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<SEC-DOCUMENT>0001121888-03-000025.txt : 20030515
<SEC-HEADER>0001121888-03-000025.hdr.sgml : 20030515
<ACCEPTANCE-DATETIME>20030515114027
ACCESSION NUMBER:		0001121888-03-000025
CONFORMED SUBMISSION TYPE:	10QSB
PUBLIC DOCUMENT COUNT:		1
CONFORMED PERIOD OF REPORT:	20030331
FILED AS OF DATE:		20030515

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:		03702134

	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>qmar03.htm
<DESCRIPTION>MARCH 31, 2003
<TEXT>
<html>
<head>
<title>
</title>
</head>
<body>
<H1 ALIGN=CENTER><FONT SIZE=3>U.S. SECURITIES AND EXCHANGE COMMISSION
</FONT></H1>

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

<P ALIGN=CENTER><FONT SIZE=3>For the quarterly period ended March 31,
2003</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</FONT></H1>

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

<pre>

Contents

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

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

          Consolidated Balance Sheet - March 31, 2003
           And December 31, 2002..........................................
          Consolidated Statements of Operations for the
           three Months Ended March 31,  2003 and 2002....................
          Consolidated Statements of Cash Flows for the
           three Months Ended March 31, 2003 and 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=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>
MARCH 31, 2003 AND DECEMBER 31, 2002</FONT></H1>



<pre>

                                                   Assets

                                    (Unaudited)              (Audited)
                                   March 31, 2003         December 31, 2002
                                   ----------------------------------------

Current assets:

Cash                                 $  346,699             $   379,209
Trade accounts receivable             1,853,571               1,350,487
Inventories                           2,584,662               2,357,505
Prepaid expenses                         78,244                 164,264
Deferred tax asset                      386,200                 386,200
Other assets                             45,422                  45,044
                                    -----------             -----------

Total current assets                  5,294,798               4,682,709

Property and equipment, net           1,549,941               1,559,080

Other assets:

Repair parts                            268,368                 281,746
Trade name                            1,509,662               1,509,662
Patent rights, net                      237,976                 258,214
Deposits                                  9,470                   9,470
Investment - Joint Venture              200,000                 200,000
                                      ---------               ---------

                                      2,225,476               2,259,092
                                      ---------               ---------

                                     $9,070,215              $8,500,881
                                      =========               =========



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>
MARCH 31, 2002 AND DECEMBER 31, 2001<br>
(CONTINUED)</FONT></H1>

<pre>
                                          Liabilities and Stockholders' Equity

                                         (Unaudited)              (Audited)
                                        March 31, 2003         December 31, 2002
                                        --------------         -----------------
Current liabilities:

Accounts payable                        $     798,841          $    478,668
Accrued expense                               457,293               396,949
Notes payable                                 679,556               525,467
Due to shareholders                            37,778                37,214
Customer deposits                             112,000               128,000
Current maturities of long-term debt           31,668                31,668
                                            ---------           -----------

     Total current liabilities              2,117,136             1,597,966

Long Term Liabilities                         403,747               411,664

Stockholders' equity:

Preferred Stock, par value $.001
 10,000,000 shares authorized
 0 issued and outstanding                          --                    --
 on March 31, 2003 and December 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 March 31, 2003 and December 31,
 2002 respectively                             13,274                13,274
Additional paid in capital                 19,821,510            19,820,044
Accumulated deficit                       (13,285,452)          (13,342,067)
                                          -----------             ----------

    Total stockholders' equity              6,549,332             6,491,251
                                          -----------             ----------

    Total liabilities and stockholders'
       equity                          $    9,070,215         $   8,500,881
                                          ===========            ==========

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 MARCH 31, 2003 AND 2002<br>
(UNAUDITED)</FONT></H1>

<pre>

                                                    2003               2002
                                                    ----               ----

Sales                                          $ 3,670,054         $ 3,028,599
Cost of sales                                    2,106,991           1,704,512
                                                 ---------           ---------

