**FORM          10-K**

**[X]          ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE **

**SECURITIES          EXCHANGE ACT OF 1934**

**BOVIE          MEDICAL CORPORATION**

| Delaware                    No.                      |   | 11-2644611                                           |
|------------------------------------------------------|--------|------------------------------------------------------|
| (State                    or other jurisdiction      |   | (IRS                    Employer Identification No.) |
| of                    incorporation or organization) |   |                                                 |

**734          Walt Whitman Rd., Melville, New York 11747**

**(631)          421-5452**

**Securities          registered under Section 12(b) of the Exchange Act**

**Securities          registered under Section 12(g) of the Exchange Act**

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**DOCUMENTS          INCORPORATED BY REFERENCE**

**Bovie          Medical Corporation**

**2006          Form 10-K Annual Report**

**Table          of Contents**

| Part                    I   |                                                                                                                        | Page   |
|-----------------------------|-----------------------------------------------------------------------------------------------------------------------------|--------|
| Item                    1   | Business                                                                                                                    | 1      |
| Item                    1A  | Risk                    Factors                                                                                             | 5      |
| Item                    1B  | Unresolved                    Staff Comments                                                                                | 9      |
| Item                    2   | Description                    of Property                                                                                  | 9      |
| Item                    3   | Legal                    Proceedings                                                                                        | 9      |
| Item                    4.  | Submission                    of Matters to a Vote of Security                    Holders                                   | 9      |
|                        |                                                                                                                        |   |
| Part                    II  |                                                                                                                        |   |
| Item                    5.  | Market                    for Registrant’s Common Equity, Related Stockholder                    Matters              | 10     |
| Item                    6.  | Selected                    Financial Data                                                                                  | 10     |
| Item                    7   | Management's                    Discussion and Analysis                                                                     | 11     |
| Item                    7A  | Quantitative                    and Qualitative Disclosures about Market                    Risk                            | 22     |
| Item                    8   | Financial                    Statements and Supplementary                    Data                                           | 23     |
| Item                    9   | Changes                    in and Disagreements with Accountants on Accounting                    and Financial Disclosure. | 23     |
| Item                    9A  | Controls                    and Procedures                                                                                  | 23     |
|                        |                                                                                                                        |   |
| Part                    III |                                                                                                                        |   |
| Item                    10  | Directors,                    Executive Officers, and                    Corporate Governance                               | 24     |
| Item                    11  | Executive                    Compensation                                                                                   | 26     |
| Item                    12  | Section                    16(a) Beneficial Ownership Reporting Compliance                                                  | 30     |
| Item                    13. | *Certain                    Relationships and Related Transactions** *                                                 | 32     |
| Item                    14  | *Principal                    Accountant Fees and Services** *                                                         | 33     |
|                        |                                                                                                                        |   |
| Part                    IV  |                                                                                                                        |   |
| Item                    15  | Exhibits                    Index                                                                                           |   |

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**BOVIE          MEDICAL CORPORATION**

**Part          I**

**ITEM          1. Business**

**Overview**

**Company          Products**

**Electrosurgery          Products**

**Bovie/Aaron          800 and 900 High Frequency Desiccators**

**Bovie/Aaron          950**

**Bovie/Aaron          1250**

----

**Bovie/Aaron          2250/IDS 300**

**Battery          Operated Cauteries**

**Battery          Operated Medical Lights**

**Nerve          Locator Stimulator**

**New          Products**

**Low          Temperature Focused Plasma Technology (in development)**

----

**New          Generator Platform**

| ·   | ***ICON                  GI Device*** |
|--------------------|---------------------------------------|
| ***·  *** | ***Bovie                  Button*** |
|--------------------------|-------------------------------------|

**Suture          Removal Device (in development)**

** **

----

**Bovie          IDS 400**

**Endoscopic          Modular Instruments**

**Bovie          Canada Products**

| -   | Tip-On-Tube®                  a disposable tip technology complementary to Bovie’s previously acquired                  and announced Modular Ergonomic Grip (MEG) forceps. Bovie acquired                  the MEG                  technology in January 2006 and recently received Food and Drug                  Administration (FDA) clearance to market the                  product. |
|---------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| -   | A                  new surgical handle platform called the Modullion® that allows a plurality                  of electrical and mechanical modes to be used in conjunction with                  reusable                  and disposable mono and bipolar cartridges and is applicable to                  most                  endoscopic surgeries. |
|---------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| -   | Seal-N-Cut®                  a family of endoscopic instruments used in monopolar and bipolar                  vessel                  and tissue cutting and sealing. |
|---------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Boston          Scientific Agreement**

**ITEM          1A. Risk factors**

**Manufacturing,          Marketing and Distribution**

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**Competition**

**Government          Regulation**

**United          States **

| ·   | Product                    development.              |
|--------------------|------------------------------------------------------|
| ·   | Product                    testing.                  |
| ·   | Product                    labeling.                 |
| ·   | Product                    storage.                  |
| ·   | Pre-market                    clearance or approval. |
| ·   | Advertising                    and promotion.        |
| ·   | Product                    traceability, and         |
| ·   | Product                    indications.              |

----

**Manufacturing**

| ·   | Quality                    System Regulations.                                                                 |
|--------------------|----------------------------------------------------------------------------------------------------------------|
| ·   | Medical                    device reporting regulations, and                                                   |
| ·   | FDA                    restrictions on promoting products for unapproved or off-label                    uses. |

**International          Regulation**

| ·   | Description                    of the device and its components,                                                   |
|--------------------|--------------------------------------------------------------------------------------------------------------------|
| ·   | Safety                    and performance of the device,                                                           |
| ·   | Clinical                    evaluations with respect to the device,                                                |
| ·   | Methods,                    facilities and quality controls used to manufacture the device,                    and |
| ·   | Proposed                    labeling for the device.                                                               |

| ·   | Results                    of bench and laboratory tests, animal studies, and clinical                    studies,                                                                                |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | A                    complete description of the device and its components,                                                                                                                       |
| ·   | A                    detailed description of the methods, facilities and controls                    used to                    manufacture the device, and proposed                    labeling. |

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**Patents          and Trademarks**

**Liability          and Insurance**

**Adverse          Weather**

**Research          and Development**

**Employees**

**Significant          Subsidiaries **

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**ITEM          1B. UNRESOLVED STAFF COMMENTS**

**ITEM          2. Description of Properties**

**ITEM          3. Legal Proceedings**

**ITEM          4. Submission of Matters to a Vote of Security          Holders**

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**PART          II**

**ITEM          5. Market for Registrant’s Common Equity and Related Stockholder          Matters**

| 2006                           |   | High   |   | Low    |
|--------------------------------|--------|--------|--------|--------|
|                           |   |   |   |   |
| 1st                    Quarter | $      | 3.70   | $      | 2.89   |
| 2nd                    Quarter |   | 6.85   |   | 2.85   |
| 3rd                    Quarter |   | 9.23   |   | 6.01   |
| 4th                    Quarter |   | 10.14  |   | 6.61   |
|                           |   |   |   |   |
| 2005                           |   | High   |   | Low    |
|                           |   |   |   |   |
| 1st                    Quarter | $      | 3.05   | $      | 2.20   |
| 2nd                    Quarter |   | 2.54   |   | 1.95   |
| 3rd                    Quarter |   | 2.44   |   | 1.60   |
| 4th                    Quarter |   | 2.99   |   | 2.05   |

