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<SEC-DOCUMENT>0001121888-02-000064.txt : 20021114
<SEC-HEADER>0001121888-02-000064.hdr.sgml : 20021114
<ACCEPTANCE-DATETIME>20021114155644
ACCESSION NUMBER:		0001121888-02-000064
CONFORMED SUBMISSION TYPE:	10QSB
PUBLIC DOCUMENT COUNT:		1
CONFORMED PERIOD OF REPORT:	20020930
FILED AS OF DATE:		20021114

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:		02825121

	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>sept02.htm
<DESCRIPTION>SEPTEMBER 30, 2002
<TEXT>
<html>
<head>
<title>
</title>
</head>
<body>

<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>U.S.
Securities and Exchange Commission</FONT></H1>

<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Washington
D.C. 20549</FONT></H1>

<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>FORM 10-QSB</FONT></H1>

<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(Mark One)</FONT></H1>

<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>[ X ]
QUARTERLY REPORT PURSUANT TO SECTION 13</FONT></H1>

<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934</FONT></H1>

<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>For the quarterly period ended September 30, 2002</FONT></H1>

<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>[ ]
TRANSITION REPORT UNDER SECTION 13 OR 15(d)</FONT></H1>

<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>OF THE
EXCHANGE ACT</FONT></H1>

<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>


<P ALIGN=JUSTIFY><FONT  FACE="Times New Roman, Times, Serif" SIZE=2>Indicate by
check mark whether the registrant (1) has filed all reports required to be filed
by  Section  13 or 15(d)  of the  Securities  Exchange  Act of 1934  during  the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports),  and (2) has been subject to such filing requirements for
the past 90 days. yes [ X ] No [ ]</FONT></P>

<P ALIGN=CENTER><FONT SIZE=3>APPLICABLE ONLY TO CORPORATE ISSUERS</FONT></P>

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



<PAGE>



<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                                                                  Page

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

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

             Consolidated Balance Sheet - September 30, 2002
                and December 31, 2001...........................................
             Consolidated Statements of Operations for the
               Nine Months Ended September 30, 2002 and 2001....................
             Consolidated Statements of Operations for the
               Three Months Ended September 30, 2002 and 2001...................
             Consolidated Statements of Cash Flows for the
               Nine Months Ended September 30, 2002 and 2001....................

              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>


<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 consolidated condensed statements of operations, and cash flows for the
nine months ended September 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><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Bloom &amp; Co., LLP.<br>
Hempstead, New York<br>
November 11, 2002</FONT></P>

<PAGE>
<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>
SEPTEMBER 30, 2002 AND DECEMBER 31, 2001</FONT></H1>

<pre>
                                     Assets

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

Current assets:

Cash                                    $    461,782            $    578,354
Trade accounts receivable                  1,380,947               1,200,933
Inventories                                2,598,470               2,419,827
Prepaid expenses                             150,330                 128,045
Deferred tax asset                           386,200                 386,200
Other receivables                                  -                     779
                                     ---------------           -------------

Total current assets                       4,977,729               4,714,138

Property and equipment, net                1,496,977               1,531,658

Other assets:

Repair parts                                 290,713                 300,272
Trade name                                 1,509,662               1,509,662
Patent rights, net                           280,308                 314,691
Deposits                                       8,125                   8,124
Investment - Joint Venture                   200,000                 200,000
                                           ---------               ---------

                                           2,288,808               2,332,749
                                           ---------               ---------

                                        $  8,763,514            $  8,578,545
                                           =========               =========



The accompanying notes are an integral part of the financial statements.