Gross profit                                     1,563,063           1,324,087

Costs and expenses:
Research and development                           274,361             299,536
Professional services                              130,419              98,020
Salaries and related costs                         401,036             329,787
Selling, general and administrative                689,245             639,732
                                                 ---------           ---------

                                                 1,495,061           1,367,075
                                                 ---------           ---------

Gain (Loss) from operations                         68,002         (    42,988)

Other income (expense):
Interest (net of income)                       (    11,387)        (    11,468)
Miscellaneous                                           --                  --
                                               -----------          -----------

                                               (    11,387)        (    11,468)
                                               -----------          ----------

Income                                              56,615         (    54,456)

Provision for income tax                        (   19,815)                 --
Realized benefit of loss carryforward               19,815                  --
                                                 ---------         -----------

Net income (loss)                             $     56,615        $  (  54,456)
                                                ==========         ===========


Earnings per share

Net income (loss):
      Basic                                          .00                  .01
      Diluted                                        .00                  .01

Weighted average number of shares
outstanding                                    13,204,755           13,204,755

Weighted average number of shares
 adjusted for dilutive securities              13,847,852           13,204,755

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


<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 THREE MONTHS ENDED MARCH 31, 2003 AND 2002<br>
(UNAUDITED)</FONT></H1>

<pre>
                                                     2003                2002
                                                     ----                ----
Cash flows from operating activities

Net income (loss)                                    56,615         $ (  54,456)
Adjustments to reconcile net income
  to net cash provided by (used in)
  operating activities:
Depreciation and amortization                        77,127              70,749

Changes in current assets
 and liabilities:

Receivables                                        (503,084)           (128,238)
Inventories and repair parts                       (213,779)          (  94,446)
Prepaid expenses                                     86,020              17,774
Accounts payable                                    320,173             112,911
Accrued expense                                      44,344            (192,006)
Other assets                                    (       378)                779
                                                 ----------          ----------

Net cash provided (applied) by
 operating activities                              (132,962)           (266,933)
                                                 ----------           ---------

Cash flows from investing activities

Increase in fixed assets                          (  47,750)          (  82,572)
Increase in patent                                       --                 150
                                                 -----------           ---------

Net cash used in investing activities              ( 47,750)          (  82,422)
                                                 -----------           ---------

Cash flows from financing activities

Borrowing - line of credit                          200,000             100,000
(Decrease) in notes payable                        ( 53,828)           ( 17,842)
Common shares purchased                               1,466               1,368
Obligations to shareholders                             564               2,818
                                                  ---------            --------

Net cash used in financing activities               148,202              86,344
                                                  ---------            --------

Net increase (decrease) in
 cash and cash equivalents                         ( 32,510)           (263,011)

Cash and cash equivalents,
 beginning of period                                 379,209             578,354
                                                    -------            --------

Cash and cash equivalents, end of period         $  346,699           $ 315,343
                                                    =======            ========

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 THREE MONTHS ENDED MARCH 31, 2003 AND 2002</FONT></H1>

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

                                              2003               2002
                                              ----               ----

Interest paid                               $ 1,285           $ 12,367
Income Taxes                                  - 0 -              - 0 -
</pre>

<P align=justify><FONT  FACE="Times New Roman, Times, Serif" SIZE=2>SUPPLEMENTAL
SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:</FONT></P>

<P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>FOR THE THREE MONTHS ENDED MARCH 31, 2002:</FONT></P>

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

<P align=justify><FONT  FACE="Times New Roman, Times, Serif" SIZE=2>FOR THE THREE MONTHS ENDED MARCH 31, 2003:</FONT></P>

<P align=justify><FONT  FACE="Times New Roman, Times, Serif" SIZE=2>The  Company  issued  stock  options  pursuant  to its 2003  executive  and
employee  stock  option  plan to  directors  and certain  employees  to purchase
525,000 shares of the Companys  common stock at the bid price when granted.  The
options give the recipients the right to purchase the shares for 10 years.</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>


<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>NOTES TO FINANCIAL STATEMENTS</FONT></H1>

<H1 ALIGN=CENTER><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>Inventories</FONT></P>

<P align=left><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 March 31, 2003 and December 31, 2002 were as follows: </FONT></P>

