U.S. SECURITIES AND 53EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   Form 10-KSB

               [X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934


            For the fiscal year ended Commission file number 0-12183
                                December 31,1999


                            BOVIE MEDICAL CORPORATION
                                Formerly known as
                              AN-CON GENETICS, INC.
             (Exact name of registrant as specified in its charter)

             Delaware 11-2644611 (State or other jurisdiction (IRS
                          Employer Identification No.)
                    734 Walt Whitman Road, Melville, NY 11747
                    (Address of principal executive offices)

                    Issuer's telephone number (516) 421-5452

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

                                      None

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

                          Common Stock, $.001 Par Value
                                (Title of class)

Indicate by check mark whether the registrant (I) filed all reports required to
 be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the past 12
months (or for such shorter period that the registrant was required to file such
 reports), and (2) has been subject to such filing requirements for the past 90
                              days. Yes [X] No[ ]

Check if there is no disclosure of delinquent filers in response to Item 405 of
    Regulation S-B is not contained in this form, and no disclosure will be
    contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
                    any amendment to this Form 10-KSB. [ X ]

       Issuer's revenues for its most recent fiscal year were $9,597,472.

 The aggregate market value of the voting stock held by non-affiliates computed
 by reference to the price at which the stock was sold, or the average bid and
asked prices of such stock, as of March 24, 2000 was approximately $13,935,141.

State the number of shares outstanding of each of the issuer's classes of common
             equity, as of the latest practicable date:13,935,141.

                       DOCUMENTS INCORPORATED BY REFERENCE

               There are no documents incorporated by reference.

<PAGE>


                            Bovie Medical Corporation
                         1999 Form 10-KSB Annual Report


Table of Contents


Part I                                                                    Page

Item          1.      Description of Business................................1

Item          2.      Properties.............................................4

Item          3.      Legal Proceedings......................................7

Item          4.      Submission of Matters to a Vote of
                      Security Holders.......................................7


Part II

Item          5.      Markets and Market Prices..............................8

Item          6.      Management's Discussion and Analysis...................8

Item          7.      Financial Statements   (See Financial Section)

Item          8.      Changes in and Disagreements with Accountants
                      on Accounting and Financial Disclosure................12


Part III

Item          9.      Directors, Executive Officers, Promoters
                      and Control Persons...................................13

Item          10.     Remuneration..........................................15

Item          11.     Security Ownership of Certain Beneficial Owners
                      and Management of Bovie Medical Corporation...........18

Item          12.     Certain Relationships and Related Transactions........19

Item          13.     Exhibits and Reports on Form 8-k......................20


<PAGE>


Bovie Medical Corporation



Item 1.   Description of Business.

Background

Bovie  Medical  Corporation,   formerly  known  as  An-Con  Genetics,  Inc.("the
Company") was  incorporated in 1982, under the laws of the State of Delaware and
has its principal executive office at 734 Walt Whitman Road, Melville,  New York
11747.

The Company is actively engaged in the business of  manufacturing  and marketing
medical products and developing related technologies.  Aaron Medical Industries,
Inc.  ("Aaron"),  a 100% owned  subsidiary based in St.  Petersburg,  Florida is
engaged in the  marketing and  distributing  of medical  products.  Although the
Company's  largest  current  product  line is battery  operated  cauteries,  the
Company  has   shifted  its  focus  to  the   manufacture   and   marketing   of
electrosurgical  generators and electrosurgical  disposables.  This new focus is
evident  in the  development  of the Aaron 800 and  Aaron  1200  electrosurgical
generators  together with the  development  of higher  powered  generators  (see
below).

The Company also  manufactures a variety of specialty  lighting  instruments for
use in  ophthalmology,  general surgery,  hip replacement  surgery,  and for the
placement  of  endotracheal  tubes.  An  industrial  version  of this  light  is
distributed commercially through various retail outlets and stores.

Bovie  manufactures  and markets its products  both under  private label and the
Bovie/Aaron label to distributors worldwide. Additionally,  Bovie/Aaron has many
original  equipment  manufacturing  (OEM)  agreements  with other medical device
manufacturers.  These  OEM  arrangements  combined  with  private  label and the
Bovie/Aaron  label  allow  the  Company  to gain  greater  market  share for the
distribution of its products.


Company Products

Battery Operated Cauteries

Battery  operated  cauteries  constitute  the  Company's  largest  product line.
Cauteries were originally  designed for precise hemostasis (to stop bleeding) in
ophthalmology.  The current use of cauteries has been substantially  expanded to
include  sculpting  woven grafts in bypass surgery,  vasectomies,  evacuation of
subungual hematoma (smashed fingernail) and for arresting bleeding in many types
of surgery.  Battery  operated  cauteries are primarily,  a sterile one-time use
product. The Company manufactures more types of cauteries than any other company
in the world,  including but not limited to, a line of  replaceable  battery and
tip cauteries, which are popular in overseas markets.


Electrosurgical Products

The  Company  continues  to  expand  its  line  of   electrosurgical   products.
Electrosurgical  products  include  electrodes,   electrosurgical  pencils,  and
various ancillary  disposable  products.  These products are used in surgery for
the cutting and  coagulation  of tissues and  constitute  the  Company's  second
largest  product  line  and  are  compatible   with  all  major   manufacturers'
electrosurgical generator products.


         Aaron 1200

         The   Company   has   developed   a   120   watts,   full-featured
         electrosurgical  generator for outpatient surgical procedures.  It
         is  used  in  a  variety  of  specialties  including  dermatology,
         gynecology, and plastic surgery.

         Aaron 800

         The Aaron 800 is a low powered  office  based  generator  designed
         primarily for  dermatology.  The unit is a 30 watts high frequency
         desiccator  used mainly in doctors offices for removing small skin
         lesions  and  growths.  This  unit was  designed  with  sufficient
         technology to permit the manufacture of more powerful office based
         generators without requiring time-consuming expense of redesign.

         New Generators

         The Company is completing development of higher powered generators
         to be introduced during the year 2000.

<PAGE>
Battery Operated Medical and Industrial Lights

The Company  manufactures a variety of specialty lighting instruments for use in
ophthalmology  as well as patented  specialty  lighting  instruments for general
surgery,  hip replacement surgery and for the placement of endotracheal tubes in
emergency and pro-surgery procedures.  These lighting instruments have also been
adapted for commercial  and industrial use and are sold to automotive  mechanics
through Companies such as Snap-On Tools, MAC and Matco.


Nerve Locator Stimulator

The Company  manufactures  three different nerve locator  stimulators  primarily
used for  identifying  motor nerves in hand and facial  reconstructive  surgery.
These  instruments are  self-contained,  battery operated units, used for single
surgical procedures.


Manufacturing, Marketing and Distribution

The Company  manufactures  the  majority of its  products on its premises in St.
Petersburg, Florida. Labor intensive sub-assemblies and labor intensive products
may be  out-sourced  to the  Company's  specification.  The Company  markets its
products through national trade journal  advertising,  direct mail,  distributor
sales  representatives  and trade  shows,  under both the  Bovie/Aaron  name and
private label. Major distributors  include Allegiance,  Bergen Brunswig Medical,
Burrows,  McKesson,  General  Medical,  Owens &  Minor,  and  Physician  Sales &
Service.


Competition

The medical  device  industry is highly  competitive.  Many  Competitors in this
industry are well  established,  do a substantial  amount of business,  and have
greater financial resources and facilities than the Company.

Main  competitors  are  Conmed  in the  electrosurgery  market  and Xomed in the
battery  operated  cautery market.  Management  believes that, based upon recent
developments,  the  Company  has the  ability to  aggressively  compete in these
markets.


Regulation

Many  medical  products  are  subject to  guidelines,  regulations  and  testing
requirements  by  federal  and  state  authorities  including  the Food and Drug
Administration  ("the FDA").  In the United States,  the FDA imposes  standards,
which may affect the  clinical  testing,  manufacture  and  marketing of certain
products.  Compliance  with the standards  and  requirements  involving  product
safety, efficacy and labeling may prove to be very expensive and time consuming.
No  assurance  can be given  that the  regulatory  authorities  will  render the
requisite  approval of the  marketing of some of the  products  that the Company
plans  to  market.  Other  countries  usually  impose  regulatory   requirements
concerning  the  development,  testing,  marketing  and  manufacture  of certain
products, which influence the overseas sales potential of these products.

Patents and Trademarks

The Company owns a total of fourteen  patents.  No  assurance  can be given that
competitors  will not infringe the Company's  patent rights or otherwise  create
similar or non infringing competing products that are technically  patentable in
there own right. (See competition)


Liability Insurance

Management  believes  that its  general  and  product  liability  exposures  are
adequately covered by insurance.


Research and Development

The  approximate  amount  expended by the Company on research and development of
its  products  during the years 1999 and 1998,  totaled  $379,832  and  $183,173
respectively.  The  Company  has not  incurred  any  direct  costs  relating  to
environmental regulations or requirements.


Employees

Presently the Company has a total of approximately  90 employees.  These consist
of 5  executives,  6  administrative,  5  sales,  and 74  technical  or  factory
employees.

<PAGE>

SIGNIFICANT SUBSIDIARY - AARON MEDICAL INDUSTRIES, INC.

Aaron Medical  Industries,  Inc., is a Florida  Corporation  with offices in St.
Petersburg,  Florida. It is principally engaged in the business of marketing and
distributing  medical  products.  Aaron  sells  products  under its own label to
distributors worldwide.

Recent Developments

In 1998, the Company  reported the  acquisition of a license for the manufacture
and sale of a new "Dylyn" technology (a nanocomposite technology for the coating
of products)  from  Advanced  Refractory  Technologies,  Inc., a  non-affiliated
Buffalo  based  privately  held  company   ("ART"),   for  2,000,000  shares  of
convertible  preferred stock of the Company.  After a series of production runs,
management  made a  determination  that the use of the DYLYN  technology did not
result in  commercially  viable  electrodes,  the  Company's  primary  choice of
products to be coated.  As a result the Company  reacquired the 2,000,000 shares
of  convertible  preferred  stock in exchange for the  equipment,  licensing and
manufacturing rights which were originally acquired by the Company from ART.

In a related  development,  the Company  entered  into an agreement in December,
1999,  whereby the Company  agreed to repurchase  2,000,000  shares from a major
shareholder  group which had originally  acquired its shares in connection  with
the  ART  transaction  in  1998.  Simultaneously  with  the  execution  of  such
agreement,  the Company repurchased  1,118,421 shares of common stock at a price
of $.38 per share and  expects to  purchase  the balance of the shares over a 21
month period.  As of December 31, 1999, the aforesaid  transaction  with ART and
the  shareholder  group  resulted in a reduction  of the  Company's  outstanding
shares on a fully  diluted  basis from  17.16  million  shares to 14.04  million
shares.

Item 2.   Properties.

The Company has executive  office space at 734 Walt Whitman Road,  Melville,  NY
and its St.  Petersburg,  Florida  facility.  The Company  leases the  executive
offices in NY for $1,226 per month and the lease expires in the year 2000.


As part of the purchase of its St. Petersburg, Florida (manufacturing facility),
the Company  caused the seller to acknowledge  that it had previously  conducted
assessments to document  environmental  conditions existing on the property, the
results  of which,  are set forth in a June 23,  1994  Contamination  Assessment
Report (CAR) and a January 27, 1995  Contamination  Assessment  Addendum (CARA).
The Florida  Department of Environmental  Protection  (FDEP) stated in a letter,
dated March 31, 1995,  that based on their review of the CARA, the CAR could not
be approved and that additional work was needed to be performed.

In February of 1998, the environmental  engineering firm Geo-Ambient conducted a
second  addendum to the CAR, (CAR Addendum II) to complete the  additional  work
requested  by the FDEP.  Based on the results of CAR  Addendum  II,  Geo-Ambient
recommended  to the FDEP that a "no  further  action"  status be granted for the
site.  However,  as of the  date  here of the  FDEP  has not yet  issued  a Site
Completion Rehabilitation Order (SCRO).