**Dividend          Policy**

**ITEM          6.****Selected          Financial Data**

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|                                                                 |   | **2006**                    |   | **2005**                    |   | **2004**                    |   | **2003**                    |   | **2002**                    |
|----------------------------------------------------------------------|--------|-----------------------------|--------|-----------------------------|--------|-----------------------------|--------|-----------------------------|--------|-----------------------------|
|                                                                 |   |                        |   |                        |   |                        |   |                        |   |                        |
| Sales,                    net                                        |   | $                    26,676 |   | $                    20,211 |   | $                    20,495 |   | $                    16,551 |   | $                    12,447 |
| Cost                    of sales                                     |   | 16,075                      |   | 12,649                      |   | 12,638                      |   | 9,435                       |   | 7,191                       |
|                                                                 |   |                        |   |                        |   |                        |   |                        |   |                        |
| Gross                    Profit                                      |   | 10,601                      |   | 7,562                       |   | 7,857                       |   | 7,116                       |   | 5,256                       |
|                                                                 |   |                        |   |                        |   |                        |   |                        |   |                        |
| Other                    costs:                                      |   |                        |   |                        |   |                        |   |                        |   |                        |
| Research                    and development                          |   | 1,048                       |   | 986                         |   | 907                         |   | 717                         |   | 694                         |
| Professional                    services                             |   | 520                         |   | 447                         |   | 416                         |   | 393                         |   | 322                         |
| Salaries                    and related costs                        |   | 2,558                       |   | 2,011                       |   | 1,977                       |   | 2,275                       |   | 2,094                       |
| Selling,                    general and administration               |   | 3,712                       |   | 3,553                       |   | 3,249                       |   | 2,937                       |   | 2,497                       |
| Development                    cost - joint venture                  |   | 139                         |   | 161                         |   | 39                          |   | 82                          |   | 124                         |
|                                                                 |   |                        |   |                        |   |                        |   |                        |   |                        |
| Total                    other costs                                 |   | 7,977                       |   | 7,158                       |   | 6,588                       |   | 6,404                       |   | 5,730                       |
|                                                                 |   |                        |   |                        |   |                        |   |                        |   |                        |
| Income                    from operations                            |   | 2,624                       |   | 404                         |   | 1,269                       |   | 712                         |   | (474)                       |
|                                                                 |   |                        |   |                        |   |                        |   |                        |   |                        |
| Other                    income and (expense):                       |   |                        |   |                        |   |                        |   |                        |   |                        |
|                                                                 |   |                        |   |                        |   |                        |   |                        |   |                        |
| Other                    Income                                      |   |                        |   |                        |   | 245                         |   |                        |   |  2                     |
| Interest                    income                                   |   | 103                         |   | 47                          |   | 3                           |   | 3                           |   | 5                           |
| Interest                    expense                                  |   | (16)                        |   | (23)                        |   | (                    15)    |   | (34)                        |   | (48)                        |
|                                                                 |   | 87                          |   | 24                          |   | 233                         |   | (31)                        |   | (41)                        |
|                                                                 |   |                        |   |                        |   |                        |   |                        |   |                        |
| Net                    income before income tax and minority expense |   |  2,711                 |   | 428                         |   | 1,502                       |   |  681                   |   |  (515)                 |
| Minority                    Interest in expense                      |   | 20                          |   | 10                          |   | 10                          |   |                        |   |                        |
|                                                                 |   |                        |   |                        |   |                        |   |                        |   |                        |
| Income                    tax expense                                |   | (942)                       |   | (164)                       |   | (541)                       |   | (246)                       |   | --                          |
| Income                    tax benefit                                |   | 894                         |   | 132                         |   | 541                         |   | 246                         |   | --                          |
|                                                                 |   |                        |   |                        |   |                        |   |                        |   |                        |
| Net                    income (Loss)                                 |   | $                    2,683  |   | $                    406    |   | $                    1,512  |   | $                    681    |   | $                    (515)  |
|                                                                 |   |                        |   |                        |   |                        |   |                        |   |                        |
| Net                    income (Loss) per common share:               |   |                        |   |                        |   |                        |   |                        |   |                        |
| Basic                                                                |   | $                    0.19   |   | $                    0.03   |   | $                    0.11   |   | $                    0.05   |   | $                    (0.04) |
| Diluted                                                              |   | $                    0.16   |   | $                    0.03   |   | $                    0.09   |   | $                    0.05   |   | $                    (0.04) |
|                                                                 |   |                        |   |                        |   |                        |   |                        |   |                        |
| Financial                    position:                               |   |                        |   |                        |   |                        |   |                        |   |                        |
| Cash,                    cash equivalents                            |   | $                    2,953  |   | $                    1,295  |   | $                    2,294  |   | $                    306    |   | $                    379    |
| Working                    capital                                   |   | 8,081                       |   | 5,501                       |   | 5,551                       |   | 3,837                       |   | 3,085                       |
| Total                    assets                                      |   | 16,686                      |   | 11,771                      |   | 11,169                      |   | 9,234                       |   | 8,501                       |
| Long-term                    debt                                    |   | 418                         |   | 0                           |   | 348                         |   | 380                         |   | 412                         |
| Stockholders’                    equity                        |   | $                    14,060 |   | $                    9,802  |   | $                    9,257  |   | $                    7,450  |   | $                    6,491  |

**Year          Ended December 31, **

**(in          thousands, except per share amounts)**

**ITEM          7**.          **Management’s          Discussion and Analysis of Financial Condition and Results of          Operations**

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***Executive          Level Overview***

***Outlook          for 2007***

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**Results          of Operations **

|                                                              | Year                      Ended   |
|-------------------------------------------------------------------|-----------------------------------|
|                                                              | December                      31, | December                      31, | December                      31, |
|                                                              | 2006                              | 2005 | 2004 |
|                                                              |                              |   |   |
| Sales                                                             | 100.0%                            | 100.0% | 100.0% |
| Cost                      of sales                                | 60.3                              | 62.6 | 61.1 |
| Gross                      profit                                 | 39.7                              | 37.4 | 38.9 |
|                                                              |                              |   |   |
| Other                      costs:                                 |                              |   |   |
| R                      & D                                    | 3.9                               | 4.9 | 4.4 |
| Professional                      fees                            | 2.0                               | 2.6 | 2.0 |
| Labor                                                             | 9.6                               | 9.6 | 9.6 |
| SGA                                                               | 13.9                              | 17.6 | 16.4 |
| Development                      cost - joint venture             | 0.5                               | 0.8 | 0.2 |
|                                                              |                              |   |   |
| Total                      other costs                            | 29.9                              | 35.4 | 32.6 |
|                                                              |                              |   |   |
| Income                      from operations                       | 9.8                               | 2.0 | 6.2 |
|                                                              |                              |   |   |
| Other                      income/expense                         | 0.3                               | .1 | 1.2 |
|                                                              |                              |   |   |
| Net                      income before taxes and minority expense | 10.1                              | 2.1 | 7.4 |
|                                                              |                              |   |   |
| Minority                      Interest                            | 0.1                               |   |   |
| Income                      tax expense                           | (3.5)                             | (.8) | (2.2) |
| Income                      tax benefit                           | 3.4                               | .7 | 2.2 |
|                                                              |                              |   |   |
| Net                      income after taxes                       | 10.1                              | 2 | 7.4 |

----

**Comparison          of Fiscal 2006 to Fiscal 2005**

| Net                    Sales (in thousands)                                       |   |   |                        |                        |   |   |                       |   |   | **Percentage** |   |
|-----------------------------------------------------------------------------------|--------|--------|-----------------------------|-----------------------------|--------|--------|----------------------------|--------|--------|----------------|--------|
|                                                                              |   |   |                        |                        |   |   | **Increase**               |   |   | **Change**     |   |
|                                                                              |   |   | **2006**                    | **2005**                    |   |   | **(Decrease)**             |   |   | **2006/2005**  |   |
|                                                                              |   |   |                        |                        |   |   |                       |   |   |           |   |
| Domestic/international                    sales (in                    thousands) |   |   |                        |                        |   |   |                       |   |   |           |   |
|                                                                              |   |   |                        |                        |   |   |                       |   |   |           |   |
| Domestic                                                                          |   |   | $                    23,431 | $                    16,830 |   |   | $                    6,601 |   |   | 39%            |   |
| International                                                                     |   |   | 3,245                       | 3,381                       |   |   | (136)                      |   |   | (4%)           |   |
|                                                                              |   |   |                        |                        |   |   |                       |   |   |           |   |
| Total                    net sales                                                |   |   | $                    26,676 | $                    20,211 |   |   | 6,465                      |   |   | 32%            |   |
|                                                                              |   |   |                        |                        |   |   |                       |   |   |           |   |
| Product                    line sales:                                            |   |   |                        |                        |   |   |                       |   |   |           |   |
| Electrosurgical                                                                   |   |   | 15,531                      | 12,191                      |   |   | 3,340                      |   |   | 27%            |   |
| Cauteries                                                                         |   |   | 5,846                       | 5,462                       |   |   | 384                        |   |   | 7%             |   |
| Other                                                                             |   |   | 5,299                       | 2,558                       |   |   | 2,741                      |   |   | 107%           |   |
|                                                                              |   |   |                        |                        |   |   |                       |   |   |           |   |
| Total                    net sales                                                |   |   | $                    26,676 | $                    20,211 |   |   | $                    6,465 |   |   | 32%            |   |
|                                                                              |   |   |                        |                        |   |   |                       |   |   |           |   |

----

----

**2005          Compared with 2004**

| Net                    Sales (in thousands) |   |   |     |     |   |   |                      |   |   | **Percentage** |   |   |
|---------------------------------------------|--------|--------|----------|----------|--------|--------|---------------------------|--------|--------|----------------|--------|--------|
|                                        |   |   |     |     |   |   | **Increase**              |   |   | **Change**     |   |   |
|                                        |   |   | **2005** | **2004** |   |   | **(Decrease)**            |   |   | **2005/2004**  |   |   |
|                                        |   |   |     |     |   |   |                      |   |   |           |   |   |
|                                        |   |   |     |     |   |   |                      |   |   |           |   |   |
|                                        |   |   |     |     |   |   |                      |   |   |           |   |   |
| Domestic                                    |   | $      | 16,830   | 17,506   |   |   | (676                    ) |   |   | (4)            | %      |   |
| International                               |   |   | 3,381    | 2,989    |   |   | 392                       |   |   | 13             |   |   |
|                                        |   |   |     |     |   |   |                      |   |   |           |   |   |
| Total                    net sales          |   | $      | 20,211   | 20,495   |   |   | (284)                     |   |   | (1)            |   |   |
|                                        |   |   |     |     |   |   |                      |   |   |           |   |   |
| Product                    line sales:      |   |   |     |     |   |   |                      |   |   |           |   |   |
| Electrosurgical                             |   | $      | 12,191   | 12,684   |   |   | (493)                     |   |   | (4)            |   |   |
| Cauteries                                   |   |   | 5,462    | 5,460    |   |   | 2                         |   |   | --             |   |   |
| Other                                       |   |   | 2,558    | 2,351    |   |   | 207                       |   |   | 9              |   |   |
|                                        |   |   |     |     |   |   |                      |   |   |           |   |   |
| Total                    net sales          |   | $      | 20,211   | 20,495   |   |   | (284)                     |   |   | (1)            |   |   |
|                                        |   |   |     |     |   |   |                      |   |   |           |   |   |