<pre>
                                     March 31, 2003        December 31, 2002
                                     --------------        -----------------

     Raw materials                      $  986,659            $  1,180,758
     Work in process                     1,095,336                 524,322
     Finished goods                        502,667                 652,425
                                       -----------             -----------

            Total                      $ 2,584,662            $  2,357,505
                                         =========             ===========

</pre>

<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 March 31, 2003, the
inventory of parts was as follows: </FONT></P>
<pre>

 Raw materials                                        $ 555,677
 Allowance for excess or obsolete parts                (287,309)
                                                        -------

                                                      $ 268,368
                                                       ========
</pre>

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


<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>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>Long-Lived Assets (Continued)</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. (Continued)</FONT></P>

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

<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
have been determined on past experience not to be material. </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
charged to customers 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 would be capitalized if incurred 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>Basic Earnings Per Shares
are computed by dividing income available to common stockholders by the weighted
average number of common shares outstanding during the period. Diluted Earnings
Per Share shall be computed by including contingently issuable shares with the
weighted average shares outstanding during the period. When inclusion of the
contingently issuable shares would have an antidilutive effect upon earnings per
share no diluted earnings per share shall be presented. </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>

<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>NOTES TO FINANCIAL STATEMENTS</FONT></H1>

<H1 ALIGN=CENTER><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>Income Taxes</FONT></P>

<P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Company and its
wholly-owned subsidiary, Aaron Medical Industries, Inc. file a consolidated
federal income tax return. 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>

<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
SFAS No. 148 and 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=LEFT><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>Effective February 3, 2002
the Company adopted SFAS No. 142, &#147;Goodwill and Other Intangible
Assets&#148;. SFAS No. 142 requires that ratable amortization of goodwill be
replaced by periodic tests for impairment within six months of the date of
adoption, and then on a periodic basis thereafter. Based on the impairment
testing performed in February 2003, management determined that there was no
impairment loss related to the net carrying value of the Company&#146;s recorded
goodwill. </FONT></P>


<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=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>New Accounting Standards (Continued)</FONT></P>

<P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In July 2001, the Financial
Accounting Standards Board (the &#147;FASB&#148;) issued SFAS No. 143,
&#147;Accounting for Asset Retirement Obligations&#148;, which provides
accounting requirements for retirement obligations associated with tangible
long-lived assets. SFAS No. 143 are effective for fiscal years beginning after
June 15, 2002. The adoption of SFAS No. 143 has not had a significant impact on
the Company&#146;s consolidated financial statements. </FONT></P>

<P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In August 2001, the FASB
issued SFAS No. 144, &#147;Accounting for the Impairment or Disposal of
Long-Lived Assets&#148;. This statement addresses accounting and reporting for
the impairment or disposal of long-lived assets, other than goodwill, including
discontinued operations. SFAS No. 144 are effective for fiscal years beginning
after December 15, 2001. Management has determined that the adoption of SFAS No.
144 has had no impact on the Company&#146;s consolidated financial statements. </FONT></P>

<P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In April 2002, the FASB
issued SFAS No. 145, &#147;Rescission of FASB Statements No. 4, 44, and 64,
Amendment of FASB Statement No. 13, and Technical Corrections&#148;. SFAS No.
145 primarily affects the reporting requirements and classification of gains and
losses from the extinguishments of debt, rescinds the transitional accounting
requirements for intangible assets of motor carriers, and requires that certain
lease modifications with economic effects similar to sale-leaseback transactions
be accounted for in the same manner as sale-leaseback transactions. SFAS No. 145
is effective for financial statements issued after April 2002, with the
exception of the provisions affecting the accounting for lease transactions,
which should be applied for transactions entered into after May 15, 2002, and
the provisions affecting classification of gains and losses from the
extinguishments of debt, which should be applied in fiscal years beginning after
May 15, 2002. Management has determined that the adoption of SFAS No. 145 will
have no immediate impact on the Company&#146;s consolidated financial
statements, but will evaluate in future periods the classification of any debt
extinguishments costs in accordance with APB Opinion No. 30 &#147;Reporting the
Results of Operations - Reporting the Effects of Disposal of a Segment of a
Business, and Extraordinary, Unusual and Infrequently Occurring Events and
Transactions&#148;. </FONT></P>