Based on the "no further  action"  finding by  Geo-Ambient  and the  anticipated
issuance of an SCRO by the FDEP  management  of the Company  has  estimated  the
present value of the cost of environmental work to be zero.

At the request of the FDEP,  GEO-Ambient  conducted an additional  water test in
October of 1999 and found the  results to be  consistent  with  previous  tests.
Additional testing has been recommended.

The nature and extent of the environmental  work, if any is to be required,  has
not yet been  determined by the FDEP.  Therefore,  no work has been completed by
the seller.

<PAGE>
Item 3.   Legal Proceedings

There are no material legal proceedings pending against the Company.


Item 4.   Submission of Matters to a Vote of Security Holders

There were no matters  submitted  to  securities  holders  during the year ended
December 31, 1999.



PART II

Item 5.

Markets and Market Prices

Bovie's  common stock is traded in the  over-the-counter  market on the National
Association of Securities Dealers,  Inc. Bulletin Board ("NASD Bulletin Board").
The table shows the reported high and low bid prices for the common stock during
each quarter of the last eight  quarters as reported by the NASD Bulletin  Board
(symbol "Bovie").  These prices do not represent actual  transactions and do not
include retail markups, markdowns or commissions.

                 1999                            High               Low

           1st Quarter                        $ 1.0625          $ .4375

           2nd Quarter                           .6350            .3750

           3rd Quarter                           .5500            .3438

           4th Quarter                          1.1250            .4100


                 1998                            High               Low


           1st Quarter                        $ 2.1250          $ .6250

           2nd Quarter                          1.8125           1.1250

           3rd Quarter                          1.2500            .8438

           4th Quarter                           .9375            .5313


On March 24, 2000,  the Closing bid for Bovie's  Common Stock as reported by the
NASD Bulletin Board was $1.00 per share.  As of March 24, 2000, the total number
of shareholders of the Company's Common Stock was approximately  2,000, of which
1,000 are  shareholders  whose  shares  are held in the name of their  broker or
stock  depositories  or the escrow agent holding shares for the benefit of Bovie
Medical Corporation shareholders and the balance are shareholders who keep their
shares registered in their own name.


Item 6.   Management's Discussion and Analysis.

Results of Operations

Bovie's net  revenues  for 1999 were  approximately  $9.6 million as compared to
$8.4 million for 1998.  The increase in sales of $1.15 million (14%) was the net
result of an increase in revenues from the sale of cauteries and electrosurgical
products. The sales for medical products represented  approximately 89% of total
sales in 1999 as compared to approximately 90% in 1998.

The Cost of goods sold  decreased by $364,465  (7%) from  $5,274,041  in 1998 to
$4,909,576  in 1999.  Consequently,  the  percentage  of gross profit from sales
increased  from 38% in 1998 to 48% in 1999.  The difference in cost of sales and
gross  profit  were  principally  due to the  gross  loss on  contract  sales of
electrosurgical products in 1998, and the increase in the gross profit margin on
the sale of  cauteries in 1999.  The negative  gross profit on sales of products
acquired from Bovie/Maxxim in 1998 was attributable to the contract price of the
components from  Bovie/Maxxim and the resulting  manufacturing  and sale back to
Maxxim of these  products.  This accounted for a difference of $300,000 in gross
margin  between  1998 and 1999.  This was 57% of the  increase  in gross  profit
between 1998 and 1999. The remaining  difference is mostly  attributable to a 5%
increase  in gross  profit on  cautery  sales  which  were the  result of better
pricing to certain customers and lower cost on certain components purchased from
offshore.
<PAGE>
During 1999 and 1998,  the Company's  family of cauteries  accounted for 42% and
41% of sales, respectively, and 36% and 35% of cost of goods sold, respectively.

Research and development expenses increased from $183,173 to $379,832, from 1998
to  1999.   The  Company   continued  to  invest  in  the   development  of  ECU
(electrosurgical  coagulation)  devices,  and other  Company  products  which is
evidenced by engineering  costs  increasing  from $59,675 in 1998 to $281,114 in
1999. Research and development costs are made up of material costs,  engineering
costs, and payroll.

Research and  development  costs of the Company had  increased in 1998 mostly by
the  depreciation  expense on the reactors that the Company  purchased from BSD.
The Company was developing  DYLYN coated  products with these  reactors.  During
1999 the Company  discontinued  this  development  program and sold the reactors
back to ART. In 1999, no depreciation was taken on the reactors.

The  decrease  in  interest  expense  of 41%  amounting  to  $42,820  was mainly
attributable  to the  Company's  retirement  of its debt to Maxxim  and the cash
received in the BSD transaction.

The  Company's  effective  income tax rate  would have been 35% except  that the
Company had a loss for the year.  Because of the net loss, the Company operating
loss carryforward increased in 1999 by $2,183,839.

General and  administrative  expenses of the Company decreased by $299,399 (17%)
from $1.75 million in 1998 to $1.5 million in 1999. This was mainly attributable
to the  decrease in  amortization  of  intangible  assets  acquired  from BSD of
$290,224.

<PAGE>
Salaries  and related  costs  increased  by 8% from $1.6 million in 1998 to $1.7
million  in 1999.  The  increase  in  salaries  were in part  because  of hiring
additional  administrative  personal,  quality  control  personnel and technical
personnel that were needed to produce electrosurgical products.

Cost of professional  services decreased by 8% from $552,352 in 1998 to $508,117
in 1999.  Professional fees were mostly related to the consulting,  auditing and
legal  costs.  During  1999,  the  Company  evaluated  its  Dylyn  Coated  Blade
Technology and decided not to pursue the project.  An agreement was entered into
with ART, the Company that  supplied  the  reactors and the  technology  for the
project,  to sell  back to ART the  reactors  and the  technology.  The  Company
incurred a non-recurring loss of $2,718,985 on the transaction.

The increase in operating  expenses,  which  included  the  non-recurring  loss,
resulted in a decrease of $1,227,868 in operating income and $1,085,793 decrease
in net income, from 1998 to 1999. Loss from operations was $2,148,030 in 1999 as
compared to an  operating  loss of $920,162 in 1998.  Net loss of the Company in
1999 was $2,183,839 as compared to net loss of $998,046 in 1998.

Total other costs as a  percentage  of sales were 71% in 1999 as compared to 48%
in 1998.  These costs mostly  increased due to the loss associated with the sale
of the Dylyn Technology.  For 2000 the Company believes total other costs should
not be significantly higher than they were in 1999, except for the non-recurring
loss.

The Company sells its products through  distributors  both in the  international
market and in the USA.  New  distributors  are  contacted  through  response  to
Company  advertising  in  international  medical  journals  or  at  domestic  or
international trade shows.


During 1999,  international  sales of the Company's product lines increased by a
total of $312,219  (21%).  In 1999,  these sales were $1.8 million (19% of total
sales) as compared to $1.5 million (18% of total sales) in 1998. The increase in
international  sales volume was mainly  attributable to the Company obtained its
European  Community  Certification  (CE Mark which permits medical devices to be
sold in the European Common Market), in mid 1998.

In the fourth  quarter of 1998, the Company made  agreements  with various sales
representatives  to develop  markets for its new products and maintain  customer
relations. The representatives receive an average commission of approximately 2%
of sales in their market areas.

An  adequate  supply  of raw  materials  is  available  from both  domestic  and
international  suppliers. The relationship between the Company and its suppliers
is generally limited to individual  purchase order  agreements,  supplemented by
contractual  arrangements  with key  vendors to ensure  availability  of certain
products. The Company has developed multiple sources of supply where possible.

New product  development and improvements to the Company's  facility required by
regulatory   agencies  in  1998  amounted  to  approximately   $125,782.   These
expenditures   were  funded  primarily  through  internal  cash  flow  and  bank
financing. In order to provide additional working capital, the Company secured a
$550,000  credit  facility with a local  commercial bank in the first quarter of
1997.  The credit  facility  was renewed and raised to $600,000  for one year in
September 1999.

Financial Condition

As of  December  31,  1999,  cash  totaled  $415,074  as compared to $270,672 at
December 31, 1998.  Cash provided by operating  activities  was $530,724 in 1999
compared to $14,010 in 1998.  Net working  capital of the Company was $2,365,530
and $1,674,297 on December 31, 1999 and 1998, respectively.

The amount of cash used in investing  activities was $126,728 in 1999,  compared
to $443,835 in 1998.  The Company  continued  to invest in  property,  plant and
equipment  needed  for future  business  requirements,  including  manufacturing
capacity.

The net cash inflow from  financing  was  $688,272 in 1998 as compared to an out
flow of $267,595 in 1999.  The most  significant  item of financing  activity in
1999 was from the  repurchase  of 1,118,421  Company  common shares for $425,000
from a major  shareholder  group that acquired its shares in connection with the
ART transaction in 1998.

The Company believes that it has the financial resources needed to meet business
requirements in the foreseeable future,  including capital  expenditures for the
expansion of its manufacturing site, working capital  requirements,  and product
development programs.

The  Company's ten largest  customers  accounted  for  approximately  59% of net
revenues for 1999 as compared to 49% in 1998. At December 31, 1999, the same ten
customers accounted for approximately 55% of outstanding accounts receivables as
compared to 65% in 1998.

<PAGE>
Outlook

The  statements  contained  in this  Outlook are based on current  expectations.
These statements are forward looking, and actual results may differ materially.

The Company believes that the world market for disposable medical products, such
as the Company's  battery-operated  cauteries,  has significant growth potential
because these type of products have not been affordable or effectively  marketed
outside the U.S.  Because of these  factors,  the Company has  designed  certain
disposable  products to be reusable.  The Company  presently  has a  significant
portion of the U.S.  cautery  market  and does not  expect a dramatic  growth in
sales of cautery-related products domestically.

The Company  has  focused on  expanding  its line of  electrosurgical  products.
Electrosurgical  products  sold by the Company  include the  standard  stainless
steel  electrodes,  the Aaron 800 and Aaron 1200 high frequency  desiccators and
the Bovie line of products acquired in 1998.

From 1998 to 1999, the Company's  electrosurgical  sales  increased by more than
24% from  $2,188,683  to  $2,720,718.  This  increase  was  attributable  to the
transaction  with  Maxxim.  Maxxim sold to the  Company  work in process and raw
materials  inventory  for the Bovie line of  generators.  The Company  agreed to
finish certain  products and sell them back to Maxxim.  The agreement  increased
sales by $592,000,  in 1998. The additional increases in sales were attributable
to sales of the Aaron 1200 device.  Except for the possible  introduction of new
electrosurgical  products the Company does not expect  electrosurgical  sales to
increase significantly in 2000. The Company through its private label capability
sees unique  opportunities  in the  domestic  market as its  competitors  do not
private label.  The  electrosurgical  product market is a larger market than the
Company  has  normally  sold  into and is  dominated  by two  main  competitors,
ValleyLab  and  Conmed.  The  combined  markets for these  products  exceed $100
million annually.


Non-Medical Products

In 1999, the Company had sales of $1 million of its flexible  lighting  products
used  primarily in the automotive and locksmith  industries.  Approximately  $.8
million was sold to one customer.


Reliance on Collaborative, Manufacturing and Selling Arrangements

The Company is dependent on certain contractual partners,  for manufacturing and
product  development.  Should  a  collaborative  partner  fail  to  develop  and
manufacture products,  the Company's future business and value of related assets
could be negatively  affected.  No assurance  can be given that a  collaborative
partner  may  give  sufficient  high  priority  to the  company's  products.  In
addition,  disagreements  or  disputes  may arise  between  the  Company and its
contractual partners which could adversely affect production of its products.

Liquidity and Future Plans

The Company has recently changed its direction from acquiring ownership interest
in companies to developing  and acquiring new product  technology  and expanding
manufacturing  capabilities  through  Aaron.  The Aaron 800 and Aaron 1200,  are
prime examples of this new direction.  Other products and technologies are being
evaluated for future development.

In order to resume strong international sales growth and maintain its ability to
sell in Europe, management has implemented and been certified as ISO9001/EN46001
quality system compliant and has been granted its CE mark (International Quality
control.)

