202,542 for the three months ended
June 30, 2001 as compared to the three months ending June 30, 2002. The increase
was mainly attributable to engineering costs on new generator models being
developed and the cost of the continued development of the J Plasma device. </FONT></P>


<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>BOVIE MEDICAL CORPORATION</FONT></H1>

<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>PART I.  FINANCIAL INFORMATION (CONTINUED)</FONT></H1>

<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)</FONT></H1>

<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Expenses for professional
services increased by 20% to $90,033 in the three months ended June 30, 2002, as
compared to $75,334 in the same period of the previous year. The main reason for
this increase was professional fees associated with standard legal matters,
audit fees for the year 2001 and consulting services. </FONT></P>

<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Selling, General and
Administrative expenses increased by $178,144, 38%. These expenses were $474,498
in the three month period ended June 30, 2001 as compared to $652,642 for the
three months ended June 30, 2002. The Company had significant increases in the
following areas: advertising, sales commissions, show fees and costs, rent,
repairs to buildings, regulatory testing and the write down of obsolete
inventory. </FONT></P>

<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Interest expense decreased
from $15,037 in the three months ended June 30, 2001 to $10,512 for the same period in 2002. The
majority of the interest the Company pays is on its building mortgage and its
line of credit. </FONT></P>

<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The operating income was
$102,601 in the first three months of 2001 as compared to an operating loss of
$55,149 in the same period in 2002.</FONT></P>


<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>BOVIE MEDICAL CORPORATION</FONT></H1>

<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>PART II.  OTHER INFORMATION</FONT></H1>

<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>ITEM 1.  LEGAL PROCEEDINGS</FONT></H1>

<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>See Form 10-KSB for the year ended December 31, 2001, Part I, Item 3.</FONT></P>


<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>ITEM 2.  CHANGES IN SECURITIES</FONT></H1>

<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>There have been no changes
in the instruments defining the rights or rights evidenced by any class of
registered securities. </FONT></P>

<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>There have been no dividends declared.</FONT></P>


<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>ITEM 3.  DEFAULTS UPON SENIOR SECURITIES</FONT></H1>

<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>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. </FONT></P>

<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>ITEM 4.  SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS</FONT></H1>

<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>An annual meeting of
shareholders was held on April 24, 2002, at which time the Company&#146;s board
of directors were re-elected, the Company&#146;s auditors were appointed and the
Company&#146;s 2002 employee stock option plan was approved. </FONT></P>

<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>ITEM 5.  EXHIBITS AND REPORTS ON FORM 8-K</FONT></H1>

<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>A)  Exhibits<br>
28   None</FONT></P>


<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>BOVIE
MEDICAL CORPORATION</FONT></H1>

<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>SIGNATURES:</FONT></P>


<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>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.</FONT></P>


<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Bovie Medical Corporation.<br>
(Registrant)</FONT></P>

<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><u>Date:  August 14, 2002,</u></FONT></P>

<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><u>/s/Andrew Makrides</u></FONT></P>

<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Chief Executive Officer - Andrew Makrides,</FONT></P>

<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>CONSENT OF CERTIFIED PUBLIC ACCOUNTANT</FONT></H1>

<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>We consent to the
incorporation in this Quarterly Report on Form 10-QSB of Bovie Medical
Corporation of our report dated August 5, 2002. </FONT></P>

<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Bloom &amp; Co., LLP<br>
s/Bloom &amp; Company<br>
Hempstead, New York<br>
August 5, 2002</FONT></P>


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