----

----

**Product          Development**

**Non-Medical          Products**

**Reliance          on Collaborative, Manufacturing and Selling Arrangements**

----

**Liquidity          and Capital Resources**

|                                                  |   | Payment                    Period |   |
|-------------------------------------------------------|--------|-----------------------------------|--------|
|                                                  | 2007   | 2008                              | 2009   | 2010 |
| Long-term                    debt                     | -0-    | -0-                               | -0-    | -0- |
| Operating                    leases                   | 219    | 223                               | -0-    | -0- |
| Unconditional                    purchase obligations | 5,033  | -0-                               | -0-    | -0- |

|                                                                            |   |      |   | Amount                    of Commitment  |   |
|---------------------------------------------------------------------------------|--------|-----------|--------|------------------------------------------|--------|
|                                                                            |   | Total     |   | Expiration                    Per Period |   |
|                                                                            |   | Amount    |   | Less                    than             |   | In                    excess of |   |
|                                                                            |   | Committed |   | 1                    year                |   | 1                    year |   |
| Secured                    revolving credit agreement and other lines of credit |   | $         | 1.5    |                                     | $      | 1.5 |   |   | -0- |   |

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**Critical          Accounting Estimates**

----

----

**Recent          Accounting Pronouncements**

**ITEM          7A**.**Quantitative          and Qualitative Disclosures about Market Risk**

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**ITEM          8. Financial Statements and supplementary          data**

**ITEM          9. Changes in and Disagreements with Accountants on Accounting          and Financial Disclosure**

**ITEM          9A. Disclosure Controls And          Procedures**

**Part          III**

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**ITEM          10. Directors and Executive Officers****of the Registrant**

| ** Name**                         | **Position                       **                                      | **Director                      Since** |
|----------------------------------------|-------------------------------------------------------------------------------|-----------------------------------------|
| Andrew                      Makrides   | Chairman                      of the Board, President, and CEO                | December                      1982      |
| J.                      Robert Saron   | President                      of Aaron Medical Industries, Inc. and Director | August                      1994        |
| George                      Kromer     | Internal                      Auditor and Director                            | October                      1995       |
| Brian                      Madden      | Director                                                                      | September                      2003     |
| Randy                      Rossi       | Director                                                                      | September                      2004     |
| Michael                      Norman    | Director                                                                      | September                      2004     |
| Moshe                      Citronowicz | Executive                      Vice President and Chief Operating Officer     | September                      2004     |
| Gary                      D. Pickett   | Chief                      Financial Officer                                  | --                                      |
| Vera                      MacElroy     | Secretary/Director                      of Human Resources                    | --                                      |
|                                   |                                                                          |                                    |

----

----

**ITEM          11. Executive Compensation **

**Summary          Compensation Table**

| NameAnd                      PrincipalPosition                                                 | Year         | Salary($)                                                                                     | Bonus($)        | StockAwards($) | OptionAwards($) | Non-EquityIncentivePlanCompensa-TionEarnings($) | Change                      inPensionValue                      andNonquali-FiedDeferredCompensa-TionEarnings($) | AllOtherCompen-Sation($) | Total($)                 |
|------------------------------------------------------------------------------------------------|--------------|-----------------------------------------------------------------------------------------------|-----------------|----------------|-----------------|-------------------------------------------------|------------------------------------------------------------------------------------------------------------------|--------------------------|--------------------------|
| (a)                                                                                            | (b)          | (c)                                                                                           | (d)             | (e)            | (f)             | (g)                                             | (h)                                                                                                              | (i)                      | (j)                      |
| Andrew                      MakridesPresident,                      CEO, Chairman of the Board | 200620052004 |                              $223,668* (1)$186,418$167,326 | 3,6853,4283,189 | 000            | 056,25053,250   | 000                                             | 000                                                                                                              | 000                      | $227,373$246,096$223,759 |
| Gary                      D.PickettChief                      FinancialOfficer                 | 200620052004 |                              $66,442* (4)00                | 1,73100         | 000       | 000             | 000                                             | 000                                                                                                              | 000                      | $68,17300                |
| J.                      Robert SaronPresidentAaronMedical                      andDirector     | 200620052004 |                              $287,419* (2)$256,173$233,036 | 5,2184,8544,515 | 000            | 056,25053,250   | 000                                             | 000                                                                                                              | 000                      | $292,637$317,277$290,801 |
| MosheCitronowiczVicePresidentChief                      OperatingOfficer                       | 200620052004 |                              $249,257* (3)$193,451$170,766 | 3,8343,5673,318 | 000            | 056,25053,250   | 000                                             | 000                                                                                                              | 000                      | $253,091$253,268$227,334 |
| VeraMacElroySecretaryDirector                      ofHumanResources                            | 200620052004 |                             $68,394* (5)$62,612$59,817          | 1,3501,2501,133 | 000            | 000             | 000                                             | 000                                                                                                              | 000                      | $69,744$63,862$60,950    |

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|     Plan                      category              |                    Number                    of Securitiesto                    be issued uponexercise                    ofoutstanding                    options, |                    Weighted-averageexercise                    price ofoutstanding                    options,warrants                    and rights |                    Number                    of securitiesremaining                    availablefor                    future issuanceunder                    equitycompensation                    plans |
|-------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                    |                                                                                                                                                                     |                                                                                                                                                      |                                                                                                                                                                                                            |
| Equity                  compensation Plans approved by Security holders |                                 3,203,700                                                                    |  $1.49                                                                                                                                               |  66,000                                                                                                                                                                                                    |
|                                                                    |                                                                                                                                                                     |                                                                                                                                                      |                                                                                                                                                                                                            |
|  Total                                                             | 3,203,700                                                                                                                                                                | $1.49                                                                                                                                                     | 66,000                                                                                                                                                                                                     |

----

| (a)                                                            | (b)                                                | (c)                                   | (d)                                                                                                                                        | (e)                                                                                                          |
|----------------------------------------------------------------|----------------------------------------------------|---------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------|
| Name                                                           | Shares                    Acquired on Exercise (#) | Value                    Realized ($) | Number                    of Securities Underlying Unexercised Options/SARs at December                    31, 2006                    (#) | Value                    of Unexercised In-the Money Options/SARs at December 31,                    2006($) |
|                                                           |                                               |                                  |                                                                                                                                       |
| Exercisable                                                    | Unexercisable                                      | Exercisable                           | Unexercisable                                                                                                                              |
| Andrew                    Makrides                             | 70,000                                             | $453,300                              | 465,000                                                                                                                                    | -                                                                                                            | $                    4,217,550 | - |
| George                    Kromer                               | 70,000                                             | 372,400                               | 370,000                                                                                                                                    | -                                                                                                            | 3,355,900 | - |
| Moshe                    Citronowicz                           | -0-                                                | -                                     | 465,000                                                                                                                                    | -                                                                                                            | 4,217,550 | - |
| Rob                    Saron                                   | 34,340                                             | 254,603                               | 232,500                                                                                                                                    | -                                                                                                            | 2,108,775 | - |
| Brian                    Madden                                | -                                                  | -                                     | 85,000                                                                                                                                     | -                                                                                                            | 770,950 | - |
| Michael                    Norman                              | -                                                  | -                                     | 60,000                                                                                                                                     | -                                                                                                            | 544,200 | - |
| Gary                    D. Pickett                             | -                                                  | -                                     |                                                                                                                                       | -                                                                                                            |   | - |
| Randy                    RossiVera                    MacElroy | --                                                 | --                                    | 50,0005,000                                                                                                                                | -                                                                                                            | 453,50045,350 | - |
|                                                           |                                               |                                  |                                                                                                                                       |                                                                                                         |   |   |
|                      Total                                | 174,340                                            | $1,080,303                            | 1,727,500                                                                                                                                  | -                                                                                                            | $                    15,713,775 | - |

----

| Name          | FeesEarnedOr                    PaidIn                    Cash($) | StockAwards($) | OptionAwards($) | Non-EquityIncentivePlanCompensa-tion($) | Change                    in PensionValue                    andNonqualifiedDeferredCompensationEarnings($) | AllOtherCompensa-tion($) | Total($) |
|---------------|-------------------------------------------------------------------|----------------|-----------------|-----------------------------------------|-------------------------------------------------------------------------------------------------------------|--------------------------|----------|
| (a)           | (b)                                                               | (c)            | (d)             | (e)                                     | (f)                                                                                                         | (g)                      | (h)      |
| BrianMadden   | 0                                                                 | 0              | 0               | 0                                       | 0                                                                                                           | 0                        | 0        |
| MichaelNorman | 0                                                                 | 0              | 0               | 0                                       | 0                                                                                                           | 0                        | 0        |
| RandyRossi    | 0                                                                 | 0              | 0               | 0                                       | 0                                                                                                           | 0                        | 0        |

| (a)   | Upon                  the death of the Executive and the Executive’s estate shall be paid the                  basic annual compensation due the Employee pro-rated through the                  date of                  termination. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b)   | By                  the Resignation of the Executive at any time upon at least thirty                  (30)                  days prior written notice to Bovie; and Bovie shall be obligated                  to pay                  the Employee the basic annual compensation due him pro-rated to                  the                  effective date of termination, |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (c)   | By                  Bovie, for cause if during the term of the Employment Agreement                  the                  Employee violates the provisions of Paragraph 12 hereof, or is                  found                  guilty in a court of law of any crime of moral                  turpitude. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (d)   | By                  Bovie, without cause, with the majority approval of the Board of                  Directors, at any time upon at least thirty (30) days prior written                  notice                  to the Executive: and Bovie shall be obligated to pay the Executive                  compensation currently in effect including all bonuses, accrued                  or                  prorate, and expenses up to the date of termination. Thereafter,                  for the                  period remaining under the contract, Bovie shall pay the Executive                  the                  salary then in effect at the |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (e)   | If                  Bovie terminates the agreement, without cause, or fails to meet                  its                  obligations to the Executive on a timely basis, or if there is                  a change in                  the control of Bovie, the Executive may elect to terminate his                  employment                  agreement. Upon any such termination or breach of any of its obligations                  under the Employment Agreement, Bovie shall pay the Executive a                  lump sum                  severance equal to three times the annual salary and bonus in effect                  the                  month preceding such termination or breach as well as any other                  sums which                  may be due under the terms of the Employment Agreement up to the                  date of                  termination. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Bovie                    Medical Corporation |
|----------------------------------------------|
| December                    31, 2006         |
|                                         |   |   |   |   |
|                                         | Contract | Expiration | Current | Auto |
|                                         | Date | Date(1) | Base                    Pay | Allowance |
|                                         |   |   |   |   |
| Andrew                    Makrides           | 01/01/98 | 1/31/2011(1) | $186,091 | $                    6,310 |
| J.                    Robert Saron           | 01/01/98 | 1/31/2011(1) | 263,406 | 6,310 |
| Moshe                    Citronowicz         | 01/01/98 | 1/31/2011(1) | 193,507 | 6,310 |
| Steve                    Livneh              | 10/02/06 | 11/01/2009(2) | 150,000 | 6,310 |