The  Company  has  obtained a line of credit  with a local  commercial  bank for
$600,000.  Interest on the loan is to be paid at 1% over  prime.  As of December
31, 1999,  the Company had $100,000  outstanding on the line of credit and had a
balance  of $8,055 on its term loan which is  amortized  at a rate of $4,167 per
month.  Due to the  Company's  loss  in 1999  the  Company  is not in  technical
compliance with the banks financial covenants.

The  Company's  future  results  of  operations  and the  other  forward-looking
statements  contained here in particular the statements  regarding growth in the
medical products  industry,  capital  spending,  research and  development,  and
marketing and general and administrative expenses, involve a number of risks and
uncertainties.  In  addition  to the factors  discussed  above,  among the other
factors that could cause actual results to differ materially, are the following:
business  conditions and the general economy;  competitive factors such as rival
manufacturers' availability of products at reasonable prices; risk of nonpayment
of accounts receivable; risks associated with foreign operations; and litigation
involving intellectual property and consumer issues.


The  management  of Bovie Medical  Corporation  believes that it has the product
mix, facilities, personnel, and competitive and financial resources for business
success, but future revenues,  costs,  margins,  product mix and profits are all
subject to the influence of a number of factors, as discussed above.

<PAGE>

Item 7.   Financial Statements.
(See Attached)


Item 8.Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure

There are no disagreements with or changes in accountants.


Article III


Item 9.   Directors, Executive Officers, Promoters and Control Persons

The Company's Executive Officers and directors are as follows:

   Name                 Position           Director since

Andrew Makrides         Chairman of the    December,1982
                        Board, President,
                        CEO and Director

J. Robert Saron         President of       August, 1994
                        Aaron
                        And Director
George Kromer           Director           October 1995

Alfred Greco            Director           April, 1998

Kenneth W. Davidson     Director           July, 1998

Keith Blakely*          Director           December, 1998

Nancy Keller            Chief Financial
                        Officer

Moshe Citronowicz       Executive Vice
                        President
                        Chief Operating
                        Officer
------------------
*In  October,  1999 Keith  Blakely  resigned as a director  of the  corporation.
Management  has no present plans to fill the  resulting  vacancy on the Board of
Directors.


Andrew Makrides, Esq. age 58, Chairman of the Board and President, member of the
Board of  Directors,  received  a Bachelor  of Arts  degree in  Psychology  from
Hofstra  University and a JD Degree from Brooklyn Law School.  He is a member of
the Bar of the State of New York and practiced law from 1968 until joining Bovie
Medical  Corporation  as Executive  Vice  President and director,  in 1982.  Mr.
Makrides  became  President of the Company in 1985 and the CEO in December  1998
and has served as such to date.

J.  Robert  Saron,  age 47,  Director,  holds a  Bachelors  degree in Social and
Behavioral  Science from the University of South  Florida.  From 1988 to present
Mr. Saron has served as a director of Aaron Medical  Industries,  Inc. (formerly
Suncoast Medical  Manufacturing,  Inc.). Mr. Saron served as CEO and chairman of
the Board of the Company from 1994 to December  1998. Mr. Saron is presently the
President of Aaron and member of the Board of Directors of the Company.
<PAGE>
Alfred V. Greco,  Esq. age 64,  Director,  is the principal of Alfred V. Greco,
PLLC,  and has been counsel to the Company since its  inception.  Mr. Greco is a
member of the Bar of the State of New York and has been  engaged in the practice
of law for the  past 35 years in the  City of New  York.  The main  focus of Mr.
Greco's  experience  for the past 30 years has been in the area of corporate and
securities  law  during  which  he has  represented  a large  number  of  public
companies,  securities brokerage firms, executives and registered representative
and has developed a broad range of experience in administrative,  regulatory and
legal aspects of public companies.  Mr. Greco graduated from Fordham  University
School of Law with a Doctor of Law degree,  in June 1960. He was admitted to the
New York State Bar in March 1961.


Nancy B. Keller,  age 51, Chief Financial Officer Controller holds a Bachelor of
Business  Administration  degree  from  the  University  of  Georgia.  She  is a
Certified Public  Accountant of the State of Florida She had worked 17 years for
a large pharmaceutical company where she was a plant controller coordinating all
plant financial activities.


George W. Kromer,  Jr., age 59,  filled a vacancy on the Board of Directors  and
became a  director  on  October  1,  1995.  Mr.  Kromer  is a  Senior  Financial
Correspondent for "Today's Investor" and is utilized as a consultant by a number
of  companies  whose  shares  are  listed on the  American  Stock  Exchange  and
Over-the-Counter  Exchange.  Bovie  Medical  Corporation  has also  retained Mr.
Kromer on a month-to-month  basis as a consultant in addition to his capacity as
a  director.  He has been  writing for  financial  publications  since 1980.  He
received  a  Master's  Degree  in 1976  from Long  Island  University  in Health
Administration.  He was engaged as a Senior Hospital Care  Investigator  for the
City of New York Health & Hospital  Corporation from 1966 to 1986. He also holds
a Bachelor of Science Degree from Long Island  University's  Brooklyn Campus and
an Associate in Applied  Science  Degree from New York City  Community  College,
Brooklyn, New York.


Moshe  Citronowicz  , age 47, is a graduate of the  University  of Be'er  Sheva,
Be'er  Sheva,   Israel,   with  a  Bachelor  of  Science  degree  in  electrical
engineering.  He has also received certificates from Worcester Polytech,  Lowell
University and the American Management Association for completion of seminars in
MRP, master  scheduling,  purchasing SPC, JIT,  accounting and plant management.
Since  coming to the  United  States in 1978,  Mr.  Citronowicz  has worked in a
variety  of  manufacturing  and high  tech  industries.  In  October  1993,  Mr.
Citronowicz  joined  the  Company  as  Vice  President  of  Operations.   He  is
responsible for all areas of manufacturing,  purchasing,  product redesign,  as
well as new product design. In September 1997, Mr.  Citronowicz was appointed by
the board of  directors  to the  position  Executive  Vice  President  and Chief
Operating Officer.


Kenneth W. Davidson, age 52, is a chairman and Chief Executive Officer of Maxxim
Medical,  Inc., a Delaware Corporation the shares of which are listed on the New
York Stock  Exchange.  Mr.  Davidson  has been a director of Maxxim  since 1986.
Prior  to  that  he was  the  Corporate  Director  of  Business  Development  at
Intermedics  Incorporated,  which is principally a  manufacturer  of implantable
medical devices such as pacemakers.

<PAGE>
REMUNERATION


Item 10. The following table sets forth the  compensation  paid to the executive
officers of the registrant for the three years ended December 31, 1999:

>
                                      Summary Compensation Table

                         Annual Compensation          Long Term compensation

<TABLE>
<CAPTION>


                                                                 Securities
                                                                 Underlying
Name and                                              Restricted   Stock
Principal                               (a)     (b)      Stock    Option
Position             Year    Salary    Bonus   Other   Awards(#)   SARS(#)  Pay-outs
--------             ----    ------    -----  ------   --------    -------  --------
<S>                   <C>     <C>       <C>      <C>      <C>         <C>   <C>
Andrew Makrides
 President, CEO
 Chairman of          1999  $ 116,312   2,198    9,263     --          --    --
 the Board            1998     99,478   1,918    9,809     --          --    --
                      1997    103,382   1,784    9,598     --          --    --

J. Robert Saron
 President of Aaron   1999  $ 166,181   3,245  14,409      --          --    --
 Medical and          1998    144,559   2,814   9,809      --          --    --
 Director             1997    155,865   2,460   9,352      --          --    --

Moshe Citronowicz
 Executive            1999  $ 116,193   2,439  14,564      --          --    --
 Vice President-      1998    112,463   22,891  9,809    100,000       --    --
 Chief Operating      1997    107,044   1,921   9,352      --          --    --
 Officer

Nancy Keller          1999  $  38,060    1,444   4,165     --          --    --
Chief Financial
Officer
</TABLE>

(b) Other compensation consists of medical insurance and auto. Option Grants and
Exercise

The following table summarizes (i) option grants to the Named Executive Officers
during the year ended  December  31, 1999 and (ii) the value of the options held
by the named Executive Officers at December 31, 1999.


The  following  table sets forth  information  with respect to the  exercises of
stock options by the Named  Executive  Officers  during the year ended  December
31,1998 and unexercised options held by the Named Executive Officers on December
31, 1998.

<TABLE>
<CAPTION>


                       Aggregated Option Exercises in Last
                    Fiscal Year and Fiscal Year End Option Values

                                                                                     Value of
                                                                   Number of        Unexercised
                                                                  Unexercised      In-The-Money
                                                                    Options         Options at
                           Shares                               At Fiscal Year        Fiscal
                          Acquired              Value               End(#)             Year
Name                   On Exercise(#)         Realized            Exercisable         End (a)
----                   --------------         --------            -----------         -------
<S>                  <C>            <C>           <C>            <C>

Andrew Makrides       --             --           220,000       $ 55,000
J. Robert Saron       --             --           240,000       $ 60,000
Moshe Citronowicz     --             --           175,000       $ 43,750


-------------------
</TABLE>
<PAGE>
(a) The  exercise  price of the options  were higher than the closing sale price
for the Common Stock.  The sales price as reported on NASDAQ  National Market on
December 31, 1999 was $1.00.

Outside  Directors are compensated in their  capacities as Board members through
option grants. The Company's Board of Directors  presently consists of J. Robert
Saron, Andrew Makrides, Chairman CEO, and President, Kenneth Davidson, George W.
Kromer,  Jr. and Alfred Greco.  Mr. Kromer has been retained on a month-to-month
basis  pursuant  to  verbal  agreement  as  a  financial  and  public  relations
consultant by Bovie Medical  Corporation for the past year at an average monthly
fee of $1,300.  Mr.  Greco is an officer  and  director  of Alfred V Greco PLLC,
Counsel to the  corporation  which earned legal fees from the Company of $93,606
during 1999. He also received  75,000 ten year options to purchase the Company's
Stock at $.75 in 1998.

In 1998  George  Kromer was awarded a ten year stock  option to acquire  100,000
shares of for ten years to purchase Bovie Medical  Corporation stock at $.75 per
share.

There have been no changes in the pricing of any options previously or currently
awarded.

In February  2000, the Company  extended  contract with certain of its officers,
for two  years.  The  following  schedule  shows all  contracts  and terms  with
officers of the company.


<TABLE>

                            Bovie Medical Corporation
                               Officers' Contracts
                                December 31, 1999

                       Contract     Expiration    Contractual    Auto
                         Date         Date(1)       Base Pay     Allowance
<S>                     <C>         <C>            <C>           <C>

Andrew Makrides         01/01/98    12/31/2004      $  92,773   $ 6,310
J. Robert Saron         01/01/98    12/31/2004        136,123     6,310
Moshe Citronowicz       01/01/98    12/31/2004         99,905     6,310

(1) Includes two year extension

</TABLE>
<PAGE>
Item 11.  Security  Ownership of Certain  Beneficial  Owners and  Management  of
Bovie.

The following table sets forth certain information as of December 31, 1999, with
respect to the beneficial ownership of the Company's common stock by all persons
known  by the  Company  to be the  beneficial  owners  of  more  than  5% of its
outstanding  shares,  by directors  who own common stock and by all officers and
directors as a group.