<P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In June 2002, the FASB
issued SFAS No. 146, &#147;Accounting for Costs Associated with Exit or Disposal
Activities&#148;. SFAS No. 146 requires companies to recognize costs associated
with exit or disposal activities when they are incurred, rather than at the date
of a commitment to an exit or disposal plan. Examples of costs covered by the
standard include lease termination costs and certain employee severance costs
that are associated with a restructuring, discontinued operation, plant closing,
or other exit or disposal activity. Previous accounting guidance was provided by
Emerging Issues Task Force (&#147;EITF&#148;) No. 94-3, &#147;Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit an
Activity (including Certain Costs Incurred in a Restructuring)&quot;. SFAS No.
146 replace EITF No. 94-3, and are required to be applied prospectively to exit
or disposal activities initiated after December 31, 2002. The Company adopted
SFAS No. 146 during the fourth quarter of Fiscal 2002 with no material impact on
the Company&#146;s consolidated financial statements. </FONT></P>


<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=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>New Accounting Standards (Continued)</FONT></P>

<P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In November 2002, the FASB
issued FASB Interpretation (&#147;FIN&#148;) No. 45, &#147;Guarantor&#146;s
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others&#148;. FIN No. 45 clarifies and expands on
existing disclosure requirements for guarantees, and clarifies that a guarantor
is required to recognize, at the inception of the guarantee, a liability equal
to the fair value of the obligation undertaken in issuing the guarantee. The
initial recognition and measurement provisions of FIN No. 45 are applicable on a
prospective basis for guarantees issued or modified after December 31, 2002. The
disclosure requirements of FIN No. 45 are effective for financial statements
issued after December 15, 2002. The Company adopted FIN No. 45 during the fourth
quarter of Fiscal 2002 with no material impact on the Company&#146;s
consolidated financial Statements. </FONT></P>

<P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In December 2002, the FASB
issued SFAS No. 148, Accounting for Stock-Based Compensation - Transition and
Disclosure. SFAS No. 148 amends SFAS No. 123;Accounting for Stock-Based
Compensation to provide alternative methods of transition for a voluntary change
to the fair value based method of accounting for stock-based employee
compensation. In addition, this Statement amends the disclosure requirements of
Statement No. 123 to require prominent disclosures in both annual and interim
financial statements about the method of accounting for stock-based employee
compensation and the effect of the method used on reported results. SFAS No. 148
is effective for periods beginning after December 15, 2002. Accordingly, the
Company has started making the disclosures required by SFAS No. 148 beginning in
the first quarter of fiscal year 2003. </FONT></P>

<P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In January 2003, the FASB
issued FIN No. 46, &#147;Consolidation of Variable Interest Entities - an
Interpretation of Accounting Research Bulletin No. 51&quot;. FIN No. 46 requires
unconsolidated variable interest entities to be consolidated by their primary
beneficiaries if the entities do not effectively disperse the risks and rewards
of ownership among their owners and other parties involved. The provisions of
FIN No. 46 are applicable immediately to all variable interest entities created
after January 31, 2003 and variable interest entities in which a company obtains
an interest after that date. For variable interest entities created before
January 31, 2003, the provisions of this interpretation are effective July 1,
2003. Management is currently evaluating the provisions of this interpretation,
and does not believe that it will have a significant impact on the
Company&#146;s consolidated financial statements. </FONT></P>


<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</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 March 31, 2003 show increased sales and increased
profitability, as compared to the first three months of 2002. As part of
operating revenues, 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 21%, from $3,028,599 to $3,670,054.
Gross profit percentage of 43% was up from 39% for the same period in 2002. The
reason for the 4% increase in gross profit was that as electrosurgical sales
grow indirect manufacturing overhead associated remains relatively constant.
Overall margins will increase as sales increase even though margins on
electrosurgical products are less than other product margins. Gross profit
increased from $1,324,087 in 2002 to $1,563,063 in 2003. Increased gross profit
was mainly attributable to increased sales of electrosurgical devices. For the
first quarter of 2003 and 2002, cauteries accounted for 31% and 44% of sales,
respectively. For the same period, electrosurgical devices accounted for 38% and
27% of sales, respectively. </FONT></P>