| (1)   | Includes                  total extensions for eight years- Salaries increase annually pursuant                  to a                  contract formula. In the event of a change in control, each officers’                  contract contains an option for each respective officer to resign                  and                  receive 3 years salary. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**ITEM          12. Section 16(a) Beneficial Ownership Reporting          Compliance**

|                                        |  Number                    of Shares |                             |       |
|---------------------------------------------|-------------------------------------------|----------------------------------|------------|
|                                        | Nature                    of              | Percentage                    of |
| Name                    and Address         | Title                                     | Owned                    (i)     | Ownership  | Ownership(i) |
| The                    Frost National Bank  | Common                                    | 1,000,000                        | Beneficial | 6.6% |
| FBO                    Renaissance          |                                      |                             |       |   |
| US                    Growth Investment     |                                      |                             |       |   |
| Trust                    PLC.               |                                      |                             |       |   |
| Trust                    no. W00740100      |                                      |                             |       |   |
|                                        |                                      |                             |       |   |
| The                    Frost National Bank  | Common                                    | 1,000,000                        | Beneficial | 6.6% |
| FBO,                    BFS US Special      |                                      |                             |       |   |
| Opportunities                    Trust PLC. |                                      |                             |       |   |
| Trust                    no. W00118000      |                                      |                             |       |   |

----

|                                                                                                                                        |         |                                 |             |    |
|---------------------------------------------------------------------------------------------------------------------------------------------|--------------|--------------------------------------|------------------|---------|
| Bjurman                    Barry & Associates                                                                                           | Common       | 790,731                              | Institutional    | 5.2%    |
|                                                                                                                                        |         |                                 |             |    |
|                                                                                                                                        |         |                                 |             |    |
| **Directors                    and Officers**                                                                                               |         |                                 |             |    |
| Andrew                    Makrides734                    Walt Whitman RoadMelville,                    NY 11746                             | Common       | 850,800(ii)                          | Beneficial       | 5.6%    |
|                                                                                                                                        |         |                                 |             |
|                                                                                                                                        |         |                                 |             |
|                                                                                                                                        |         |                                 |             |    |
| George                    KromerP.O.                    Box 188Farmingville,                    NY 11738                                    | Common       | 440,000(iii)                         | Beneficial       | 2.9%    |
|                                                                                                                                        |         |                                 |             |
|                                                                                                                                        |         |                                 |             |
| J.                    Robert Saron7100                    30th                    Avenue NorthSt.                    Petersburg, FL 33710   | Common       | 399,681(iv)                          | Beneficial       | 2.6%    |
|                                                                                                                                        |         |                                 |             |
|                                                                                                                                        |         |                                 |             |
|  Brian                    Madden300                    Garden City PlazaGarden                    City, NY 11530                       |  Common | 85,000                    (vi)       |  Beneficial | .6%     |
|                                                                                                                                        |         |                                 |             |
|                                                                                                                                        |         |                                 |             |    |
| Mike                    Norman                                                                                                              | Common       | 60,000(vii)                          | Beneficial       | .4%     |
| 410                    Jericho Tpke.                                                                                                        |         |                                 |             |    |
| Jericho,                    NY                                                                                                              |         |                                 |             |    |
|                                                                                                                                        |         |                                 |             |    |
| Randy                    Rossi                                                                                                              | Common       | 50,000(viii)                         | Beneficial       | .4%     |
| 2641                    Kelliwood Circle                                                                                                    |         |                                 |             |    |
| Shrevesport,                    LA                                                                                                          |         |                                 |             |    |
|                                                                                                                                        |         |                                 |             |    |
| Moshe                    Citronowicz7100                    30th                    Avenue NorthSt.                    Petersburg, FL 33710 | Common  | 639,591                    (v)  | Beneficial  | 4.2%    |
|                                                                                                                                        |         |                                 |             |    |
| Gary                    Pickett                                                                                                             | -            | -                                    | -                | -       |
| 7100                    30th                    Avenue NorthSt.                    Petersburg, FL 33710                                     |         |                                 |             |    |
| Vera                    MacElroy7100                    30th                    Avenue NorthSt.                    Petersburgh, FL 33710    | Common  | 16,000                    (ix)  | Beneficial  | -  |
|                                                                                                                                        |         |                                 |             |    |
| Officers                    and Directors as a group (9 Persons)                                                                            |         | 2,541,072(x)                         |             | 16.8%   |

----

**ITEM          13. Certain Relationships and Related          Transactions**

**Recent          Developments**

----

**ITEM          14. Principal Accountant Fees And          Services**

|                                          |   | 2006   |    | 2005   |   |
|-----------------------------------------------|--------|--------|---------|--------|--------|
| Audit                    Fees (1)             |   | $      | 114,694 |   | $      | 130,027 |   |
|                                          |   |   |    |   |   |   |   |
| Non-Audit                    Fees:            |   |   |    |   |   |   |   |
| Related                    Fees(2)            |   |   | 2,000   |   |   | 25,000 |   |
| Tax                    Fees(3)                |   |   | 8,000   |   |   | 5,000 |   |
| All                    other Fees(4)          |   |   | --      |   |   | -- |   |
| Total                    Fees paid to Auditor |   | $      | 124,694 |   | $      | 160,027 |   |

----

**Audit          Committee**

**SIGNATURES**

|   | Bovie                    Medical Corporation     |
|--------|--------------------------------------------------|
|   |                                             |
|   | By:                    /s/ Andrew Makrides  |
|   | Andrew                    Makrides               |
|   | President                                        |
|   | Chairman                    of the Board         |
|   |                                             |

|   | Bovie                    Medical Corporation |
|--------|----------------------------------------------|
|   |                                         |
|   | /s/Gary                    D. Pickett        |
|   | Gary                    D. Pickett           |
|   | Chief                    Financial Officer   |
|   |                                         |

----

----

**PART          II**

**ITEM          15. Exhibits and Financial Statement          Schedules**

**ITEM          15A. Financial Statements**

**BOVIE          MEDICAL CORPORATION INDEX **

**TO          FINANCIAL STATEMENTS**

| Contents                                                                                                                                                            |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                                |   |
| Independent                    Auditors' Report                                                                                                                     |   |
|                                                                                                                                                                |   |
| Consolidated                    Balance Sheet at December 31, 2006                    and 2005                                                                 | F-1    |
|                                                                                                                                                                |   |
| Consolidated                    Statements of Operations for the years ended December 31, 2006,                    2005 and                    2004            | F-3    |
|                                                                                                                                                                |   |
| Consolidated                    Statements of Shareholders' Equity for the years ended December                    31, 2006,                    2005 and 2004  | F-4    |
|                                                                                                                                                                |   |
| Consolidated                    Statements of Cash Flows for the years ended December 31, 2006,                    2005 and                    2004            | F-5    |
|                                                                                                                                                                |   |
| Notes                    to Consolidated Financial Statements                                                                                                  | F-7    |
|                                                                                                                                                                |   |
| Consent                    of Certified Public                    Accountant                                                                                        |   |

----

**ITEM          15B.  Exhibit s List and Reports on Form 8K**

| Exhibit                    4.2   | Registration                    Rights Agreement dated May 8, 1998                                                                                                                               |
|----------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Exhibit                    4.3   | Assignment                    of Registration Rights Agreement dated September, 2004                                                                                                             |
| Exhibit                    10.1  | Joint                    Venture Agreement dated February 25, 2000 Between                    Bovie Medical Corporation and Jump Agentur fur Elektrotechnik                    GmBH              |
| Exhibit                    10.2  | Agreement                    between Bovie Medical Corporation and Arthrex Inc. dated June                    2002                                                                               |
| Exhibit                    10.3  | Distribution                    and Service Center Agreement  between Bovie Medical Corp and                    Symbol Medical                    Limited dated December 31, 2004 |
| Exhibit                    10.4  | Employment                    Agreement- Andrew Makrides                                                                                                                                         |
| Exhibit                    10.5  | Employment                    Agreement-Robert J. Saron                                                                                                                                          |
| Exhibit                    10.6  | Employment                    Agreement-Moshe Citronowicz                                                                                                                                        |
| Exhibit                    10.7  | Amended                    Employment Agreement between Bovie and Andrew Makrides dated                    as of January                    6, 2004.                                             |
| Exhibit                    10.8  | Amended                    Employment Agreement between Bovie and J. Robert Saron dated                    as of January                    6, 2004.                                             |
| Exhibit                    10.9  | Amended                    Employment Agreement between Bovie and Moshe Citronowicz dated                    as of                    January 6, 2004.                                           |
| Exhibit                    10.10 | License                    Agreement between Bovie and Emergency Medicine Innovations, LLC                    dated                    October 22, 2004.                                         |
| Exhibit                    10.11 | Consulting                    and Intellectual Property Assignment Agreement dated January                    12, 2006                    among Bovie, Henvil Corp. Ltd and Steve Livneh.        |
| Exhibit                    21.1  | Consent                    of Bloom & Co., LLP                                                                                                                                               |
| Exhibit                    31.1  | Certification                    pursuant to Section 302 of Sarbanes-Oxley Act of 2002.                                                                                                          |
| Exhibit                    31.2  | Certification                    pursuant to Section 302 of Sarbanes-Oxley Act of 2002.                                                                                                          |
| Exhibit                    32.1  | Certification                    pursuant to Section 906 of Sarbanes-Oxley Act of 2002.                                                                                                          |
| Exhibit                    32.2  | Certification                    pursuant to Section 906 of Sarbanes-Oxley Act of 2002.                                                                                                          |
| _____________________            |                                                                                                                                                                                             |