</pre>
                                        1


<PAGE>



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

<pre>

                      Liabilities and Stockholders' Equity

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

Accounts payable                         $     444,823           $    373,375
Accrued expense                                489,904                499,850
Notes payable - current portion                542,182                228,977
Due to shareholders                             36,651                 32,705
                                           -----------            -----------

     Total current liabilities               1,513,560              1,134,907

Long Term Liabilities                          419,587                443,332

Stockholders' equity:

Preferred Stock, par value $.001
 10,000,000 shares authorized
 0 issued and outstanding                          --                     --
 on September 30, 2002 and 2001

Common stock par value $.001;
 40,000,000 shares authorized,
 issued and outstanding 13,204,755
 shares and 13,204,755 shares
 on September 30, 2002 and December 31,
 2001 respectively                             13,274                   13,274
Additional paid in capital                 19,818,550               19,814,334
Accumulated deficit                       (13,001,457)             (12,827,302)
                                           ----------               ----------

    Total stockholders' equity              6,830,367                7,000,306
                                          -----------               ----------

     Total liabilities and stockholders'
          equity                      $     8,763,514           $    8,578,545
                                         ============              ===========

The accompanying notes are an integral part of the financial statements.

</pre>
                                        2


<PAGE>


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

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

Sales                                          $ 9,277,461        $ 8,335,585
Cost of sales                                    5,169,427          4,576,278
                                                 ---------          ---------

Gross profit                                     4,108,034          3,759,307(1)

Costs and expenses:
Research and development                           770,610            327,371
Professional services                              247,935            226,989
Salaries and related costs                       1,452,838          1,297,396
Selling, general and administrative              1,776,872          1,361,317
                                                ----------          ---------

                                                 4,248,255          3,213,073(1)
                                                ----------          ----------

Gain (Loss) from operations                    (   140,221)           546,234

Other income (expense):
Interest                                       (    33,933)      (     45,486)
Miscellaneous                                           --                 --
                                                ----------         ----------

                                               (    33,933)      (     45,486)
                                                ----------         ----------

Income (loss)                                   (  174,154)           500,748

Provision for income tax                                --       (    175,262)
Realized benefit of loss carryforward                   --            175,262
                                                 ----------        ----------

Net income (loss)                             $  ( 174,154)      $    500,748
                                                 ==========         =========

Earnings per share

Net income (loss):
      Basic                                      ( .01)                 .04
      Diluted                                    ( .01)                 .03

Weighted average number of shares
 outstanding                                   13,204,755           13,559,501
Weighted average number of shares
  adjusted for dilutive securities             14,406,255           14,759,501

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


The accompanying notes are an integral part of the financial statements.

</pre>
                                        3


<PAGE>


<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 SEPTEMBER 30, 2002 AND 2001<br>
(UNAUDITED)</FONT></H1>

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

Sales                                            $ 3,045,994      $ 2,780,407
Cost of sales                                      1,481,062        1,181,240
                                                   ---------       -----------

Gross profit                                       1,564,932        1,599,167(1)

Costs and expenses:
Research and development                             268,532          116,681
Professional services                                 59,882           70,064
Salaries and related costs                           804,616          663,400
Selling, general and administrative                  484,498          414,028
                                                  ----------        ----------

                                                   1,617,528        1,264,173(1)
                                                  ----------        ---------

Gain (Loss) from operations                      (    52,596)         334,994

Other income (expense):
Interest                                         (    11,953)    (     22,686)
Miscellaneous                                             --               --
                                                  -----------     -----------

                                                 (    11,953)    (     22,686)
                                                  ----------      -----------

Income (loss)                                    (    64,549)         312,308

Provision for income tax                                  --      (   109,308)
Realized benefit of loss carryforward                     --          109,308
                                                   ---------       ----------

Net income                                     $  (   64,549)    $    312,308
                                                   =========       ==========

Earnings per share

Net income (loss):
      Basic                                            NIL               .02
      Diluted                                          NIL               .02

Weighted average number of shares outstanding      13,204,755       13,435,334
Weighted average number of shares adjusted for
  dilutive securities                              14,406,255       14,635,334

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


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


                                        4


<PAGE>



<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 NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001<br>
(UNAUDITED)</FONT></H1>

<pre>
                                                       2002             2001
                                                       ----             ----
Cash flows from operating activities
Net income (loss)                                 $ ( 174,155)     $   500,748
Adjustments to reconcile net income
  to net cash provided by (used in)
  operating activities:
Depreciation and amortization                         204,274          424,431