<P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Operating salaries and
related expenses had increased 22% and went from $329,787 to $401,036, in the
three months ended March 31, 2003 as compared to the same period in 2002. The
main reason for the increase was in the area of customer service and employee
training. </FONT></P>

<P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Research and development
costs decreased by an 8% from $299,536 to $274,361 from the quarter ended March
31, 2002 to the quarter ending March 31, 2003. The high cost of research and
development 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 33% to $130,419 in the three months ended March 31, 2003,
as compared to $98,020 in the same period of the previous year. The main reason
for this increase was professional fees associated with legal matters, audit of
the year 2002 and consulting services. </FONT></P>

<P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Selling, General and
Administrative expenses increased by $49,513 (8%). These expenses were $639,732
in the three month period ended March 31, 2002 as compared to $689,245 for the
three months ended March 31, 2002. The increase was mainly attributable to the
expense of additional personnel, advertising and promotions. </FONT></P>

<P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Interest expense decreased
from $12,897 in the three months ended March 31, 2002 to $12,285 in 2003. The
largest part 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 gain was
$68,002 in the first quarter of 2003 as compared to an operating loss of $42,988
in the same period in 2002. </FONT></P>

<P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Company had a net gain
of $56,615 for the three months ended March 31, 2003 as compared to net loss of
$54,456 in 2002 for the same period. The main reason for the increase in income
of $111,071 for the first quarter of 2003 from the first quarter of 2002 was an
increase in OEM (Original Equipment Manufacturer) sales of the companies
generators. </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 sells its
products mostly through distributors, independent representatives who service
the distributors, both in the international market and in the USA and original
equipment manufacturing agreements (EOM). 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 while 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 three
months of 2003, international sales increased by 16%. These sales were $587,607,
which represented 16% of total sales, while in 2002 total international sales
were $505,048 and 18% of total sales. The Company is ISO 9001 certified. </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 March 31, 2003, the
amount of cash was $346,699 as compared to $315,343 at March 31, 2002. Cash
applied to operating activities was $132,962 in the first quarter of 2003 as
compared to $266,933 in 2002. Net working capital of the Company on March 31,
2003 was $3,177,662 as compared to $3,489,212 in 2002. </FONT></P>

<P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Investing activities
utilized $82,422 in cash during the first three months of 2002, compared to
$47,750 in the first three months of 2003. In 2003, 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 amount of cash provided
by financing activity was $148,202 and $86,344 respectively, in the first three
months of 2003 and 2002. The most significant financing activity in the three
months ended March 31, 2003 was borrowing $200,000 additional funds on the
Company credit line. </FONT></P>

<P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Company&#146;s ten
largest customers accounted for approximately 64% of net revenues for the first
three months of 2003. At March 31, 2003, the ten largest receivables accounted
for approximately 53% of outstanding accounts receivable. </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>


<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=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 has continued
to expand its line of electrosurgery products which include the standard
stainless steel electrodes, the Bovie/Aaron 800, Bovie/Aaron 900, Bovie/Aaron
950, Bovie/Aaron 1250, and the Aaron 2250 high frequency generators. Pursuant to
perceived market demands, the Company has developed and is currently marketing
the Bovie IDS 300-Watt and Bovie IDS 200-Watt digital generators under the newly
formed Bovie sales division. </FONT></P>

<P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>From the First Quarter of
2002 to the First Quarter of 2003, the Company&#146;s electrosurgical sales
increased by 91% from $966,121 to $1,843,404. This increase was mainly
attributable to contract purchasers. 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 $500 million worldwide, annually. </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, including the Company&#146;s
battery-operated cauteries continued to have growth potential domestically and
abroad. Accordingly, the Company has designed certain disposable products to be
reusable. The Company presently has a significant portion of the U.S. cautery
market and expects moderate growth in sales of cautery-related products to
continue. </FONT></P>