----

| BLOOM                    & CO., LLP 50 CLINTON STREET. HEMPSTEAD. NEW YORK 11550:                                         | TEL:                    516 - 486-5900                                                            |
|-------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------|
| CERTIFIED                    PUBLIC ACCOUNTANTS                                                                               | FAX:                    516 - 486-5476                                                            |
|                                                                                                                          |                                                                                              |
| STEVEN                    BLOOM, CPAFREDERICK                    PAUKER, CPASIROUSSE                    TABRIZTCHI, Ph.D. CPA | MEMBER                    OF AMERICAN INSTITUTE OFCERTIFIED                    PUBLIC ACCOUNTANTS |

**REPORT          OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

----

**BOVIE          MEDICAL CORPORATION**

**CONSOLIDATED          BALANCE SHEET**

**DECEMBER          31, 2006 AND 2005**

**ASSETS**

|                                                                                                           |   | 2006    |       | 2005   |    |
|----------------------------------------------------------------------------------------------------------------|--------|---------|------------|--------|---------|
| Current                    assets:                                                                             |   |    |       |   |    |
|                                                                                                           |   |    |       |   |    |
| Cash                                                                                                           |   | $       | 2,952,892  |   | $       | 1,295,266 |   |
| Trade                    accounts receivable, net                                                              |   |    | 2,817,557  |   |    | 2,316,761 |   |
| Inventories                                                                                                    |   |    | 3,609,301  |   |    | 2,996,832 |   |
| Prepaid                    expenses                                                                            |   |    | 402,423    |   |    | 335,492 |   |
| Deferred                    tax asset                                                                          |   |    | 386,200    |   |    | 386,200 |   |
|                                                                                                           |   |    |       |   |    |   |   |
|                                                                                                           |   |    |       |   |    |   |   |
| Total                    current assets                                                                        |   |    | 10,168,373 |   |    | 7,330,551 |   |
|                                                                                                           |   |    |       |   |    |   |   |
| Property                    and equipment, net                                                                 |   |    | 3,217,020  |   |    | 2,595,641 |   |
|                                                                                                           |   |    |       |   |    |   |   |
| Other                    assets:                                                                               |   |    |       |   |    |   |   |
|                                                                                                           |   |    |       |   |    |   |   |
|                                                                                                           |   |    |       |   |    |   |   |
| Brand                    name/Trademark                                                                        |   |    | 1,509,662  |   |    | 1,509,662 |   |
| Purchased                    technology, net                                                                   |   |    | 1,529,330  |   |    | 33,663 |   |
| License                    rights                                                                              |   |    | 240,000    |   |    | 280,000 |   |
| Deposits                                                                                                       |   |    | 21,215     |   |    | 21,215 |   |
|                                                                                                           |   |    |       |   |    |   |   |
|                                                                                                           |   |    |       |   |    |   |   |
|                                                                                                           |   |    | 3,300,207  |   |    | 1,844,540 |   |
|                                                                                                           |   |    |       |   |    |   |   |
|                                                                                                           |   |    |       |   |    |   |   |
| Total                    Assets                                                                                |   |  $ | 16,685,600 |   | $  | 11,770,732 |   |
|                                                                                                           |   |    |       |   |    |   |   |
|                                                                                                           |   |    |       |   |    |   |   |
| The                    accompanying notes are an integral part of the financial                    statements. |   |    |       |   |    |   |   |

----

**BOVIE          MEDICAL CORPORATION**

**CONSOLIDATED          BALANCE SHEET**

**DECEMBER          31, 2006 AND 2005**

**(Continued)**

**LIABILITIES          AND STOCKHOLDERS' EQUITY**

**LIABILITIES**

| Current                    liabilities:                                                                                                                                                                                                        |   | 2006   |        | 2005   |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|-------------|--------|--------|
|                                                                                                                                                                                                                                           |   |   |        |   |   |
| Accounts                    payable                                                                                                                                                                                                            |   | $      | 916,253     |   | $      | 868,212 |   |
| Accrued                    expenses and other liabilities                                                                                                                                                                                      |   |   | 743,768     |   |   | 471,006 |   |
| Customers                    deposits                                                                                                                                                                                                          |   |   | 91,198      |   |   | -- |   |
| Deferred                    Revenue                                                                                                                                                                                                            |   |   | 173,986     |   |   | 141,586 |   |
| Current                    maturities of long term debt                                                                                                                                                                                        |   |   | 161,948     |   |   | 348,328 |   |
|                                                                                                                                                                                                                                           |   |   |        |   |   |   |   |
| Total                    current liabilities                                                                                                                                                                                                   |   |   | 2,087,153   |   |   | 1,829,132 |   |
|                                                                                                                                                                                                                                           |   |   |        |   |   |   |   |
| Mortgage                    Payable-Non current                                                                                                                                                                                                |   |   |        |   |   | -- |   |
| Liability                    for purchased assets                                                                                                                                                                                              |   |   | 418,150     |   |   |   |   |
| Minority                    interest                                                                                                                                                                                                           |   |   | 120,000     |   |   | 140,000 |   |
| Stockholders'                    equity:                                                                                                                                                                                                       |   |   |        |   |   |   |   |
|                                                                                                                                                                                                                                           |   |   |        |   |   |   |   |
| Preferred                    stock 10,000,000 sharesauthorized,                    none outstanding                                                                                                                                            |   |   |        |   |   |   |   |
|                                                                                                                                                                                                                                           |   |   |        |   |   |   |   |
| Common                    stock par value $.001;40,000,000                    shares authorized, 15,223,538 and 14,040,728issued                    and outstanding on December 31, 2006 andDecember                    31, 2005 respectively, |   |   | 15,241      |   |   | 14,059 |   |
| Additional                    paid in capital                                                                                                                                                                                                  |   |   | 22,104,399  |   |   | 20,530,090 |   |
| Accumulated                    deficit                                                                                                                                                                                                         |   |   | (8,059,343) |   |   | (10,742,549) | ) |
|                                                                                                                                                                                                                                           |   |   |        |   |   |   |   |
| Total                    stockholders' equity                                                                                                                                                                                                  |   |   | 14,060,297  |   |   | 9,801,600 |   |
|                                                                                                                                                                                                                                           |   |   |        |   |   |   |   |
| Total                    liabilities and stockholders' equity                                                                                                                                                                                  |   | $      | 16,685,600  |   | $      | 11,770,732 |   |
|  The                    accompanying notes are an integral part of the financial                    statements.                                                                                                                           |   |   |        |   |   |   |   |

----

**BOVIE          MEDICAL CORPORATION**

**CONSOLIDATED          STATEMENT OF OPERATIONS**

**FOR          THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004**

|                                                                                                           | 2006                            |   |   | 2005                         |   | 2004                           |
|----------------------------------------------------------------------------------------------------------------|---------------------------------|--------|--------|------------------------------|--------|--------------------------------|
|                                                                                                           |                            |   |   |                         |   |                           |
| Sales,                    net                                                                                  | $                    26,676,182 |   |   | $20,211,141                  |   | $20,495,101                    |
| Cost                    of sales                                                                               | 16,075,426                      |   |   | 12,649,209                   |   | 12,638,161                     |
| Gross                    Profit                                                                                | 10,600,756                      |   |   | 7,561,932                    |   | 7,856,940                      |
|                                                                                                           |                            |   |   |                         |   |                           |
| Other                    costs:                                                                                |                            |   |   |                         |   |                           |
| Research                    and development                                                                    | 1,048,175                       |   |   | 985,807                      |   | 907,389                        |
| Professional                    services                                                                       | 519,861                         |   |   | 447,346                      |   | 415,606                        |
| Salaries                    and related costs                                                                  | 2,558,170                       |   |   | 2,010,599                    |   | 1,977,053                      |
| Selling,                    general and administration                                                         | 3,711,795                       |   |   | 3,553,022                    |   | 3,249,050                      |
| Development                    cost - joint venture                                                            | 138,913                         |   |   | 161,190                      |   | 39,286                         |
| Total                    other costs                                                                           | 7,976,914                       |   |   | 7,157,964                    |   | 6,588,384                      |
|                                                                                                           |                            |   |   |                         |   |                           |
| Income                    from operations                                                                      | 2,623,842                       |   |   | 403,968                      |   | 1,268,556                      |
|                                                                                                           |                            |   |   |                         |   |                           |
| Other                    income and (expense):                                                                 |                            |   |   |                         |   |                           |
| Gain                    from involuntary conversion of fixed assets                                            |                            |   |   |                         |   | 245,264                        |
| Interest                    income                                                                             | 103,088                         |   |   | 46,959                       |   | 3,263                          |
| Interest                    expense                                                                            | (16,157)                        |   |   | (22,703)                     |   | (                    15,090    |
|                                                                                                           | 86,931                          |   |   | 24,256                       |   | 233,437                        |
|                                                                                                           |                            |   |   |                         |   |                           |
| Net                    income before income tax and minority expense                                           | 2,710,773                       |   |   | 428,224                      |   | 1,501,993                      |
| Minority                    Interest in expense                                                                | 20,000                          |   |   | 10,000                       |   | 10,000                         |
| Income                    tax expense                                                                          | (941,458)                       |   |   | (164,016)                    |   | (541,000                       |
| Income                    tax benefit                                                                          | 893,891                         |   |   | 132,000                      |   | 541,000                        |
|                                                                                                           |                            |   |   |                         |   |                           |
| Net                    income                                                                                  | $                    2,683,206  |   |   | $                    406,208 |   | $                    1,511,993 |
|                                                                                                           |                            |   |   |                         |   |                           |
| Basic                    earnings per common share                                                             | $                    0.19       |   |   | $                    0.03    |   | $                    0.11      |
|                                                                                                           |                            |   |   |                         |   |                           |
| Diluted                    earnings per common share                                                           | $                    0.16       |   |   | $                    0.03    |   | $                    0.09      |
|                                                                                                           |                            |   |   |                         |   |                           |
| Weighted                    average number                                                                     |                            |   |   |                         |   |                           |
| of                    common shares outstanding                                                                | 14,537,025                      |   |   | 13,923,134                   |   | 13,755,552                     |
|                                                                                                           |                            |   |   |                         |   |                           |
| Incremental                    items:                                                                          |                            |   |   |                         |   |                           |
| Stock                    options                                                                               | 2,372,078                       |   |   | 1,827,150                    |   | 2,422,329                      |
|                                                                                                           |                            |   |   |                         |   |                           |
| Diluted                    weighted average                                                                    |                            |   |   |                         |   |                           |
| common                    shares outstanding                                                                   | 16,909,103                      |   |   | 15,750,284                   |   | 16,177,881                     |
| The                    accompanying notes are an integral part of the financial                    statements. |                            |   |   |                         |   |                           |