Changes in current assets and liabilities:
Receivables                                          (180,014)          73,904
Inventories and repair parts                         (178,643)        (414,886)
Prepaid expenses                                    (  22,285)       (  54,540)
Accounts payable                                       71,448           10,036
Accrued expense                                    (    9,946)        ( 30,930)
Other assets                                           10,338       (      400)
Obligations to shareholders                             3,946               --
                                                   ----------      -----------

Net cash provided (applied) by
 operating activities                                (275,037)         508,363
                                                   -----------     -----------

Cash flows from investing activities

Increase in fixed assets                           (  109,911)       (  99,988)
Increase in patents                                (   25,300)       ( 270,438)
Increase in deposits                                       --        (  11,622)
Decrease in due to joint venture                           --         (100,000)
                                                    ---------        ---------

Net cash used in investing activities              (  135,211)       ( 482,048)
                                                    ---------        ---------

Cash flows from financing activities
Borrowing - line of credit/Insurance
  Premium Financing                                   410,651               --
(Decrease) in obligations to shareholders                  --       (   24,720)
(Decrease) in notes payable                         ( 121,191)       ( 206,522)
Common shares purchased                                    --        ( 114,000)
Increase in notes payable                                  --          438,783
Subscription Receivable                                 4,216            3,967
                                                  -----------      -----------

Net cash used in financing activities                 293,676           97,508
                                                  -----------      -----------

Net increase (decrease) in
 cash and cash equivalents                           (116,572)         123,823

Cash and cash equivalents, beginning of period        578,354          278,662
                                                     --------         --------

Cash and cash equivalents, end of period          $   461,782       $  402,485
                                                    =========         ========

The accompanying notes are an integral part of the financial statements.

</pre>


                                        5


<PAGE>


<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 NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001</FONT></H1>

<pre>

Cash paid during the nine months ended September 30:

                                              2002                   2001
                                              ----                   ----

Interest paid                               $ 32,910               $ 44,721
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 NINE MONTHS ENDED SEPTEMBER 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 nine months of the year 2002 or
2001. </FONT></P>

                                        6

<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 September 30, 2002 and December 31, 2001 were as follows: </FONT></P>

<PRE>

                                   September 30, 2002       December 31, 2001
                                   ------------------        -----------------

    Raw materials                        $1,083,697            $1,222,349
    Work in process                         944,361               614,342
    Finished goods                          570,412               583,136
                                          ---------             ---------

           Total                         $2,598,470            $2,419,827
                                          =========             =========


</PRE>
                                        7



<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>

<Pre>
     As of September 30, 2002, the inventory of parts was as follows:

      Raw materials                                        $ 561,233
      Allowance for excess or obsolete parts                (270,520)
                                                             -------

                                                           $ 290,713
                                                             =======
</pre>

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

<P align=justify><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>

                                               8
<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>

                                        9


<PAGE>

<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=LEFT><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 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>

                                       10

<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>

<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><U>FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002,</U></FONT></P>

<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 nine months ended September 30, 2002 show increased sales and decreased
profitability, as compared to the first nine months of 2001. As part of
operating revenues, for the first nine 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 11%,
from $8,335,585 to $9,277,461. Gross profit percentage of 44% was one point less
than 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 because margins on electrosurgical products are less than other product margins. Gross profit
increased from $3,759,307 to $4,108,034 which was mainly
attributable to increased sales of cauteries and electrosurgical devices. For
the first nine months of 2002 and 2001, cauteries accounted for 41% and 42% of sales,
respectively. For the same periods, electrosurgical devices accounted for 35%
and 30% of sales, respectively. </FONT></P>

<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Operating salaries and
related expenses increase from $1,297,396 to $1,452,838 in the nine months ended
September 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 135% from $327,371 to $770,810 for the nine months ended
September 30, 2002 as compared to the nine months ended September 30, 2001. The
increase was mainly attributable to engineering costs of 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 9% to $247,935 in the nine months ended September 30,
2002, as compared to $ 226,989 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 $415,555 (31%). These expenses were
$1,776,872 in the nine month period ended September 30, 2001 as compared to
$1,361,317 for the nine months ended September 30, 2002. The Company had
significant increases in the following areas: advertising, sales commissions,
show fees and costs, rent, repairs to buildings, regulatory, quality control and
the write down of obsolete inventory. The previous items accounted for total increases
of $515,219 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 $111,532. </FONT></P>