<TABLE>
<CAPTION>

                                   Number of       Nature       Percentage
Name and                Title       Shares           of            of
Address                            of Class       Ownership     Ownership(i)
-------                            --------       ---------     ------------
                                   Shares(i)

<S>                      <C>       <C>            <C>                <C>
Maxxim Medical Inc.    Common      3,000,000      Beneficial        18.5%
 10300 49th St. North
 Clearwater, FL 33762

Directors

Andrew Makrides        Common        537,000(ii)  Beneficial         3.3%
 734 Walt Whitman Road
 Melville, NY 11746

George Kromer          Common        205,000(iii) Beneficial         1.2%
 P.O. Box 188
 Farmingville, NY 11738

Alfred Greco           Common        266,500(iv)  Beneficial         1.6%
 666 5th Ave.
 New York, NY 10103

J. Robert Saron        Common        673,805 (v)   Beneficial        4.1%
 Ashley Drive
 Seminole, FL

Kenneth Davidson          --                (vii)
 c/o Maxxim
 10300 49th St. North
 Clearwater, FL 33762

Officers and Directors
as a group                           2,017,89(a)                    12.3%

</TABLE>
<PAGE>
(a) Includes 995,000 shares reserved for options

(i) Based on common shares of 14,045,334  and 2,145,500  options  outstanding to
acquire shares. Officers and directors have 995,000 options to acquire shares at
December 31, 1999.

(ii) Includes 220,000 shares owned by Mr. Makrides  reserved pursuant to 10 year
options to  purchase  shares of the  Company.  His  options  range from $.75 for
150,000 to $1.15 for 50,000.

(iii)  Constitute  170,000 shares reserved  pursuant to 10 year options owned by
Mr. Kromer to purchase shares of the Company.

(iv) Include 150,000 shares reserved pursuant to 10 year options  exercisable at
$.75 per share. Granted but not delivered until 1999. Represents shares owned by
Alfred V Greco  PC,  former  professional  corporation  of which  Mr.  Greco was
principal.

(v) Includes 240,000 shares reserved pursuant to 10 year options  exercisable at
$.75 per share owned by Mr. Saron.

(vi) Does not include 3 million  shares of common  stock held by Maxxim  Medical
Inc. of which Mr. Davidson is an officer, director and major shareholder.


Item 12.   Certain Relationships and Related Transactions

George  Kromer,  a director,  also serves as a  consultant  to the Company  with
average consulting compensation of approximately $1,300 per month.


Former CEO and President

As of December 31, 1997, the Company had repaid  $235,100 of a principal  amount
previously  owned to a former officer director and a shareholder of the Company.
In October,  1999, the Company  settled its dispute with this former officer for
alleged sums claimed to be due him for interest  consulting fees incurred during
his  affiliation  with the  Company.  The claim  was  settled  in the  amount of
$150,000,  payable  $50,000 upon execution of the agreement and $100,000 over 20
months at $5,000 per month.

See "Certain  Relationships  and related  Transactions".  Presently  there is no
lawsuit between the Company and a former officer.


Alfred V Greco

A director is the principal of Alfred V Greco PLLC, the Company's  counsel which
received  $93,606 in legal fees during 1999. See "Security  Ownership of Certain
Beneficial Owners and Management.


Item 13.   Exhibits and Reports on Form 8-k

No Form 8-k was filed in the fourth quarter of 1999.
<PAGE>

SIGNATURES

Pursuant  to the  requirements  of the  Section  13 or 15(d)  of the  Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the  undersigned,  thereunto duly  authorized,  in the City of St.
Petersburg, State of Florida, on April 14, 2000.

                                         Bovie Medical Corporation


                                         By: S/ Andrew Makrides
                                         Andrew Makrides
                                         Chairman of the Board
                                         President


Pursuant to the  requirements  of the Securities and Exchange Act of 1934,  this
report has been signed by the following  persons on behalf of the  Registrant in
the capacities and on the dates indicated.

<TABLE>
<CAPTION>

<S>                                                    <C>

         Signatures                                   Title and Date

S/Andrew Makrides                                     Chairman of Board
Andrew Makrides                                       Chief Executive Officer
                                                      President, Director
                                                      April 14, 2000

S/J. Robert Saron                                     Director
-------------------------------------
J. Robert Saron                                       April 14, 2000

S/George W. Kromer                                    Director
-------------------------------------
George W. Kromer                                      April 14, 2000


S/Nancy Keller                                        Chief Financial Officer
-------------------------------------
Nancy Keller                                          April 14, 2000

                                                      Director
-------------------------------------
Kenneth Davidson                                      April 14, 2000


S/Alfred Greco                                        Director
-------------------------------------
Alfred Greco                                          April 14, 2000
</TABLE>
<PAGE>
PART II

ITEM 7.  FINANCIAL STATEMENT


BOVIE MEDICAL CORPORATION
INDEX TO FINANCIAL STATEMENTS



       Contents                                          Page



Consolidated Balance Sheet at December 31, 1999


Consolidated Statements of Operations for the
 years ended December 31, 1999 and 1998

Consolidated Statements of Shareholders' Equity
 for the years ended December 31, 1999 and 1998

Consolidated Statements of Cash Flows for the
 years ended December 31, 1999 and 1998

Notes to Consolidated Financial Statements

Consent of Certified Public Accountant

Independent Auditors' Report


<PAGE>


                        BOVIE MEDICAL CORPORATION
                        CONSOLIDATED BALANCE SHEET
                             DECEMBER 31, 1999


                                  ASSETS


<TABLE>
<CAPTION>

Current assets:
<S>                                                     <C>
Cash                                               $   415,074
Trade accounts receivable, net                       1,210,048
Inventories                                          1,677,779
Prepaid expenses                                        86,445
Deferred tax asset                                     175,010
Other Assets                                           131,143
                                                     ---------

Total current assets                                 3,695,499

Property and equipment, net                          1,434,569

Other assets:

Repair parts                                           322,311
Trade name                                           1,697,392
Patent rights, net                                     189,283
Deposits                                                 4,765
                                                    ----------

                                                     2,213,751
                                                    ----------


Total Assets                                       $ 7,343,819
                                                     =========
</TABLE>
The accompanying notes are an integral part of the financial statements.

<PAGE>


                         BOVIE MEDICAL CORPORATION
                        CONSOLIDATED BALANCE SHEET
                            DECEMBER 31, 1999
                                (Continued)


                   LIABILITIES AND STOCKHOLDERS' EQUITY

                               Liabilities
<TABLE>
<CAPTION>

Current liabilities:

<S>                                                         <C>
Accounts payable                                        $  402,254
Accrued expenses                                           264,146
Notes payable                                              562,591
Due to shareholders                                        100,979
                                                         ---------

Total current liabilities                                1,329,970


Stockholders' equity:


Preferred stock 10,000,000
authorized, 0 outstanding                                        0

Common stock par value $.001;
  40,000,000 shares authorized,
  issued and outstanding 14,045,334
  shares, on December 31, 1999                              14,115
  Additional paid in capital                            20,111,957
  Accumulated deficit                                  (14,112,223)
                                                        ----------

Total stockholders' equity                               6,013,849
                                                        ----------

Total liabilities and
  stockholders' equity                                $  7,343,819
                                                         =========


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

</TABLE>
<PAGE>


                            BOVIE MEDICAL CORPORATION
                    CONSOLIDATED STATEMENT OF OPERATIONS
             FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998

<TABLE>


                                          1999              1998

<S>                                     <C>                <C>

Sales                                $ 9,597,472         $8,441,846
Cost of sales                          4,909,576          5,272,041
                                       ---------          ---------

Gross Profit                           4,687,896          3,167,805

Other costs:
Research and development                 379,832            183,173
Professional services                    508,117            552,352
Salaries and related costs             1,720,795          1,599,925
Selling, general and
 administration                        1,453,118          1,752,517
Write down of fixed assets                55,079                 --
Loss on sale of license
 and reactors                          2,718,985                 --
                                       ---------         ----------

Total other costs                      6,835,926          4,087,967
                                       ---------         ----------

Income from operations                (2,148,030)         (920,162)
                                       ---------         ----------

Other income and (expense):

Interest income                           21,964             4,163
Interest expense                         (61,023)       (  103,843)
Miscellaneous                              3,247            21,796
                                          ------         ---------

                                         (35,812)       (   77,884)
                                          ------         ---------

Net loss                             $(2,183,842)       (  998,046)
                                      ===========        ==========




</TABLE>
<PAGE>


                            BOVIE MEDICAL CORPORATION
                      CONSOLIDATED STATEMENT OF OPERATIONS
                FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
                                   (CONTINUED)

<TABLE>

    <S>                                           <C>                <C>
                                                  1999              1998
                                                  ----              ----
   Net loss per share                          $ (.13)            $(.07)


         Weighted average number
          of common shares
          outstanding                       16,787,000         13,876,328
                                            ==========         ==========



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


BOVIE MEDICAL CORPORATION
CONSOLIDATED STATEMENT OF SHAREHOLDERS EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998

<TABLE>
<S>                           <C>            <C>      <C>        <C>       <C>       <C>            <C>         <C>

                            Warrants          Preferred              Common        Paid-in
                          Outstanding     shares     Stock      share     stock     Capital       Deficit      Total
                          -----------     ------     -----      -----     -----     -------       -------      -----

Balance January 1, 1998     1,064,000        --       --    8,279,948   $124,071  $13,030,962  (10,930,335)  2,224,698

Shares exchanged for
 warrants at $.75            ( 83,500)       --       --       83,500         84      62,157           --      62,241
Shares issued for consulting
 services at $.40 per share        --        --       --      306,667        307     122,360           --     122,667

Shares issued for employee
 bonus at $.40 per share           --        --       --      100,000        100      19,900           --      20,000

Shares issued for purchase
 of patent rights at $.40
 per share                         --        --       --       39,580         40      16,229           --      16,269

Shares issued for purchase
 of equipment, license,
 manufacturing rights and
 cash at $.98 per share            -- 2,000,000    2,000    2,900,000      3,000   4,855,000           --   4,860,000

Shares issued for trade name
 and inventory at $1.00 per share  --        --       --    3,000,000      3,000   2,977,000           --   2,980,000

Receipt of cash on subscriptions
 receivable Aaron officers         --        --       --           --         --         515           --         515

Adjustment to par value of
 stock from $.015 to $.001 as
 per stockholders meeting          --        --       --           --   (115,822)    115,822           --          --

Warrants issued 1998        1,000,000        --       --           --         --          --           --          --
Loss for 1998                      --        --       --           --         --          --  (  998,046) (  998,046)
                            ---------  --------    -----   ----------    -------   ---------   ---------   ---------
Balance as of December
31,1998                     1,980,500  2,000,000  $2,000   14,709,695   $ 14,780 $21,199,945$(11,928,381) $9,288,344
                            =========  =========   =====   ==========     ======  ==========  ==========   =========

The accompanying notes are an integral part of the financial statements. (Continued on next page)

</TABLE>
<PAGE>
BOVIE MEDICAL CORPORATION
CONSOLIDATED STATEMENT OF SHAREHOLDERS EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
(Continued)

<TABLE>
<CAPTION>

                            Warrants          Preferred              Common        Paid-in
                          Outstanding     shares     Stock      share     stock     Capital       Deficit        Total
                          -----------     ------     -----      -----     -----     -------       -------        -----
<S>                      <C>          <C>          <C>       <C>         <C>     <C>          <C>            <C>

Balance
January 1,
 1999                    1,980,500    2,000,000     $2,000   14,709,695  $14,780 $21,199,945  $(11,928,381)   $9,288,344

Common shares
  issued for cash
  at $.40 per share             --           --         --      425,000      425     169,575            --       170,000

Preferred shares
  purchased from ART
  valued at $.425 per
  share and retired             --   (2,000,000)   (2,000)          --        --    (848,000)           --      (850,000)

Common share issued
 as rent valued at
 $.24 per share                 --           --        --        29,060       29       6,945            --         6,974

Common shares purchased
  from share holder from
  cash at $.38 per share
  and retired                   --           --        --    (1,118,421) (1,118)   (423,882)            --      (425,000)

Subscription receivable
  paid for in cash              --           --        --            --       --      7,374             --         7,374

Warrants Issue             165,000           --        --            --       --         --             --            --
Loss for period                 --           --        --            --       --         --     (2,183,842)   (2,183,842)
                           -------     --------   --------   -----------  ------    -------     -----------   -----------


Balance as of
December 31, 1999        2,145,500           --         --    14,045,334  $14,116 20,111,957   (14,112,223)    $6,013,850
                         =========     ========  =========    ==========   ====== ==========    ==========      =========