<H2 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Non-Medical
Products</FONT></H2>

<P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Sales of the Company
flexible lighting products had been on the decline for several years. In 2002,
the Company sales of these products, used primarily in the automotive and
locksmith industries, totaled $736,758. One customer accounted for $561,276
(77%) of such sales. </FONT></P>

<P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Sales for the first quarter
of 2003 and 2002 of industrial lighting products was $153,382 and $175,175,
respectively. At the end of March 2003 the Company executed an exclusive license
agreement with its largest customer of industrial lighting products to transfer
its technology and manufacturing capability to that customer for a royalty fee
of $8,250 per month for five years. The Company will no longer sell industrial
lighting 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>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>

<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&#146;s focus is
to acquire, develop, and manufacture new product technologies and to expand its
manufacturing capabilities. </FONT></P>

<P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In order to increase
international sales growth and maintain its ability to sell in Europe, the
Company has 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>In December 2001, the
Company satisfied its first mortgage on the building it owns in St. Petersburg,
Florida and replaced it with a new first mortgage form its prime lender in the
amount of $475,000. The mortgage loan is to be repaid over 5 years with a
variable interest starting at the banks present base rate of 4.25%. The Company
pays a principal payment of $2,639.00 plus interest each month. A balloon
payment of $316,660 is due in December 2006. </FONT></P>

<P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In May 2001, the Company
changed commercial lenders and increased its credit line from $600,000 to
$1,500,000. The interest rate on the line is variable and is presently at the
bank&#146;s base rate, which is 4.25% per annum. The outstanding balance on the
credit line on March 31, 2003 was $600,000. </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=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 3.  DISCLOSURE CONTROLS AND PROCEDURES</FONT></H1>

<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(a) Evaluation of disclosure controls and procedures</FONT></P>

<P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>For purposes of rule 13a-14
and 15d-14 of the Securities Exchange Act of 1934 (&#147;Exchange Act&#148;) the
term &#147;disclosure controls and procedures&#148; refers to the controls and
other procedures of a company that are designed to ensure that information
required to be disclosed by a company in the reports that it files under the
Exchange Act is recorded, processed, summarized and reported within required
time periods. Within 90 days prior to the date of this report (&#147;Evaluation
Date&#148;), the Company carried out an evaluation under the supervision and
with the participation of the Company&#146;s Chief Executive Officer and its
Chief Financial Officer of the effectiveness of the design and operation of its
disclosure controls and procedures. Based on that evaluation, the Company&#146;s
Chief Executive Officer and Chief Financial Officer have concluded that, as of
the Evaluation Date, such controls and procedures were effective at ensuring
that required information will be disclosed on a timely basis in our periodic
reports filed under and pursuant to the Exchange Act. </FONT></P>

<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(b) Changes in internal controls</FONT></P>

<P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>There were no significant
changes to our internal controls or in other factors that could significantly
affect our internal controls subsequent to the Evaluation Date. </FONT></P>

<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, 2002, 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=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>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>Exhibits</FONT></P>

<P align=left><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(a)      Certification  pursuant to Section 906 of Sarbanes-Oxley Act of 2002.</FONT></P>
<P align=left><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(b)      Certification  pursuant to Section 906 of Sarbanes-Oxley Act of 2002.</FONT></P>

<P align=left><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Report on Form 8-K</FONT></P>

<P align=left><FONT FACE="Times New Roman, Times, Serif" SIZE=2>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>EXHIBIT 99(a)</FONT></P>

<P align=left><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002</FONT></P>

<P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In connection with the
Quarterly Report of Bovie Medical Corporation (the &#147;Company&#148;) on Form
10-QSB of the period ended March 31, 2003 as filed with the Securities and
Exchange Commission on the date hereof, I, Andrew Makrides, President and
Chairman of the Board of the Company, certify, pursuant to section 906 of the
Sarbanes-Oxley Act of 2002, that to my knowledge: (1) the quarterly report fully
complies with the requirements of section 13(a) of the Securities Exchange Act
of 1934; and (2) the information contained in the quarterly report fairly
presents, in all material respects, the financial condition and results of
operations of the Company. </FONT></P>