<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Interest expense decreased
from $45,486 in the nine months ended September 30, 2001 to $33,933 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
$140,221 for the first nine months of 2002 as compared to an operating gain of
$546,234 in the same period in 2001. </FONT></P>

                                       11


<PAGE>


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

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

<H1 ALIGN=CENTER><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 $174,154 for the nine months ended September 30, 2002 as compared to net gain
of $500,748 in 2001, for the same period. The main reason for the decrease in
income of $674,902 for the first nine months of 2002, from the first nine months
of 2001 was an increase in selling, general and administrative expenses of
$415,555 and an increase in research and development costs of $443,239. These
were offset by an increase in gross profit of $348,727. </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 nine
months of 2002, international sales increased by 24%. Sales in 2001 were
$1,435,057, which represented 17% of total sales, while in 2002 total
international sales were $1,782,300 which represented 19% of total sales. The
Company expects international sales to continue to increase. </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 September 30, 2002,
we had $461,782 in cash as compared to $402,485 at September 30, 2001. Cash
applied to operating activities was $275,037 in the first nine months of 2002 as
compared to $508,363 provided by operations in 2001. Net working capital of the
Company on September 30, 2002 was $3,464,169 as compared to $2,853,445 on
September 30, 2001. </FONT></P>

<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Investing activities
utilized $135,211 in cash during the first nine months of 2002, compared to
$482,048 in the first nine 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 62% of net revenues for the first
nine months of 2002. At September 30, 2002, the ten largest customer receivables
accounted for approximately 66% 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 $293,676 and $97,508, in the first nine months of 2002
and 2001, respectively. The most significant financing activity in the nine
months ended September 30, 2002 was borrowing $250,000 additional funds on the
Company credit line, and financing the Company&#146;s insurance premium for
$160,651. </FONT></P>

                                       12

<PAGE>


<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 and our electrosurgical line of products have growth
potential worldwide. We have developed a digital 300 watt generator, the IDS 300
model. A 510k application for permission to market the product has been
submitted to the Food and Drug Administration. </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,
950, 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 nine months
of 2001 to the first nine months of 2002, the Company&#146;s electrosurgical
sales increased by 28% from $2,520,373 to $3,233,043. 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 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. Accordingly, 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>

                                       13


<PAGE>


<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 September 30, 2002, the Company had $400,000
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>

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

<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 September 30, 2002 show increased sales and
decreased profitability, as compared to the same period of 2001. The
Company&#146;s sales revenues increased by 10%, from $2,780,407 to $3,045,994.
Gross profit percentage for three months ended September 30, 2002 was 51% as
compared to 58% for the same period in 2001. Gross profit decreased from
$1,599,167 to $1,564,932. Decreased gross profit was mainly attributable to
increased sales of electrosurgical devices which carry a lower profit margin. </FONT></P>

<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Operating salaries and
related expenses increased by 21% from $663,400 to $804,616, in the three months
ended September 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 130% from $116,681 to $268,532 for the three months ending
September 30, 2002 as compared to the three months ending September 30, 2001.
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>

                                       14

<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 decreased by 15% to $59,882 in the three months ended September 30,
2002, as compared to $70,064 in the same period of the previous year
for professional fees associated with standard legal
matters, quarterly review fees and consulting services. </FONT></P>

<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Selling, General and
Administrative expenses increased by $70,470, 17%. These expenses were $414,028
in the three month period ended September 30, 2001 as compared to $484,498 for
the three months ended September 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 $22,686 in the three months ended September 30, 2001 to $11,953 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 $
334,994 in the three months ending September 30, 2001 as compared to an
operating loss of $52,596 in the same period in 2002. </FONT></P>