</TABLE>

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


<PAGE>



                            BOVIE MEDICAL CORPORATION
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998


<TABLE>
<CAPTION>

                                                 1999                   1998
                                                 ----                   ----
Cash flows from operating activities:
<S>                                          <C>                     <C>
Net income (loss)                          $(2,183,842)            $  (998,046)

Adjustments  to reconcile  net income
(loss) to net cash  provided by operating
activities:

Depreciation and amortization                 321,172                  787,088
Shares issued for rent                          6,974                  162,667
Write down inventory of repair
 parts                                         33,445                  193,219
Loss on write down of fixed assets             55,079                       --
Loss on sale of license and reactors        2,718,985                       --

Change in assets and liabilities:
Trade receivables                            (207,214)               ( 211,009)
Prepaid expenses                               (8,005)               (  10,510)
Inventories                                  (201,231)               (  24,697)
Other receivables                              16,908                   34,212
Accounts payable                               16,696                (  13,532)
Accrued expenses                             ( 38,243)                  66,598
                                              --------                ---------

Total adjustments                            2,714,566               ( 984,036)
                                             ---------                --------

Net cash provided
 (used in) operations                      $(  530,724)             $(  14,010)
                                             =========                ========
</TABLE>

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

<PAGE>


                            BOVIE MEDICAL CORPORATION
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
                                 (Continued)

<TABLE>
                                                 1999                  1998
                                                 ----                  ----

<S>                                            <C>                 <C>

Net cash used in operating activities       $  (530,724)           $ ( 14,010)

Cash flows from investing activities:

Increase in fixed assets                       (126,728)             (301,220)
Increase in security deposits                        --              (  2,615)
Purchase of Technology                               --              ( 20,000)
Increase deposit on equipment                        --              (120,000)
                                              ----------             --------

Net cash used in investing
 activities                                    (126,728)             (443,835)

Cash flows from financing activities

Common shares issued                             177,374               982,756
Loans from shareholders                           (2,147)                3,976
Repurchase and retirement of common stock       (425,000)                   --
Increase in term borrowing                           --                 40,280
Reduction of notes payable                      (117,822)             ( 28,734)
Repayment of term loan                                --              ( 50,006)
Repayment - line of credit                            --              (260,000)
Borrowing - line of credit                       100,000                    --
                                               ---------              ---------
Net cash provided by (used in)
 financing activities                           (267,595)              688,272
                                                 -------               -------

Net increase in cash                              136,401              230,427

Cash at beginning of year                         278,673               48,246
                                                  -------               ------
Cash at end of year                             $ 415,074            $ 278,673
                                                =========            =========


Cash paid during the twelve months ended December 31:

                                                1999                   1998
                                                ----                   ----

Interest                                    $  60,751              $ 104,657
Income Taxes                                       -0-                  -0-

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

</TABLE>
<PAGE>


                    BOVIE MEDICAL CORPORATION AND SUBSIDIARY
                      CONSOLIDATED STATEMENT OF CASH FLOWS
               INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
                 FOR THE YEAR ENDED DECEMBER 31, 1999 AND 1998

SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1998

1. In February of 1998,  the Company  issued 5 million shares valued at $.98 per
share for two  reactors,  1  million  in cash and a  license  and  manufacturing
agreement  to coat  medical  products  with a multi-patented  advanced  coating
technology called "Dylyn".

2.The Company  issued  306,667  restricted  shares valued at $.40 per share for
consulting services.

3. The Company issued 100,000  restricted  shares valued at $.40 per share to an
officer of the Company in the form of a salary bonus.

4. The Company issued 39,580  restricted shares valued at $.40 for patent rights
on its OmniFix products.

5. The Company issued  3,000,000  shares valued at $1.00 per share for the trade
name "Bovie" and inventory of raw materials  spare parts and work in progress to
produce electrosurgical generators.

FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1999

1. During 1999 it was  determined  that a deposit of $125,000 to purchase a new
reactor from ART would have to be  reclassified  as other assets because the
due date for  delivery of the reactor had passed and a request to the vendor
for return of the deposit was made.

2. During 1999 the  license,  manufacturing  rights and  equipment  for the
Dylyn  process to coat purchased from ART in 1998 was sold back to ART for
2  million  shares  of the  Company  held  by  ART.  As a  result  of  this
transaction  the  Company  took a loss  of  $2,718,985  on the  sale of the
technology.

3. During 1999 the Company  evaluated  machinery and  equipment  and  determined
certain items no longer had future cash flows.  The majority of these items were
fully depreciated. The net carrying cost write down was $55,079.
<PAGE>


                            BOVIE MEDICAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1.  SIGNIFICANT ACCOUNTING POLICIES


Use of Estimates in the Preparation of Financial Statements

The  preparation  of  consolidated   financial  statements  in  conformity  with
generally accepted  accounting  principles requires management to make estimates
and assumptions  that affect the reported  amounts of assets and liabilities and
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting period. Actual results could differ from those estimates.


Consolidated Financial Statements

The accompanying consolidated financial statements include the accounts of Bovie
Medical  Corporation and its wholly owned subsidiary  Aaron Medical  Industries,
Inc. Intercompany transaction accounts have been eliminated in consolidation.


Fair Values of Financial Instruments

Cash and cash equivalents. Holdings of highly liquid investments with maturities
of three months or less, when purchased,  are considered to be cash equivalents.
The carrying amount reported in the balance sheet for cash and cash  equivalents
approximates its fair values.  The amount of federally insured cash deposits was
$100,000 as of December 31, 1999.

The carrying amount of trade accounts receivable,  accounts payable, prepaid and
accrued expenses,  bonds and notes payable, and amounts due to shareholders,  as
presented in the balance sheet, approximates fair value.


Inventories and Repair Parts

Inventories.  Inventories  are  stated at the lower of cost or  market.  Cost is
determined  principally on the average  actual cost method.  Inventory at fiscal
year-end  was as follows:

               Raw  materials           $  1,059,421
               Work in process               319,035
               Finished goods                299,322
                                           ---------

                   Total                $  1,677,778
                                           =========

Repair Parts.  The Company acquired the inventory of repair parts in conjunction
with the purchase of the Bovie Line of  Generators  and Bovie Trade name, on May
8, 1998. Although, the production of Bovie generators has been discontinued, the
Company has maintained the inventory to service the previously sold  generators.
The useful life of repair  parts is  estimated to be five to seven years and the
Company has set up an allowance for excess and obsolete parts.
<PAGE>

                          BOVIE MEDICAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1.  SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

As of December 31, 1999, the inventory of parts was as follows:

       Raw materials                                        $  542,530
       Allowance for excess or obsolete parts                 (220,219)
                                                               -------

                                                            $  322,311
                                                              ========

Long-lived Assets

Long-lived  assets  consist of property,  plant and  equipment,  and  intangible
assets.

Property,  plant  and  equipment  are  recorded  at cost less  depreciation  and
amortization.   Depreciation   and   amortization   are  accounted  for  on  the
straight-line  method based on  estimated  useful  lives.  The  amortization  of
leasehold  improvements is based on the shorter of the lease term or the life of
the  improvement.  Betterments and large renewals,  which extend the life of the
asset,  are capitalized  whereas  maintenance and repairs and small renewals are
expenses, as incurred.  The estimated useful lives are: machinery and equipment,
7-15 years; buildings, 30 years; and leasehold improvements 10-20 years.

Intangible assets consist of patent rights and goodwill. Goodwill represents the
excess of the cost of assets of the acquired  companies over the values assigned
to  net  tangible  assets.   These   intangibles  are  being  amortized  by  the
straight-line  method  over a 5-year  period.  Effective  January 1,  1996,  the
Company adopted the Statement of Financial  Accounting  Standards (SFAS) No.121,
"Accounting for the Impairment of Long-lived Assets and for Long-lived Assets to
be Disposed Of". In accordance with SFAS No.121,  the Company reviews long-lived
assets for impairment whenever events or changes in business circumstances occur
that indicate that the carrying  amount of the assets may not be recovered.  The
Company assesses the recovery ability of long-lived assets held, and to be used,
based on  undiscounted  cash flows and measures the  impairment,  if any,  using
discounted cash flows. Adoption of SFAS No.121 did not have a material impact on
the Company's consolidated financial position, operating results or cash flows.


Revenue Recognition and Product Warranty

Revenue  from  sales of  products  is  generally  recognized  upon  shipment  to
customers.  The Company warrants its products for one year. The estimated future
costs of  warranties  are not  material.  Income is  recognized in the financial
statements (and the customer  billed) when products are shipped from stock.  Net
sales are arrived at by deducting discounts and freight from gross sales.

Environmental Remediation

The Company accrues  environmental  remediation  costs if it is probable that an
asset has been impaired or a liability incurred at the financial  statement date
and the amount can be reasonably estimated.  Environmental  compliance costs are
expenses,  as incurred.  Certain  environmental  costs are capitalized  based on
estimates and depreciated over their useful lives.

Advertising Costs

All advertising costs are expensed as incurred.  The amount of advertising costs
were $67,120 and $93,700 for 1999 and 1998 respectively.

<PAGE>

                            BOVIE MEDICAL CORPORATION
                   CONSOLIDATED NOTES TO FINANCIAL STATEMENTS


NOTE 1.  SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)


Earnings Per Common and Common Equivalent Share

In February 1997, the Financial  Accounting Standards Board issued the Statement
of Financial  Accounting Standards 128(SFAS 128). "Earnings Per Share." SFAS 128
establishes  new  standards  for  computing  and  presenting  earnings per share
("EPS"). Specifically, SFAS 128 replaces the previously required presentation of
primary EPS with a presentation  of basic EPS. It requires dual  presentation of
basic and diluted EPS on the face of the income  statement for all entities with
complex capital  structures,  and requires a reconciliation of the numerator and
denominator of the basic EPS computation to the financial  statements issued for
periods ending after  December 15, 1997. In 1997, the Company  adopted SFAS 128.
In 1999, the Company had a net loss, the outstanding  options were  antidilutive
and were not included in computing the net loss per share.

Research and Development Costs

The  Company is  continually  conducting  research  and  development  activities
utilizing a team  approach  that involves its  engineering,  manufacturing,  and
marketing  resources.  Although,  the Company has  developed a number of its own
products,  most of its research and development  efforts have  historically been
directed towards product improvement and enhancement of previously  developed or
acquired products.  Research and development expenses are charged to operations.
Only the development  costs that are purchased from another  enterprise and have
alternative  future use are capitalized and are amortized over estimated  useful
life of the asset, generally five years.

Income Taxes

The Company and its wholly-owned  subsidiary file a consolidated  federal income
tax return.

Income taxes are accounted for under the asset and  liability  method.  Deferred
tax assets  and  liabilities  are  recognized  for the  future tax  consequences
attributable to differences  between the financial statement carrying amounts of
existing  assets and  liabilities  and their  respective tax bases and operating
loss and tax credit  carry-forwards.  Deferred  tax assets and  liabilities  are
measured  using  enacted tax rates  expected  to apply to taxable  income in the
years in which those  temporary  differences  are  expected to be  recovered  or
settled.  The effect on deferred tax assets and  liabilities  of a change in tax
rates is recognized in income in the period that includes the enactment date.

<PAGE>


                           BOVIE MEDICAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1.  SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Non-monetary Transactions

The accounting for non-monetary assets is based on the fair values of the assets
involved.  Cost  of a  non-monetary  asset  acquired  in  exchange  for  another
non-monetary  asset is  recorded at the fair value of the asset  surrendered  to
obtain it. The difference in the costs of the assets  exchanged is recognized as
a gain or loss. The fair value of the asset received is used to measure the cost
if it is more clearly evident than the fair value of the asset surrendered.


Stock-Based Compensation

In October 1995, the Financial  Accounting  Standards Board issued the Statement
of  Financial   Accounting   Standards  No.  123,  "Accounting  for  Stock-Based
Compensation"  (SFAS  123).  SFAS No.  123  allows a company to adopt a new fair
value based method of accounting for its stock based  compensation  plans, or to
continue  to  follow  the  intrinsic  method  of  accounting  prescribed  by the
Accounting  Principles  Board  (APB)  Opinion  No. 25  "Accounting  for Stock to
Employees".