<P align=left><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Date:   April 9, 2003</FONT></P>

<P align=left><FONT FACE="Times New Roman, Times, Serif" SIZE=2><u>/s/ Andrew Makrides</u><br>
President, Chief<br>
Executive Officer, Chairman<br>
of the Board and Director</FONT></P>

<P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>A signed original of this
written statement required by Section 906 of the Sarbanes-Oxley Act has been
provided to the Company and will be retained by the Company and furnished to the
Securities and Exchange Commission or its staff upon request. </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>EXHIBIT 99(b)</FONT></P>

<P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002</FONT></P>

<P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In connection with the
Quarterly Report of Bovie Medical Corporation (the &#147;Company&#148;) on Form
10-QSB of the period ended March 31, 2003 as filed with the Securities and
Exchange Commission on the date hereof, I, Charles Peabody, Chief Financial
Officer, certify, pursuant to section 906 of the Sarbanes-Oxley Act of 2002,
that to my knowledge: (1) the quarterly report fully complies with the
requirements of section 13(a) of the Securities Exchange Act of 1934; and (2)
the information contained in the quarterly report fairly presents, in all
material respects, the financial condition and results of operations of the
Company. </FONT></P>

<P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Date:   April 9, 2003<br>
<u>/s/ Charles Peabody,</u><br>
Chief Financial Officer,</FONT></P>

<P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>A signed original of this
written statement required by Section 906 of the Sarbanes-Oxley Act has been
provided to the Company and will be retained by the Company and furnished to the
Securities and Exchange Commission or its staff upon request. </FONT></P>


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

SIGNATURES:


<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)<br>
Date:  May 5, 2003<br>
/s/Andrew Makrides<br>
Chief Executive Officer - Andrew Makrides</FONT></P>



<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>CERTIFICATIONS</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-QSB of Bovie Medical Corporation;</FONT></P>

<P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>2. Based on my  knowledge,  this annual  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 annual report;</FONT></P>

<P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3. Based on my knowledge,  the financial statements,  and other financial information included in this annual 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 annual report;</FONT></P>

<P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>4. The  Registrant'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 annual report is being prepared;  b) evaluated the
effectiveness  of the  Registrant's  disclosure  controls and  procedures  as of a date within 90 days prior to the filing date of this
annual  report (the  "Evaluation  Date");  and c)  presented  in this annual  report our  conclusions  about the  effectiveness  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>5. The Registrant's other certifying officers and I have disclosed,  based on our most recent evaluation,  to the registrant's auditors
and the audit  committee of  Registrant'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's  ability to record,
process,  summarize and report  financial data and have identified for the  Registrant'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's internal controls; and</FONT></P>

<P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>6. The  Registrant's  other  certifying  officers and I have  indicated  in this annual  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=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Date: May 5, 2003<br>

/s/Andrew Makrides<br>
Chief Executive Officer</FONT></P>


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

<P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>I, Charles Peabody, the Registrant's Chief Financial 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-QSB of Bovie Medical Corporation;</FONT></P>

<P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>2. Based on my  knowledge,  this annual  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 annual report;</FONT></P>

<P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3. Based on my knowledge,  the financial statements,  and other financial information included in this annual 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 annual report;</FONT></P>

<P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>4. The  Registrant'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 annual report is being prepared;  b) evaluated the
effectiveness  of the  Registrant's  disclosure  controls and  procedures  as of a date within 90 days prior to the filing date of this
annual  report (the  "Evaluation  Date");  and c)  presented  in this annual  report our  conclusions  about the  effectiveness  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>5. The Registrant's other certifying officers and I have disclosed,  based on our most recent evaluation,  to the registrant's auditors
and the audit  committee of  Registrant'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's  ability to record,
process,  summarize and report  financial data and have identified for the  Registrant'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's internal controls; and</FONT></P>

<P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>6. The  Registrant's  other  certifying  officers and I have  indicated  in this annual  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=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Date: May 5, 2003<br>

/s/Charles Peabody<br>
Chief Financial Officer</FONT></P>


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