----

**BOVIE          MEDICAL CORPORATION**

**CONSOLIDATED          STATEMENT OF SHAREHOLDERS EQUITY**

**FOR          THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004**

|                                                      |        |       |                        |                            |                              |                            |
|-----------------------------------------------------------|-------------|------------|-----------------------------|---------------------------------|-----------------------------------|---------------------------------|
|                                                      | Options     | Common     | Paid-                       |                            |                              |
|                                                      | Outstanding | Shares     | Value                       | in                    Capital   | Deficit                           | Total                           |
| January                    1, 2004                        | 3,988,800   | 13,464,528 | $                    13,482 | $                    20,097,095 | $                    12,660,750)  | $                    7,449,827  |
|                                                      |        |       |                        |                            |                              |                            |
| Options                    granted                        | 370,000     | --         | --                          | --                              | --                                | --                              |
|                                                      |        |       |                        |                            |                              |                            |
| Options                    exercised                      | (397,600)   | 397,600    | 399                         | 294,312                         | --                                | 294,711                         |
|                                                      |        |       |                        |                            |                              |                            |
| Options                    forfeited                      | (10,000)    | --         | --                          | --                              | --                                | --                              |
|                                                      |        |       |                        |                            |                              |                            |
| Income                    for period                      | --          | --         | --                          | --                              | 1,511,993                         | 1,511,993                       |
|                                                      |        |       |                        |                            |                              |                            |
| December                    31, 2004                      | 3,951,200   | 13,862,128 | $                    13,881 | $                    20,391,407 | $                    (11,148,757) | $                    9,256,531  |
|                                                      |        |       |                        |                            |                              |                            |
| Options                    granted                        | 427,500     |       |                        |                            |                              |                            |
|                                                      |        |       |                        |                            |                              |                            |
| Options                    exercised                      | (178,600)   | 178,600    | 178                         | 138,683                         |                              | 138,861                         |
|                                                      |        |       |                        |                            |                              |                            |
| Options                    forfeited                      | (31,230)    |       |                        |                            |                              |                            |
|                                                      |        |       |                        |                            |                              |                            |
| Income                    for period                      |        |       |                        |                            | 406,208                           | 406,208                         |
|                                                      |        |       |                        |                            |                              |                            |
| December                    31, 2005                      |        |       |                        |                            |                              |                            |
|                                                      | 4,168,870   | 14,040,728 | $                    14,059 | $                    20,530,090 | $                    (10,742,549) | $                    9,801,600  |
|                                                      |        |       |                        |                            |                              |                            |
| Options                    granted                        | 120,000     |       |                        |                            |                              |                            |
|                                                      |        |       |                        |                            |                              |                            |
| Options                    exercised                      | (982,810)   | 982,810    | 982                         | 794,944                         |                              | 795,926                         |
|                                                      |        |       |                        |                            |                              |                            |
| Options                    forfeited                      | (102,360)   |       |                        |                            |                              |                            |
|                                                      |        |       |                        |                            |                              |                            |
| Stock                    based compensation               |        |       |                        | 41,097                          |                              | 41,097                          |
|                                                      |        |       |                        |                            |                              |                            |
| Stock                    options issued to acquire assets |        |       |                        | 63,300                          |                              | 63,300                          |
|                                                      |        |       |                        |                            |                              |                            |
| Stock                    issued to acquire assets         |        | 200,000    | 200                         | 674,968                         |                              | 675,168                         |
|                                                      |        |       |                        |                            |                              |                            |
| Income                    for period                      |        |       |                        |                            | 2,683,206                         | 2,683,206                       |
|                                                      |        |       |                        |                            |                              |                            |
| December                    31, 2006                      | 3,203,700   | 15,223,538 | $                    15,241 | $                    22,104,399 | $                    (8,059,343)  | $                    14,060,297 |

----

**BOVIE          MEDICAL CORPORATION**

**CONSOLIDATED          STATEMENT OF CASH FLOWS**

**FOR          THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004**

|                                                                       |                           |   |   |                           |   |   |                           |   |
|----------------------------------------------------------------------------|--------------------------------|--------|--------|--------------------------------|--------|--------|--------------------------------|--------|
|                                                                       | **2006**                       |   |   | **2005**                       |   |   | **2004**                       |   |
| **Cash                    flows from operating activities**:               |                           |   |   |                           |   |   |                           |   |
| Net                    income                                              | $                    2,683,206 |   |   | $                    406,208   |   |   | $                    1,511,993 |   |
| **Adjustments                    to reconcile net income to net cash**     |                           |   |   |                           |   |   |                           |   |
| **provided                    by operating activities:**                   |                           |   |   |                           |   |   |                           |   |
|                                                                       |                           |   |   |                           |   |   |                           |   |
| Depreciation                    and amortization                           | 529,260                        |   |   | 545,876                        |   |   | 395,119                        |   |
| Write                    down of inventories and parts                     |                           |   |   |                           |   |   | 303,872                        |   |
| Involuntary                    conversion & write down of fixed assets | 29,422                         |   |   |                           |   |   | (                    245,264)  |   |
| Stock-based                    compensation                                | 41,098                         |   |   |                           |   |   |                           |   |
| Stock-based                    expense for Henvil asset purchase           | 20,886                         |   |   |                           |   |   |                           |   |
| Restricted                    stock liability for asset purchase           | 418,150                        |   |   |                           |   |   |                           |   |
|                                                                       |                           |   |   |                           |   |   |                           |   |
| **Change                    in assets and liabilities:**                   |                           |   |   |                           |   |   |                           |   |
| Trade                    receivables                                       | (500,796)                      |   |   | (362,474)                      |   |   | (322,106)                      |   |
| Prepaid                    expenses                                        | (66,931)                       |   |   | (                    6,727)    |   |   | 61,260                         |   |
| Inventories                    and parts                                   | (612,469)                      |   |   | (870,832)                      |   |   | 249,503                        |   |
| Accounts                    payable                                        | 118,130                        |   |   | 248,061                        |   |   | (59,641)                       |   |
| Accrued                    expenses                                        | 293,862                        |   |   | (133,476)                      |   |   | 149,251                        |   |
| Deferred                    Revenue                                        | 32,400                         |   |   | (                    16,258)   |   |   | --                             |   |
| Net                    cash (applied to) provided by operations            | 2,986,218                      |   |   | (189,622)                      |   |   | 2,043,987                      |   |
|                                                                       |                           |   |   |                           |   |   |                           |   |
| **Cash                    flows from investing activities:**               |                           |   |   |                           |   |   |                           |   |
| Increase                    in fixed assets                                | (1,130,627)                    |   |   | (908,283)                      |   |   | (606,505)                      |   |
| Decrease                    (Increase) in security deposits                | --                             |   |   | (                    6,770)    |   |   | (                    4,975)    |   |
| Purchase                    of technology                                  | (1,344,343)                    |   |   | (                    2,001)    |   |   | --                             |   |
| Involuntary                    conversion of fixed assets                  |                           |   |   |                           |   |   | 296,735                        |   |
|                                                                       |                           |   |   |                           |   |   |                           |   |
| Net                    cash used in investing activities                   | (2,474,970)                    |   |   | (917,054)                      |   |   | (314,745)                      |   |
|                                                                       |                           |   |   |                           |   |   |                           |   |
| **Cash                    flows from financing activities:**               |                           |   |   |                           |   |   |                           |   |
| Sale                    of common stock                                    | 1,332,840                      |   |   | 138,861                        |   |   | 290,425                        |   |
| Reduction                    in subscription receivable                    |                           |   |   |                           |   |   | 4,286                          |   |
| Reduction                    in mortgage                                   | (348,328)                      |   |   | (31,665)                       |   |   | (35,344)                       |   |
| Notes                    payable                                           | 161,866                        |   |   |                           |   |   |                           |   |
|                                                                       |                           |   |   |                           |   |   |                           |   |
| Net                    cash provided by financing activities               | 1,146,378                      |   |   | 107,196                        |   |   | 259,367                        |   |
|                                                                       |                           |   |   |                           |   |   |                           |   |
| Net                    increase (decrease) in cash                         | 1,657,626                      |   |   | (999,480)                      |   |   | 1,988,609                      |   |
|                                                                       |                           |   |   |                           |   |   |                           |   |
| Cash                    at beginning of year                               | 1,295,266                      |   |   | 2,294,746                      |   |   | 306,137                        |   |
|                                                                       |                           |   |   |                           |   |   |                           |   |
| Cash                    at end of year                                     | $                    2,952,892 |   |   | $                    1,295,266 |   |   | $                    2,294,746 |   |