The Company has elected to continue to follow APB Opinion 25 for its  accounting
for stock based compensation. Under this policy:

1. Compensation costs are recognized as an expense over the period of employment
attributable to the employee stock options.

2. Stocks  issued in  accordance  with a plan for past or future  services of an
employee are allocated between the expired costs and future costs.  Future costs
are charged to the periods in which the services are performed.

If the Company had adopted SFAS No. 123, the  Company's  net income and earnings
per years ended December 31, 1999 and 1998 would have been impacted as discussed
in Note 9.

New Accounting Standards

In June  1997,  the  Financial  Accounting  Standards  Board  issued  SFAS  130,
"Reporting  Comprehensive  Income". SFAS 130 establishes standards for reporting
and  display of  comprehensive  income and its  components.  The  components  of
comprehensive  income refer to (revenues,  expenses,  gains, and losses that are
excluded from net income under current accounting  standards,  including foreign
currency translation items, and minimum pension liability adjustments.  SFAS 130
requires that all items recognized  under accounting  standards as components of
comprehensive  income be  displayed  in equal  prominence  with other  financial
statements;  the total of other comprehensive income for a period is required to
be  transferred  to a component  of equity  that is  separately  displayed  in a
statement of financial position at the end of the accounting period. SFAS 130 is
effective for both interim and annual periods beginning after December 15, 1997.
In 1998, the Company adopted SFAS 130.

<PAGE>
                          BOVIE MEDICAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1.  SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

In April  1998,  the FASB issued SOP 98-5,  "Reporting  on the Costs of Start-up
Activities,"  which will become  effective  for the Company in fiscal  2000.  It
requires costs of start-up activities and organization costs to be expensed,  as
incurred.  The Company  currently follows this approach and such costs have been
minimal in the past.

In June  1997,  the  Financial  Accounting  Standards  Board  issued  SFAS  131,
"Financial  Reporting for Segments of Business  Enterprise." SFAS 131 supersedes
the "industry  segment" concept of SFAS 14 with a "management  approach" concept
as the basis for  identifying  reportable  segments.  SFAS 131 is effective  for
fiscal years  beginning  after December 15, 1997. In 1998,  the Company  adopted
SFAS 131.  The Company does not believe the adoption of SFAS No. 131 will have a
material affect on its consolidated financial statements.

In February 1998, the FASB issued SFAS No. 132,  "Employers'  Disclosures  About
Pensions and Other  Post-retirement  Benefits,"  which became  effective for the
fiscal years beginning after December 15, 1997. The statement  standardizes  the
disclosure requirements for pension plans and other post retirement benefits. To
the extent practicable, the statement requires additional information on changes
in the benefit  obligations  and fair value of plan assets.  The Company adopted
the SFAS 132. The adoption of SFAS No. 132 did not have a material impact on the
Company's consolidated financial statements,  the results of operations,  or the
notes thereto.

In June  1998,  the  FASB  issued  SFAS  No.  133,  "Accounting  for  Derivative
Instruments and Hedging  Activities," which becomes effective for the Company in
fiscal 2000.  Historically,  the Company has not utilized  such  instruments  or
engaged in such  activities;  therefore,  the  adoption of SFAS No. 133 will not
impact  the  Company's  consolidated   financial  statements,   the  results  of
operations, or the notes thereto.


NOTE 2.  DESCRIPTION OF BUSINESS

Bovie Medical  Corporation,  formally An-Con Genetics,  Inc. ("the Company") was
incorporated  in 1982,  under  the laws of the  State  of  Delaware  and has its
principal  executive office at 734 Walt Whitman Road, Suite 207,  Melville,  New
York 11747.

Currently,  the Company is actively engaged in the business of manufacturing and
marketing medical products and developing related technologies.


Aaron Medical Industries, Inc.

On January 11, 1995,  the Company  acquired a 100%  ownership  interest in Aaron
Medical Industries, Inc. a St. Petersburg,  Florida based Company engaged in the
manufacturing and distributing of medical products.

Aaron's largest current product line is  battery-operated  cauteries.  Cauteries
were originally  designed for precise  hemostatic in  ophthalmology.  Today they
have a variety  of uses  including  sculpting  woven  grafts in bypass  surgery,
vasectomies,  evacuation  of subungual  hematoma  (smashed  fingernail)  and for
stopping bleeding in
<PAGE>


                            BOVIE MEDICAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2.  DESCRIPTION OF BUSINESS (CONTINUED)

many types of surgery.  Aaron manufactures many types of cauteries.

Aaron additionally  manufactures a variety of specialty lighting instruments for
use in ophthalmology,  as well as a patented  flexible  lighting  instrument for
general surgery,  hip replacement surgery, and for the placement of endotracheal
tubes.  An  industrial  version  of this  light is  distributed  through a large
automotive tool distributor, and various retail outlets and stores.

Aaron Medical  Industries,  Inc.  manufactures  and sells its products under the
Bovie/Aaron label worldwide and has private label arrangements.

ECU Technology

On December 15, 1995 the Company's  subsidiary,  Aaron,  purchased design rights
for the technology to manufacture a 30 watt  electrosurgical  coagulation device
(ECU).

The ECU was being made by a third party manufacturer. The Company had a one year
contract  with the  manufacturer  to  produce  the unit at a fixed  price with a
provision for a second year  extension at an agreed upon price.  The Company has
hired an  electrical  engineer  to head up the  project  and has  relocated  the
production to the St. Petersburg facility.

The Company has developed a 120 watt  electrosurgical  coagulation  device (ECU)
which it began marketing in 1998.

During 1999,  the Company has been  developing  other  electrosurgical  products
which will be marketed in the future.

Asset Acquisition

In May 1998, the Company acquired certain assets and liabilities associated with
the Bovie brand of  electrosurgical  products  from  Maxxim  Medical,  Inc.  for
3,000,000  shares of the Company's  common stock.  Included in this purchase was
the "Bovie"  Tradename  which the Company  now uses as its name.  The  purchased
assets consisted of intangibles and inventory of component and repair parts. The
assets were recorded at fair market value.

NOTE 3.  TRADE ACCOUNTS RECEIVABLE

As of December 31, 1999 the trade accounts receivable were as follows:

      Trade accounts receivable                              $ 1,267,695
      Less: allowance for doubtful accounts                   (   57,647)
                                                               ---------

      Trade accounts receivable, net                         $ 1,210,048
                                                               =========


<PAGE>
                            BOVIE MEDICAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 4.  PROPERTY, PLANT AND EQUIPMENT

As of  December  31,  1999  property,  plant  and  equipment  consisted  of  the
following:

        Equipment                                   $   443,293
        Building                                        637,485
        Furniture & Fixtures                            330,177
        Leasehold Improvements                          271,013
        Molds                                           288,128
                                                      ---------
                                                      1,970,096
        Less: Accumulated depreciation                  535,527
                                                      ---------

        Net property, plant, and equipment          $ 1,434,569
                                                      =========

Depreciation  expenses  for the  years  ended  December  31,  1999 and 1998 were
$185,426 and $326,843, respectively.


NOTE 5. RENTAL AGREEMENTS

On May 6, 1997,  an  agreement  was entered  into with the  landlord of 734 Walt
Whitman  Rd.,  Melville,  New York for a new  lease  beginning  May 6,  1997 and
extending for three years to May 5, 2000.  The annual rental is $14,722  payable
at $1,226.83 per month.

The following is a schedule of future minimum rental payments as of December 31,
1999:

                                      Year                       Amount
                                      ----                       ------
                                      2000                    $  4,907



Total  consolidated rent expense for the Company was $25,584 in 1999 and $21,342
in 1998.

NOTE 6.  DUE TO SHAREHOLDERS

A former Chief Executive Officer (CEO) and past President made cash loans to the
Company during the period October 12, 1990 to December 31, 1993 in the amount of
$180,500.  In addition to these  loans,  the past CEO  advanced  his own cash of
$76,100 in the form of loans for product development, travel and other expenses.
Interest on these loans were at 9% to 12% and had been accrued  from  inception.
His loan balance at December 31, 1998 was $73,800. In October 1999, this dispute
was settled for $150,000 which included consulting fee, the Company had disputed
to be paid $50,000 down and $5,000 per month for 20 months.  The balance due the
former officer on December 31, 1999 was $82,198.

In response to the recission offer made by Bovie Medical  Corporation to Aaron's
former  shareholders,   certain  shareholders  owning  46,800  shares  have  not
contacted the Company.  The amount due to these shareholders,  including $11,665
of accrued interest, is $30,452.
<PAGE>

                            BOVIE MEDICAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 7.  INTANGIBLE ASSETS

At December 31, 1999, the intangible assets consisted of the following:


      Classification                                   Amount

      ECU Technology                                $  370,601
      Multifunction Cautery                             59,400
      Patent rights                                     87,769
      Goodwill                                         188,000
      Trade name                                     1,877,299
                                                     ---------

                                                     2,583,069

      Less: Accumulated Amortization                   696,394
                                                     ---------

                                                   $ 1,886,675
                                                    ==========


The cost of patents,  trademarks,  patent  rights,  technologies  and copyrights
acquired are being  amortized on the  straight-line  method over their remaining
lives, ranging from 2 to 20 years. Amortization expense charged to operations in
1999 and 1998 was $171,021 and $461,245, respectively.


NOTE 8. LONG-TERM DEBT

The long-term debt of the Company  includes a mortgage,  convertible  debentures
and notes payable.

         Bonds payable                                $   20,000
         Mortgage payable                                420,024
         Term loan                                         8,055
         7% Note payable                                   7,547
         9% Note payable                                   6,965
         Line of credit- bank                            100,000
                                                         -------

     Convertible Debentures                           $  562,591

As of April 21, 1987, the Company had sold 1,711  convertible  debenture  units.
Each  unit  consisted  of $1,000  subordinated  debentures  and 50 common  stock
warrants.

As of December 31, 1999,  1,691 units of  debentures  have been  converted  into
common shares of Bovie Medical Corporation or have been redeemed.  The remaining
number of outstanding debentures was 20 units.
<PAGE>

                            BOVIE MEDICAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 8. LONG-TERM DEBT (CONTINUED)

In February  of 1997,  the  10-year  notes of $78,000  and  accrued  interest of
$42,580 came due and the Company offered each bond holder 2,200 shares of common
stock for their $1,000 bond and accrued interest of $550.  Nineteen  bondholders
accepted the offer and forty-three bondholders received cash for their bonds and
accrued  interest.  The balance of the bondholders have not redeemed their bonds
or accepted the share offer.

Mortgage Payable

10% - Mortgage payable was issued to the former landlord for the purchase of the
property located at 7100 30th Avenue North, St. Petersburg,  Florida was secured
on June 26, 1995 for  $500,000  payable in monthly  installments  of  $5,673.06,
inclusive of interest, until July 1,1998 when a balloon payment of $ 442,733 was
due.  Because  an  environmental  (See Note 13,  Properties)  issue has not been
remediated, the mortgage is not due.

Notes Payable to a Commercial Bank

There exists a note payable a for a term loan which was originally $150,000. The
interest on the term loan is the bank's  prime rate plus 1 percent.  The loan is
repaid in equal  monthly  payments plus accrued  interest  based on a three-year
amortization schedule.  The bank has a security interest in inventory,  accounts
receivable and equipment of the Company (the collateral).

7% Note  Payable - This note was issued in  connection  with the  purchase  of a
probe  scope  technology  payable  at  $779.14  per  month  for  48  months  and
self-liquidating  beginning  November  1996 with the last  payment due  October,
2000.

9% Note Payable - This note was issued to finance insurance  premiums.  The note
is payable at $6,965.00 per month for 1 month.