<H2 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>DISCLOSURE
CONTROLS AND PROCEDURES</FONT></H2>

<P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Securities and Exchange
Commission (the &#147;SEC&#148;) has adopted new rules, Rule 13a-15 and Rule
15d-15, which require the Company to, among other things, conduct, under the
supervision of the Chief Executive Officer and Chief Financial Officer, an
evaluation of the effectiveness of the design and operation of its disclosure
controls and procedures within 90 days of the filing date of any quarterly or
annual report. An evaluation of the Company&#146;s disclosure controls and
procedures (as defined in Section 13(a)-14(c) of the Securities Exchange Act of
1934, as amended (the &#147;Exchange Act&#148;)) was carried out by us and with
participation of several other members of our senior management within the
90-day period preceding the filing date of this quarterly report. </FONT></P>

<P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>We maintain disclosure
controls and procedures that are designed to ensure that information required to
be disclosed in our Exchange Act reports is recorded, processed, summarized and
reported within the time periods specified in the rules promulgated by of the
SEC, and that such information is accumulated and communicated to our
management, including our Chief Executive Officer and Chief Financial Officer,
as appropriate, to allow timely decisions regarding required disclosure. In
designing and evaluating the disclosure controls and procedures, management
recognized that any controls and procedures, no matter how well designed and
operated, can provide only reasonable assurance of achieving the desired control
objectives, and management necessarily was required to apply its judgment in
evaluating the cost-benefit relationship of possible controls and procedures. </FONT></P>

<P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>We have concluded that our
disclosure controls and procedures as currently in effect are effective in
ensuring that the information required to be disclosed by the Company in the
reports it files or submits under the Exchange Act is: (i) accumulated and
communicated to the Company&#146;s management, including the Chief Executive
Officer and Chief Financial Officer, in a timely manner, and (ii) recorded,
processed, summarized and reported within the time periods specified in the
SEC&#146;s rules. </FONT></P>

<P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>We did not make any
significant changes in, nor take any material corrective actions regarding, our
internal controls or other factors that could significantly affect these
controls subsequent to the date of our most recent evaluation. </FONT></P>


                                       15


<PAGE>


<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 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 ($20,000), 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 2001 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>

                                       16

<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=left><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:  November 11, 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>

<P ALIGN=left><FONT FACE="Times New Roman, Times, Serif" SIZE=2><U>/s/Charles Peabody</U></FONT></P>

<P ALIGN=left><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Chief Financial Officer - Charles Peabody,</FONT></P>


                                       17

<PAGE>


<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 May 14, 2002. </FONT></P>


<P ALIGN=left><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Bloom &amp; Co., LLP<br>
s/Bloom and Company<br>
Hempstead, New York<br>
May 14, 2002</FONT></P>



<PAGE>


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

<P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>I, Andrew Makrides, the Registrant's Chief Executive Officer, certify that:</FONT></P>

<P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1.I have reviewed this quarterly report on Form 10-Q of Bovie Medical Corporation;</FONT></P>

<P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.
Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report; </FONT></P>

<P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.
Based on my knowledge, the financial statements, and other financial information
included in this quarterly report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this quarterly report; </FONT></P>

<P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.
The registrant&#146;s other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a)
designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this quarterly report is being prepared; b) evaluated the
effectiveness of the registrant&#146;s disclosure controls and procedures as of
a date within 90 days prior to the filing date of this quarterly report (the
&#147;Evaluation Date&#148;); and c) presented in this quarterly report our
conclusions about the effectiveness of the disclosure of the disclosure controls
and procedures based on our evaluation as of the Evaluation Date; </FONT></P>

<P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.
The registrant&#146;s other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant&#146;s auditors and the audit
committee of registrant&#146;s board of directors (or persons performing the
equivalent function): a) all significant deficiencies in the design or operation
of internal controls which could adversely affect the registrant&#146;s ability
to record, process, summarize and report financial data and have identified for
the registrant&#146;s auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant&#146;s internal
controls; and </FONT></P>

<P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.
The registrant&#146;s other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses. </FONT></P>

<P ALIGN=left><FONT FACE="Times New Roman, Times, Serif" SIZE=2><U>Date:  November 11, 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>


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