----

**BOVIE          MEDICAL CORPORATION**

**CONSOLIDATED          STATEMENT OF CASH FLOWS**

**FOR          THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004**

|                                                                                                                 |                        |   |   |                        |   |   |                        |   |
|----------------------------------------------------------------------------------------------------------------------|-----------------------------|--------|--------|-----------------------------|--------|--------|-----------------------------|--------|
| Cash                    paid during the twelve months ended December 31:                                             | **2006**                    |   |   | **2005**                    |   |   | **2004**                    |   |
| Interest                                                                                                             | $                    16,156 |   |   | $                    22,703 |   |   | $                    11,625 |   |
|                                                                                                                 |                        |   |   |                        |   |   |                        |   |
| Income                    Taxes                                                                                      | $                    32,557 |   |   | $                    22,015 |   |   | $                    --     |   |
|                                                                                                                 |                        |   |   |                        |   |   |                        |   |
| The                    accompanying notes are an integral part of the financial                    statements.  |                        |
|                                                                                                                 |                        |   |   |                        |   |   |                        |   |

**BOVIE          MEDICAL CORPORATION AND SUBSIDIARY**

**CONSOLIDATED          STATEMENT OF CASH FLOWS**

**INCREASE          (DECREASE) IN CASH AND CASH EQUIVALENTS**

**FOR          THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004**

**SUPPLEMENTAL          SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:**

**FOR          THE TWELVE MONTHS ENDED DECEMBER 31, 2006, 2005 AND 2004:**

----

**BOVIE          MEDICAL CORPORATION**

**NOTES          TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE          1. DESCRIPTION OF BUSINESS**

**NOTE          2. SIGNIFICANT ACCOUNTING POLICIES**

**Use          of Estimates in the Preparation of Financial Statements**

**Consolidated          Financial Statements**

**Cash          and cash equivalents**

**Fair          Values of Financial Instruments**

**Accounts          Receivable**

----

**BOVIE          MEDICAL CORPORATION**

**NOTES          TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE          2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**

**Inventories          and Repair Parts**

|                                               |   | 2006   |      | 2005   |   |
|----------------------------------------------------|--------|--------|-----------|--------|--------|
| Raw                    materials (net of reserves) |   | $      | 1,640,254 |   | $      | 1,139,730 |   |
| Work                    in process                 |   |   | 1,351,540 |   |   | 1,267,991 |   |
| Finished                    goods                  |   |   | 617,507   |   |   | 589,111 |   |
|                                               |   |   |      |   |   |   |   |
| Total                                              |   | $      | 3,609,301 |   | $      | 2,996,832 |   |

**Notes          Payable**

**Property,          plant and equipment**

----

**BOVIE          MEDICAL CORPORATION**

**NOTES          TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE          2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**

**Goodwill          and Other Intangible Assets**

**Impairment          of Long-Lived Assets**

**Revenue          recognition**

----

**BOVIE          MEDICAL CORPORATION**

**NOTES          TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE          2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**

**Advertising          Costs**

**Net          Earnings Per Common share**

**Research          and Development Costs**

**Research          and Development Costs for Others**

**Income          Taxes**

----

**BOVIE          MEDICAL CORPORATION**

**NOTES          TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE          2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**

**Non-monetary          Transactions**

***FASB          Interpretation No. 46R, Consolidation of Variable Interest Entities - An          Interpretation of ARB51***

*Variable          Interest Entities (VIEs)*
*Special          Purpose Entities (SPEs)*

----

**BOVIE          MEDICAL CORPORATION**

**NOTES          TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE          2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**

***Accounting          for Stock-Based Compensation***

|                                          |   | December                    31, 2006 |   |
|-----------------------------------------------|--------|--------------------------------------|--------|
|                                          |   |                                 |   |
| Cost                    of Sales              |   | $                    3,409           |   |
| Research                    and Development   |   | 25,125                               |   |
| Salaries                    and related costs |   | 12,564                               |   |
|                                          |   |                                 |   |
| Total                                         |   | $                    41,098          |   |

----

**BOVIE          MEDICAL CORPORATION**

**NOTES          TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE          3. TRADE ACCOUNTS RECEIVABLE**

|                                                  |   | 2006   |                         | 2005   |   |
|-------------------------------------------------------|--------|--------|------------------------------|--------|--------|
| Trade                    accounts receivable          |   | $      | 2,904,774                    |   | $      | 2,495,457 |   |
| Less:                    allowance for doubtful accts |   |   | (                    77,217) |   |   | (                    119,490) |   |
| allowance                    for discounts            |   |   | (                    10,000) |   |   | (                    59,206) |   |
|                                                  |   |   |                         |   |   |   |   |
| Trade                    accounts receivable, net     |   | $      | 2,817,557                    |   | $      | 2,316,761 |   |

**NOTE          4. PROPERTY, PLANT AND EQUIPMENT**

|                                                  |   | 2006   |        | 2005   |   |
|-------------------------------------------------------|--------|--------|-------------|--------|--------|
|                                                  |   |   |        |   |   |
| Equipment                                             |   | $      | 1,995,562   |   | $      | 1,297,261 |   |
| Building                                              |   |   | 791,618     |   |   | 791,618 |   |
| Furniture                    and Fixtures             |   |   | 1,221559    |   |   | 1,045,835 |   |
| Leasehold                    Improvements             |   |   | 894,478     |   |   | 731,001 |   |
| Molds                                                 |   |   | 725,165     |   |   | 661,462 |   |
|                                                  |   |   | 5,628,382   |   |   | 4,527,177 |   |
|                                                  |   |   |        |   |   |   |   |
| Less:accumulated                    depreciation      |   |   | (2,411,362) |   |   | (1,931,536) |   |
|                                                  |   |   |        |   |   |   |   |
| Net                    property, plant, and equipment |   | $      | 3,217,020   |   | $      | 2,595,641 |   |
|                                                  |   |   |        |   |   |   |   |

**Property          and Rental Agreements**

| 2007   |   |  $ | 218,522 |   |
|--------|--------|---------|---------|--------|
| 2008   |   |    | 222,870 |   |
| 2009   |   |    | -0-     |   |
| 2010   |   |    | -0-     |   |
| 2011   |   |    | -0-     |   |
|   |   | $       | 441,392 |   |

----

**BOVIE          MEDICAL CORPORATION**

**NOTES          TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE          6. INTANGIBLE ASSETS**

|                                                      |   | 2006   |      | 2005   |    |
|-----------------------------------------------------------|--------|--------|-----------|--------|---------|
| Indefinite                    life assets:                |   |   |      |   |    |
| Brand                    name/Trademark (life indefinite) |   | $      | 1,509,662 |   | $       | 1,509,662 |   |
|                                                      |   |   |      |   |    |   |   |
| Other                    intangibles:                     |   |   |      |   |    |   |   |
|  License                    rights (20yr life)       |   |   | 240,000   |   |    | 280,000 |   |
|                                                      |   |   |      |   |    |   |   |
| Purchased                    technology (5 yr life)       |   | $      | 1,805,864 |   | $       | 280,764 |   |
| Less:                    Accumulated amortization         |   |   | (276,534) |   |    | (247,101) |   |
|                                                      |   |   |      |   |    |   |   |
| Net                    carrying amount                    |   | $      | 1,529,330 |   |  $ | 33,663 |   |

**NOTE          7. LONG-TERM DEBT AND LINE OF CREDIT**

|                                    |   | 2006   |   | 2005   |   |
|-----------------------------------------|--------|--------|--------|--------|--------|
| Mortgage                    payable     |   | $      | -0-    |   | $      | 348,328 |   |
| Line                    of credit- bank |   |   | --     |   |   | -- |   |
|                                    |   |   |   |   |   |   |   |
|                                    |   | $      | -0-    |   | $      | 348,328 |   |

**Mortgage          Payable**

----

**BOVIE          MEDICAL CORPORATION**

**NOTES          TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE          7. LONG-TERM DEBT AND LINE OF CREDIT (CONTINUED)**