Line of Credit - Commercial Bank

Advances  under the line of credit are  limited to the lesser of $600,000 or 60%
of  net  accounts  receivable  from  non-affiliated  parties.  Availability  was
$440,302 net of $100,000 already advanced.  The annual interest rate on the loan
is the bank's prime rate plus one percent.  The line expires September 23, 2000.
The bank has a security interest in inventory, accounts receivable and equipment
of the Company (the collateral).  The balance due the bank on the credit line at
December 31, 1999 was $100,000.


The following are maturities of long term debt for each of the next 5 years:

                    2000                    $ 562,591
                                              =======



<PAGE>

                            BOVIE MEDICAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 9. OPTIONS

As of December 31, 1999, outstanding options were as follows:


        Number of Options                         Exercise
      Currently Exercisable                         Price

            200,000                                $ 2.000
             50,000                                  1.150
            307,000                                  1.125
             30,000                                  1.120
          1,558,500                                  0.750
          ---------                                  -----

          2,145,500                               $  0.940 (a)
          =========                                  =====

(a) The amount of $0.940  represents the weighted  average exercise price of the
outstanding options.

In 1996,  the Company  issued  921,000 10 years  non-statutory  stock options to
employees exercisable at $.75 to $1.15 a share.

In 1997,  the Company  issued  100,000  shares of common  stock in exchange  for
200,000 options.  Also, 143,000 warrants were issued to the Company's  employees
as part of the employee benefit plan (Note 16).

In 1998, the Company  authorized  1,341,000  options under its 1998 services and
compensation plan and issued only 800,000. The Company issued 200,000 options at
$2.00 per share for investment  banking  services that expire two years from the
date of issuance.  In the fourth  quarter of 1999,  the Company  authorized  the
issuance  of  165,000  options  from its 1998  plan,  of which  145,000  were to
non-executive employees.

The options became exercisable in 1997 and 1998 and will expire at various dates
through  December  2007.  At December 31, 1999,  2,145,500  shares of stock were
reserved for that  purpose.  Options are currently  exercisable  with a weighted
average life of approximately seven years.

The Company has adopted the  "disclosure-only"  provision  of the  Statement  of
Financial  Accounting  Standards  ("SFAS") No. 123,  "Accounting for Stock-Based
Compensation."  Accordingly,  no  compensation  cost has been recognized for the
common stock option plans.

The Company  used the  Black-Scholes  Model to  determine  the fair value of the
options with the following  weighted average  assumptions,  zero dividend yield;
expected  volatility of 50%; and risk free interest rate of 6% and expected life
of ten and two  years  for the  800,000  and  200,000  options  issued  in 1998,
respectively.

<PAGE>

                            BOVIE MEDICAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 9. OPTIONS(Continued)

Had the  compensation  cost for the  Company's two stock option  issuances  been
determined  based  on the fair  value  at the  grant  date  for  awards  in 1996
consistent  with the  provisions of SFAS No.123,  the Company's net earnings and
earnings  per share would have been reduced to the pro forma  amounts  indicated
below:
<TABLE>
<CAPTION>


                                                    1999                  1998
                                                    ----                  ----
<S>                                               <C>                 <C>

Net earnings (Loss) - as reported)             $ (2,183,839)       $ (  998,146)
Net earnings (Loss) - pro forma                  (2,241,174)         (1,417,000)
Loss per share                                      (.130)              (.070)
Loss per share-pro forma                            (.134)              (.100)
</TABLE>

The fair value of each option  grant is estimated on the date of grant using the
Black-Scholes   option  pricing  model  with  the  following   weighted  average
assumptions,  zero  dividend  yield;  expected  volatility  of  .50%;  risk-free
interest rate of 6.34%; and expected lives of 3 years.


NOTE 10.  NET OPERATING LOSS CARRYFORWARDS

As of December 31, 1999, the components of deferred tax assets were as follows
<TABLE>
<CAPTION>


        Deferred tax assets:                       1999                  1998
                                                   ----                  ----
        <S>                                    <C>                  <C>

        Accounts receivable                  $    57,647         $         --
        Inventories                              289,457               82,550
        Net operating loss carry-forwards      3,356,344            2,827,000
        Patent rights, primarily due to
        amortization                             131,034              109,815
                                               ---------             ---------

        Total gross deferred tax assets        3,834,482            3,019,365

        Less: Valuation allowance              3,659,472            2,844,355
                                               ---------            ---------

        Net deferred tax assets - current    $   175,010         $    175,010
                                               =========            =========
</TABLE>

The Company had NOLs of approximately $9,588,839 at December 31, 1999, primarily
because of the past operating losses  associated with  discontinued  businesses.
These NOLs and  corresponding  estimated  tax assets,  computed at 35% tax rate,
expire as follows:

<PAGE>


                            BOVIE MEDICAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10.  NET OPERATING LOSS CARRYFORWARDS (CONTINUED)
<TABLE>
<CAPTION>

          Year loss          Expiration         Loss         Estimated
        incurred              Date             Amount        Tax Asset
          <S>                 <C>             <C>              <C>

         1985                 2000            764,000          267,000
         1986                 2001            301,000          105,000
         1987                 2002            730,000          255,000
         1988                 2003            757,000          265,000
         1989                 2004            374,000          131,000
         1990                 2005            382,000          134,000
         1991                 2006            246,000           86,000
         1992                 2007          1,004,000          352,000
         1993                 2008            465,000          163,000
         1994                 2009          1,197,000          419,000
         1995                 2010            637,000          223,000
         1998                 2018            548,000          192,000
         1999                 2019          2,183,839          764,344
                                            ---------        ---------

          Total                           $ 9,588,839      $ 3,356,344
                                            =========        =========
</TABLE>
Under the  provisions of SFAS 109, NOLs  represent  temporary  differences  that
enter into the  calculation of deferred tax assets.  Realization of deferred tax
assets associated with the NOL is dependent upon generating  sufficient  taxable
income prior to their expiration.


Management  believes  that there is a risk that certain of these NOLs may expire
unused and,  accordingly,  has established a valuation  allowance  against them.
Although realization is not assured for the remaining deferred tax assets, based
on the historical trend in sales and profitability,  sales backlog, and budgeted
sales of the Company's wholly owned and consolidated  subsidiary,  Aaron Medical
Industries,  Inc.,  management  believes it is more likely than not they will be
realized through future taxable earnings.  However,  the net deferred tax assets
could be reduced in the near term if  management's  estimates of taxable  income
during the carryforward period are significantly reduced.

The  valuation  allowance of  $3,019,365  as of January 1, 1999 was increased by
$815,117 as a consequence  of  recognizing  additional  deferred tax assets,  in
1999.  The Company  believes that it is more likely than not that the benefit of
these additional assets may not be realized in the future.

NOTE 11.  RETIREMENT PLANS

The  Company  and/or  its  subsidiary  provides a  tax-qualified  profit-sharing
retirement plan under section 401k of the Internal  Revenue Code the ("Qualified
Plans") for the benefit of eligible  employees with an accumulation of funds for
retirement  on a  tax-deferred  basis  and  provides  for  annual  discretionary
contribution to individual trust funds.

<PAGE>
                            BOVIE MEDICAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 11. RETIREMENT PLANS (CONTINUED)

All  employees are eligible to  participate  if they have one year of service in
theCompany.  The employees may make voluntary contribution to the plan up to 15%
of  their  annual  compensation.  The  Company's  contributions  to the plan are
discretionary but may not exceed 25% of the first 4% of the annual  compensation
that an employee  contributes to the plan.  Vesting is graded and depends on the
years of service. After six years of service the employees are 100% vested.

The Company has made a contribution  during 1999 and 1998 of $46,763 and $23,607
respectively, for the benefit of its employees.

The  Company  also  maintains  a group  health and dental  insurance  plan.  The
employees  are  eligible  to  participate  in the plan  after  three  months  of
full-time service in the Company.


NOTE 12. RELATED PARTY TRANSACTIONS


Alfred V. Greco:

A director  is the CEO of Alfred V.  Greco,  PC,  the  Company's  council  which
received $93,606 in legal fees. See "Security  ownership" of certain  beneficial
owners and management.

George Kromer:

A director  also serves as a consultant  to the Company with average  consulting
compensation of approximately $1,300 per month.

NOTE 13.  PROPERTIES

The Company had moved its  executive  offices to the Aaron  facility  located at
7100 30th  Avenue  N.,  St.  Petersburg,  Florida  33710-2902,  during the first
quarter of 1995.

The Company has  additional  executive  office space at 734 Walt  Whitman  Road,
Melville,  which it leases for $1,226.83  per month.  The lease runs through the
year 2000.

As part of the  purchase  of 7100 30th Avenue  North,  St.  Petersburg,  Florida
(manufacturing  facility) the seller  acknowledged  it had previously  conducted
assessments to document  environmental  conditions existing on the property, the
results  of which  are set  forth in a June 23,  1994  Contamination  Assessment
Report (CAR) and a January 27, 1995  Contamination  Assessment  Addendum (CARA).
The Florida  Department of Environmental  Protection  (FDEP) stated in a letter,
dated March 31, 1995,  that based on their review of the CARA, the CAR could not
be approved and that additional work was needed to be performed.

In February of 1998, the environmental  engineering firm Geo-Ambient conducted a
second  addendum to the CAR, (CAR Addendum II) to complete the  additional  work
requested  by the FDEP.  Based on the results of CAR  Addendum  II,  Geo-Ambient
recommended  to the FDEP that a "no  further  action"  status be granted for the
site.  However,  as of the date of  filing,  the FDEP has not yet  issued a Site
Completion Rehabilitation Order (SCRO).
<PAGE>

                           BOVIE MEDICAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 13. PROPERTIES (CONTINUED)



The  Company  has  received a report and  recommendations  on the results of the
water tests  performed.  As a result of previous  sampling  that showed that one
on-site  monitoring  well still had ground water  excedes for vinyl chloride
and total xylene,  the State Department of  Environmental  Protection has placed
the site on a "monitoring-only"  plan. The plan includes 4 quarters of sampling,
concluding in May, 1999.

DEP disagreed,  instead requiring the monitoring plan. At the end of the period,
DEP will likely  approve a "no further  action"  unless the well  concentrations
have not declined.  In that case,  DEP could ask for further  monitoring or some
type of ground water treatment.  The SCRO is on hold and the Company believes it
will not be issued for more than a year pending action on the above issue.

In a letter dated  November 22, 1999 written by Ambient  Technologies  Inc. that
states based on the ground water  quality  monitoring data obtained and existing
site conditions, ATI recommends that a "no further action" status be granted for
the site. If such is not granted,  ATI  recommends the  ground water  monitoring
plan be extended for a minimum of two additional quarters to continue to further
assess natural attenuation of ground water quality.


NOTE 14.  COMMITMENTS AND CONTINGENCIES

Environmental conditions -Purchase of Building
(See Note 13 - properties)

Leases

The Company  leases  administrative  facilities  under an  operating  lease that
expires in 2000. Rental expense was $25,584 in 1999 and $21,342 in 1998. Minimum
rental  commitments  under all  non-cancelable  leases  with an initial  term in
excess of one year are payable as follows:  2000 and beyond $4,907. There was no
commitment  for  construction  or purchase of  property,  plant,  and  equipment
approximated at December 31, 1999.

Employment Agreements

The Company has employment agreements with five key employees.  These agreements
are for terms up to 5 years and call for salaries of up to $136,000.

During 1997,  officers  waived their right to 1996 bonuses and allowed the board
of directors to determine  future  bonuses.  These bonuses are valued at $70,600
and were shown as a contribution to paid-in capital.

<PAGE>


                            BOVIE MEDICAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 14.  COMMITMENTS AND CONTINGENCIES (CONTINUED)

Employee Benefit Plans

In 1996, the Company  established  stock option plans under which officers,  key
employees and  non-employee  directors may be granted options to purchase shares
of the Company's  authorized,  but unissued,  Common Stock. Under Employee Stock
Warrant Plans, the Company has warrants  outstanding as of December 31, 1999 for
the purchase of 1,945,500  shares of restricted  common stock at exercise prices
ranging from $.75 to $1.125.