**Line          of Credit - Commercial Bank**

**NOTE          8. TAXES AND NET OPERATING LOSS CARRYFORWARDS**

|                                                 |   |   |       |   |   |
|------------------------------------------------------|--------|--------|------------|--------|--------|
|                                                 |   | 2006   |       | 2005   |   |
|                                                 |   |   |       |   |   |
| Accounts                    receivable (allowances)  |   | $      | 30,526     |   | $      | 62,544 |   |
| Inventories                    (reserves)            |   |   | 175,306    |   |   | 346,610 |   |
| Net                    operating loss carry forwards |   |   | 1,328,109  |   |   | 2,222,000 |   |
| Patent                    rights, primarily due to   |   |   |       |   |   |   |   |
| Amortization                                         |   |   | (58,242)   |   |   | (57,136) |   |
|                                                 |   |   |       |   |   |   |   |
| Total                    gross deferred tax assets   |   |   | 1,475,699  |   |   | 2,574,018 |   |
| Less:                    Valuation allowance         |   |   | (1,089,499 | )      |   | (2,187,818 | ) |
|                                                 |   |   |       |   |   |   |   |
| Net                    deferred tax assets - current |   | $      | 386,200    |   | $      | 386,200 |   |

| Year                    loss | Expiration | Loss                           | Estimated                      |
|------------------------------|------------|--------------------------------|--------------------------------|
| Incurred                     | Date       | Amount                         | Tax                    Asset   |
|                         |       |                           |                           |
| 1995                         | 2015       | 495,000                        | $                    173,000   |
| 1998                         | 2018       | 548,000                        | 192,000                        |
| 1999                         | 2019       | 2,184,000                      | 764,000                        |
| 2002                         | 2022       | 515,000                        | 180,000                        |
|                         |       |                           |                           |
| Total                        |       | $                    3,742,000 | $                    1,309,000 |

----

**BOVIE          MEDICAL CORPORATION**

**NOTES          TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE          8. TAXES AND NET OPERATING LOSS CARRYFORWARDS (continued)**

| Tax                    at statutory rate                           | 32.0%  |
|--------------------------------------------------------------------|--------|
| State                    income taxes, net of U.S. federal benefit | 2%     |
| Tax                    benefit of loss carry forward               | (32%)  |
|                                                               |   |
| Effective                    tax rate                              | 2%     |

**NOTE          9. RETIREMENT PLANS**

----

**BOVIE          MEDICAL CORPORATION**

**NOTES          TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE          10. RELATED PARTY TRANSACTIONS**

| ·   | Tip-On-Tube®                  a disposable tip technology complementary to Bovie’s previously acquired                  and announced Modular Ergonomic Grip (MEG) forceps. Bovie acquired                  the MEG                  technology in January 2006 and recently received Food and Drug                  Administration (FDA) clearance to market the                  product. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | A                  new surgical handle platform called the Modullion® that allows a plurality                  of electrical and mechanical modes to be used in conjunction with                  reusable                  and disposable mono and bipolar cartridges and is applicable to                  most                  endoscopic surgeries. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | Seal-N-Cut®                  a family of endoscopic instruments used in monopolar and bipolar                  vessel                  and tissue cutting and sealing. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Professional          Services and Employment Agreements**

----

**BOVIE          MEDICAL CORPORATION**

**NOTES          TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE          10. RELATED PARTY TRANSACTIONS (continued)**

**Employment          Agreement**

**Employee          Benefit Plans**

**NOTE          11. COMMITMENTS AND CONTINGENCIES**

**Legal          Proceedings**

**Product          Liability**

**Bank          Line of Credit and Term Loan**

**Joint          Venture - J Plasma Technology**

**Deferred          Revenue**

----

**BOVIE          MEDICAL CORPORATION**

**NOTES          TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE          12. EARNINGS PER SHARE**

** **
** **

**NOTE          13. RESEARCH AND DEVELOPMENT PERFORMED FOR OTHERS **

|                                                          |   | 2006   |    | 2005   |   |
|---------------------------------------------------------------|--------|--------|---------|--------|--------|
| Amounts:                                                      |   |   |    |   |   |
| Revenue                    from development in progress       |   | $      | 463,926 |   | $      | 203,857 |   |
|                                                          |   |   |    |   |   |   |   |
| Revenues                    included in Gross Sales           |   | $      | 463,926 |   | $      | 203,857 |   |
|                                                          |   |   |    |   |   |   |   |
| Cost                    of Research and Development contracts |   |   |    |   |   |   |   |
| included                    in gross profit                   |   | $      | 452,585 |   | $      | 203,857 |   |

**NOTE          14. RESEARCH AND DEVELOPMENT COSTS CAPITALIZED**

**NOTE            15.  INDUSTRY SEGMENT            REPORTING**

| Net                        Sales (in thousands)                    |                            |                            |
|--------------------------------------------------------------------|---------------------------------|---------------------------------|
|                                                               | 2006                            | 2005                            |
|                                                               |                            |                            |
| Domestic/international                        sales (in thousands) |                            |                            |
|                                                               |                            |                            |
| Domestic                                                           | $                        23,431 | $                        16,830 |
| International                                                      | 3,245                           | 3,381                           |
|                                                               |                            |                            |
| Total                        net sales                             | $                        26,676 | $                        20,211 |
|                                                               |                            |                            |
| Product                        line sales:                         |                            |                            |
| Electrosurgical                                                    | 15,531                          | 12,191                          |
| Cauteries                                                          | 5,846                           | 5,462                           |
| Other                                                              | 5,299                           | 2,558                           |
|                                                               |                            |                            |
| Total                        net sales                             | $                        26,676 | $                        20,211 |

**NOTE          16. SUBSEQUENT EVENT **

**None**

----

**BOVIE          MEDICAL CORPORATION**

**NOTES          TO CONSOLIDATED FINANCIAL STATEMENTS**

**CONSENT          OF CERTIFIED PUBLIC ACCOUNTANT**

----

**EXHIBIT          INDEX**

| Exhibit                    4.2                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | Registration                    Rights Agreement dated May 8, 1998 (1)                                                                                                                                                  |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Exhibit                    4.3                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | Assignment                    of Registration Rights Agreement dated September, 2004 (2)                                                                                                                                |
| Exhibit                    10.1                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | Joint                    Venture Agreement dated February 25, 2000 Between                    Bovie Medical Corporation and Jump Agentur Fur Elektrotechnik                    GmBH                    (3)              |
| Exhibit                    10.2                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | Agreement                    between Bovie Medical Corporation and Arthrex Inc. dated June                    2002                    (4)                                                                               |
| Exhibit                    10.3                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | Distribution                    and Service Center Agreement  between Bovie Medical Corp and                    Symbol Medical                    Limited dated December 31, 2004                    (5) |
| Exhibit                    10.4                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | Employment                    Agreement- Andrew Makrides (6)                                                                                                                                                            |
| Exhibit                    10.5                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | Employment                    Agreement-Robert J. Saron (7)                                                                                                                                                             |
| Exhibit                    10.6                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | Employment                    Agreement-Moshe Citronowicz (8)                                                                                                                                                           |
| Exhibit                    10.7                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | Amended                    Employment Agreement between Bovie and Andrew Makrides dated                    as of January                    6, 2004 (9)                                                                 |
| Exhibit                    10.8                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | Amended                    Employment Agreement between Bovie and J. Robert Saron dated                    as of January                    6, 2004 (10)                                                                |
| Exhibit                    10.9                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | Amended                    Employment Agreement between Bovie and Moshe Citronowicz dated                    as of                    January 6, 2004 (11)                                                              |
| Exhibit                    10.10                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | License                    Agreement between Bovie and Emergency Medicine Innovations, LLC                    dated                    October 22, 2004 (12)                                                            |
| Exhibit                    10.11                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | Consulting                    and Intellectual Property Assignment Agreement dated January                    12, 2006                    among Bovie, Henvil Corp. Ltd and Steve Livneh                                |
| Exhibit                    21.1                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | Consent                    of Bloom & Co., LLP                                                                                                                                                                 |
| Exhibit                    31.1                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | Certification                    pursuant to Section 302 of Sarbanes-Oxley Act of 2002.                                                                                                                                 |
| Exhibit                    31.2                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | Certification                    pursuant to Section 302 of Sarbanes-Oxley Act of 2002.                                                                                                                                 |
| Exhibit                    32.1                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | Certification                    pursuant to Section 906 of Sarbanes-Oxley Act of 2002.                                                                                                                                 |
| Exhibit                    32.2                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | Certification                    pursuant to Section 906 of Sarbanes-Oxley Act of 2002.                                                                                                                                 |
| _____________________                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                    |
| (1)  Incorporated                    by reference to Exhibit 4.2 of Form S-3 bearing file No. 333-120741                    filed                    on November 23, 2004.(2)  Incorporated                    by reference to Exhibit 4.3 of Form S-3/A bearing file No.                    333-120741.(3)  Incorporated                    by reference to Exhibit 10.1 of Form KSB of Bovie Medical Corporation                    for                    12-31-04 filed on 3-31-05.(4)  Incorporated                    by reference to Exhibit 99.1 of Form S-3/A filed on August 8,                    2005 and has                    been granted confidential treatment.(5)  Incorporated                    by reference to Exhibit 10.3 of Form 10KSB for the period ended                    12-31-04                    filed on March 31, 2005.(6)  Incorporated                    by reference to Exhibit 10.4 of Form 10KSB/A for December 31,                    2004 filed                    on 7-15-2005.(7)  Incorporated                    by reference to Exhibit 10.5 of Form 10KSB/A for December 31,                    2004 filed                    on 7-15-2005.(8)  Incorporated                    by reference to Exhibit 10.6 of Form 10KSB/A for December 31,                    2004 filed                    on 7-15-2005.(9)  Incorporated                    by reference to Exhibit 10.8 of Form 10KSB/A for December 31,                    2004 filed                    on August 25, 2005.(10)   Incorporated                    by reference to Exhibit 10.9 of Form 10KSB/A for December 31,                    2004 filed                    on August 25, 2005.(11)                      Incorporated by reference to Exhibit 10.10 of Form 10KSB/A for                    December                    31, 2004 filed on August 25, 2005.(12)   Incorporated                    by reference to Exhibit 10.11 of Form 10KSB/A for December 31,                    2004 filed                    on August 25, 2005. |