Product Liability

The Company currently has product  liability  insurance which, it believes to be
adequate for its business. The Company's existing policy expires in May 2000.

Bank Line of Credit and Term Loan

The financial covenants of the bank are:

1)         Total  Liabilities to Tangible Net Worth Ratio. The Company shall, at
           all  times,   maintain  a  ratio  of  Total  Liabilities,   including
           subordinated  debt,  divided by  Tangible  Net Worth of not more than
           0.75 to 1.00. For purposes of this computation,  "Total  Liabilities"
           shall  mean all  liabilities,  including  capitalized  leases and all
           reserves for deferred  taxes and other deferred sums appearing on the
           liabilities  side of a balance  sheet,  in accordance  with generally
           accepted  accounting   principles  applied  on  a  consistent  basis.
           "Tangible Net Worth" shall mean total assets minus total liabilities.
           For  purposes  of  this  computation,  the  aggregate  amount  of any
           intangible  assets  of the  Company  including,  without  limitation,
           goodwill,  franchises,  licenses, patents,  trademarks,  trade names,
           copyrights,  service marks, and brand names, shall be subtracted from
           total assets, and total liabilities shall include subordinated debt.

2)         Capital Expenditures.  The Company shall not, during any fiscal year,
           expend  on  gross  fixed  assets   (including   gross  leases  to  be
           capitalized  under  generally  accepted  accounting   principles  and
           leasehold  improvements)  an amount  exceeding Four Hundred  Thousand
           Dollars and No Cents ($400,000) in the aggregate.

3)         Dividends.  The Company shall not, during any fiscal year, declare or
           pay dividends in an amount in excess of twenty-five  percent (25%) of
           its net income.  Said amount may be paid only after providing for the
           prior satisfaction of all accrued taxes and debt service. In no event
           shall the  Company  declare or pay a dividend  if there shall exist a
           default or a condition  which,  upon the giving of notice or lapse of
           time or both, would become a default under the Loan Documents.

4)         EBITDA to Interest Ratio.  The Company shall, at all times,  maintain
           an EBITDA to Interest Ratio of not less than 3.50 to 1.00. "EBITDA to
           Interest  Ratio"  shall  mean the sum of  earnings  before  interest,
           taxes, depreciation and amortization divided by interest expense.

Because of the loss for 1999,  the Company is not in technical  compliance  with
the bank's financial covenants relating to item number four above.


NOTE 15.  EARNING PER SHARE

In 1999, the Company  sustained a $.13 loss per share.  Because of the Company's
loss, the convertible  debt and warrants had an  anti-dillutive  effect and were
not used to compute any diluted loss per share.


NOTE 16. PURCHASE OF ASSETS FOR SHARES

In 1998, the Company  reported the  acquisition of a license for the manufacture
and sale of a new "Dylyn" technology (a nanocomposite technology for the coating
of products)  from  Advanced  Refractory  Technologies,  Inc., a  non-affiliated
Buffalo  based  privately  held  company   ("ART"),   for  2,000,000  shares  of
convertible  preferred stock of the Company.  After a series of production runs,
management  made a  determination  that the use of the Dylyn  technology did not
result in  commercially  viable  electrodes,  the  Company's  primary  choice of
products to be coated.  As a result the Company  reacquired the 2,000,000 shares
of  convertible  preferred  stock in exchange for the  equipment,  licensing and
manufacturing rights which were originally acquired by the Company from ART.

In a related  development,  the Company  entered  into an agreement in December,
1999,  whereby the Company  agreed to repurchase  2,000,000  shares from a major
shareholder  group which had originally  acquired its shares in connection  with
the  ART  transaction  in  1998.  Simultaneously  with  the  execution  of  such
agreement,  the Company repurchased  1,118,421 shares of common stock at a price
of $.38 per share and  expects to  purchase  the balance of the shares over a 21
month period.  As of December 31, 1999, the aforesaid  transaction  with ART and
the  shareholder  group  resulted in a reduction  of the  Company's  outstanding
shares on a fully  diluted  basis from  17.16  million  shares to 14.04  million
shares.

Maxxim Medical, Inc. Asset Acquisition, Supply and License Agreement.

On May 8, 1998, the company  entered into and  consummated a strategic  alliance
agreement with Maxxim Medical, Inc., (Maxxim), a Delaware corporation the shares
of which are listed on the New York Stock Exchange.  The agreement  provided for
the  acquisition,  by the Company,  of the trade name and the trademark Bovie, a
supply,  license  and  distributorship  arrangement  concerning  electrosurgical
devices and the acquisition of Maxxim's  electrosurgical  generator product line
in  exchange  for  3,000,000  shares  of  common  stock  of  the  Company.  More
specifically,   the  agreement   provides  for  (a)   irrevocable   royalty-free
sub-license  to  Maxxim  to  use  the  Bovie  name;   (b)  a  2-year   exclusive
distributorship in Maxxim to resell the Bovie electrosurgical  generator product
line  anywhere  in the  world,  and (c) a  non-exclusive  right  to sell  An-con
products  anywhere in the world. The  distributorship  arrangement  provides for
anticipated  cooperation  between  Maxxim and the  Company  with  respect to the
research and  development  of new  products  and  Maxxim's  option to become the
exclusive  distributor  thereof.  Maxxim also agreed to certain minimum purchase
orders for the Bovie generator product line, the Aaron 1200 generators and other
An-con products and accessories aggregating $3,000,000 during the initial 5-year
term of the agreement,  subject to quality control and the Company's  ability to
meet commercially  reasonable purchase orders of Maxxim.  Kenneth Davidson,  the
chairman  of the  Board of  Maxxim,  has been  elected  a member of the Board of
Directors of the Company.

As  consideration  for the foregoing,  the Company agreed to exchange  3,000,000
shares of common stock for the Bovie  Electrosurgical  Generator line, the Bovie
trademark and trade name,  and entered into  agreements  for the  aforementioned
supply, license, and distributorship  arrangement involving Maxxim's commitments
to purchase the Company's current and future products. Due to the Company's lack
of sufficient authorized shares, in lieu of common stock, the Company had issued
a secured  convertible  promissory  note to Maxxim  in the  principal  amount of
$3,000,000,  which was retired  when the  shareholders  authorized  the required
shares and the Company delivered them to Maxxim.

<PAGE>

                            BOVIE MEDICAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 17. INDUSTRY SEGMENT REPORTING


Disclosures about Reportable Segments - Types of products and services.

Bovie has two reportable segments: medical and non-medical products. The medical
products segment produces battery operated cauteries,  electrosurgical products,
and a variety of  specialty  lighting  instruments  for  surgical  use. The non
surgical segment produces and sells lighting instruments for commercial use.

Measurement of Segment profit or loss and segment assets

The accounting  policies of the segments are the same as those  described in the
summary of significant accounting policies. Bovie evaluates performance based on
profit or loss from  operations  before income taxes not including  nonrecurring
gains  and  losses  and  foreign  exchange  gains  and  losses.  There  were  no
intersegment sales and transfers in 1999 and 1998.

Factors Management used to Identify the Enterprise's Reportable Segments

Bovie's  reportable  segments are strategic  business units that offer different
products  and  services.  They are  managed  separately  because  each  business
requires different technology and marketing strategies.

The  Company's  principal  markets  are the  United  States,  Europe,  and Latin
America,  with the U.S. and Europe being the largest  markets based on revenues.
The Company's major products include cauteries, electrosurgical,  Bend-A-lights,
nerve locators,  reusable  penlights and electrodes.  Cauteries,  disposable and
replaceable,  account  for 42% and 41% of  Company's  sales  for 1999 and  1998,
respectively.

One significant  customer  accounted for 8% and 7% of revenues in 1999 and 1998,
respectively.  In 1999, that customer  accounted for $.77 million of non-medical
sales,  which is 75% of that segments sales. The Company's ten largest customers
accounted for  approximately 59% of net revenues for 1999. At December 31, 1999,
the same ten customers  accounted for approximately 55% of outstanding  accounts
receivable.


Summary  information by geographic  area and  significant  industry  segment for
years ended December 31,1999 and 1998 were as follows:

<TABLE>
<CAPTION>

                                                                                          Additional Information
                                Operating            Gain           Identifiable    Interest    Interest
                                  Sales             (Loss)              Assets       Income     Expense     Depreciation
<S>                                <C>                 <C>             <C>           <C>        <C>         <C>
1999 - (in thousands)
Geographic Area
Domestic                        $ 7,765             $  426            $  3,604        --        --           --
International                     1,832                199                  91        --        --           --
                                  -----                ---               -----
                                $ 9,597             $  625 (1)        $  3,695        --        --           --
                                =======             ====== ==         ========

Segment
Medical Products                $ 8,566             $  790            $  3,299      $ 20      $ 54        $ 165
Non-medical Products              1,031               (165)                396         2         7           20
                                  -----                ---               -----        --        --          ---
                                $ 9,597             $  625 (1)        $  3,695        22        61          185
                                  =====                ===               =====        ==        ==          ===


1998 - (in thousands)
Geographic Area
Domestic                        $ 6,921            $ ( 259)            $ 7,018        --        --           --
International                     1,520              (  81)                145        --        --           --
                                  -----               ----               -----
                                $ 8,441              ( 340)            $ 7,163        --        --           --
                                =======              =====             =======

Segment
Medical Products                $ 7,599            $ ( 302)            $ 6,447         4        94          293
Non-medical products                842              (  38)                716         -        10           33
                                  -----               ----               -----        --       ---          ---
                                $ 8,441            $ ( 340)            $ 7,163       $ 4     $ 104        $ 326
                                  =====               ====               =====        ==       ===          ===

</TABLE>
<PAGE>

                            BOVIE MEDICAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 17. INDUSTRY SEGMENT REPORTING


                                             1999           1998
                                             ----           ----

Assets and liabilities outside the U.S.A.
 Total assets                              $  91            $   102
Total liabilities                            -0-                -0-
Net property, plant
 and equipment                               -0-                -0-


(1) Does not include Non-recurring loss and other income or expense.


The Company had no assets (other than certain trade  receivables) or liabilities
outside the United States, in the two years ended December 31, 1999.

During 1999, a portion of the Company's  consolidated net sales and consolidated
loss from operations was derived from foreign operations. Foreign operations are
subject to certain risks inherent in conducting business abroad, including price
and  exchange   controls,   limitations  on  foreign   participation   in  local
enterprises, possible nationalization or expropriation, potential default on the
payment of government  obligations with attendant impact on private  enterprise,
political   instability  and  health  care  regulations  and  other  restrictive
governmental  actions.  Changes in the relative  value of currencies  take place
from time to time and could adversely affect the Company's results of operations
and  financial  condition.  The  future  effects  of these  fluctuations  on the
operations of the Company and its subsidiaries are not predictable.



<PAGE>


                     CONSENT OF CERTIFIED PUBLIC ACCOUNTANT


We consent to the  incorporation  by  reference  in this  Annual  Report on Form
10-KSB of Bovie Medical Corporation of our report dated March 31, 2000, included
in the Annual Report to Stockholders of Bovie Medical Corporation.





Bloom and Company



Hempstead, New York
March 31, 2000

<PAGE>


                          INDEPENDENT AUDITORS' REPORT



To the Board of Directors
and Shareholders of
Bovie Medical Corporation

We have audited the  accompanying  consolidated  balance  sheet of Bovie Medical
Corporation as of December 31, 1999 and the related  consolidated  statements of
operations,  and  stockholders'  equity,  and cash  flows  for the  years  ended
December 31, 1999 and 1998.  These  consolidated  financial  statements  are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the accounting  principles  used, and  significant  estimates made, by
management as well as evaluating the overall financial  statement  presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion the financial statements referred to above present fairly, in all
material  respects,  the financial  position of Bovie Medical  Corporation as of
December  31,  1999 and the  results of its  operations,  and cash flows for the
years ended  December 31, 1999 and 1998 in conformity  with  generally  accepted
accounting principles.


BLOOM AND COMPANY



Hempstead, New York
March 31, 2000
<PAGE>