U.S. SECURITIES AND EXCHANGE 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 31,2000


                            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 $9,935,886.

 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 20, 2001 was approximately $9,129,344.

State the number of shares outstanding of each of the issuer's classes of common
             equity, as of the latest practicable date:13,585,334.

                       DOCUMENTS INCORPORATED BY REFERENCE

               There are no documents incorporated by reference.

<PAGE>


                            Bovie Medical Corporation
                         2000 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  900 high  frequency
desiccators  (generators)  and the  Aaron  1200  electrosurgical  generator.  In
addition,  the Company has designed,  developed and scheduled the release of two
other  electrosurgical  generators;  the Aaron 1250 and the Aaron  2100,  during
first two  quarters  of 2001.  These two  generators  are  designed  for today's
rapidly expanding surgi-center market.

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
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  generators,   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.  Our  accessory   electrosurgical  products  are
substantially compatible with all major manufacturers' electrosurgical generator
products. All electrosurgical  generators and accessories are marketed using the
Bovie trademark,  which is recognized  internationally in electrosurgery.  It is
estimated  that  80%  of  all  surgical   procedures   performed  worldwide  are
accomplished  by   electrosurgery,   which  includes   surgical   procedures  in
gynecology, urology, plastic surgery, general surgery and dermatology.


         Aaron 800 and Aaron 900 High Frequency Desiccators

         The Aaron 800 and Aaron 900 are low powered  office  based  generators
         designed primarily for dermatology and plastic surgery.  The units are
         30 watt high frequency  desiccators used mainly in doctors offices for
         removing small skin lesions and growths.


         Aaron 1200

         The Company has developed a 120 watts,  full-featured  electrosurgical
         generator for outpatient surgical  procedures.  It was designed mainly
         for  use in the  doctors'  office  and is  utilized  in a  variety  of
         specialties including: dermatology, gynecology, and plastic surgery.


         Aaron 1250

         The  Company  has  developed  and plans to  release  during  the first
         quarter of 2001, a 120 watt  multipurpose  electrosurgical  generator.
         The unit also  features  monopolar  and  bipolar  functions  with pad
         sensing.  The product has received a positive  response  from the OEM
         community and is being  produced in at least two private label formats
         in addition to the Bovie/Aaron label.


         Aaron 2100

         The Company has developed and plans release  during the second quarter
         of 2001, a 200 watt multipurpose  electrosurgical generator,  designed
         for the rapidly  expanding  surgi-center  market in the United States.
         The unit features both  monopolar and bipolar  functions,  has pad and
         tissue sensing plus nine blended cutting settings.  This powerful unit
         has the capability to do practically any procedure  performed today in
         the surgi-center or outpatient setting.


         New Generators

         In addition to the Aaron 2100 and 1250,  the Company is  continuing to
         develop  and  expand  its  range of  electrosurgical  generators.  The
         Company has two  generators  currently  in the design and  development
         phase.  The first new  generator  is  expected  to be  released in the
         fourth  quarter  of 2001 and the  second is  expected  to be ready for
         release during 2002.


         Jump Unipolar Low Temperature Focused Plasma Technology

         In February,  2000, the Company entered into a Joint Venture Agreement
         with a German  corporation,  Jump  Agentur Fuer  Elektrotechnik  GMBH.
         Pursuant  to  the  agreement,  Bovie  is to  advance  $200,000  to the
         partnership to cover costs of further research and development for the
         production of two commercial  prototypes for  dermatology  and general
         surgery.  It shall also make  available its  facilities in Florida for
         development,  manufacturing and marketing of the products of the joint
         venture and will be  responsible to expend it's best efforts to secure
         all necessary financing for the research, development and marketing of
         the products estimated to be an amount up to $1,500,000.

         The joint venture acquired an exclusive  license to produce and market
         any surgical  device  utilizing  this  technology.  As of December 31,
         2000,  Bovie had advanced  $100,000 to the joint  venture and expensed
         $21,924 in development costs.

         The technology  utilizes a gas ionization  process  utilizing only one
         working  electrode.  The device produces a stable thin focused beam of
         ionized gas that can be controlled in a wide range of temperatures and
         intensities,   providing   the   surgeon   with   precision,   minimal
         invasiveness and an absence of conductive currents during surgery.

         This  electrosurgical  device has been  developed and patented in both
         Europe and the U.S., and is awaiting FDA submission and approval.  The
         initial  intended  uses are in the areas of  Dermatology  and  Plastic
         Surgery.   Other   contemplated   uses   for   the   technology   are:
         cardiovascular, thoracic, gynecological and other surgeries.

<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  a  nerve  locator  stimulator  primarily  used  for
identifying  motor  nerves  in hand  and  facial  reconstructive  surgery.  This
instrument is a self-contained,  battery operated unit, 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, HBOC, IMCO, NDC (Abco, Cida and Starline), 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,   Valley  Lab  (a  division  of  Tyco),  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 2000 and 1999,  totaled  $513,020  and  $379,832
respectively.  The  Company  has not  incurred  any  direct  costs  relating  to
environmental regulations or requirements.


Employees

Presently the Company has a total of approximately 109 employees.  These consist
of 5  executives,  10  administrative,  5 sales,  and 89  technical  support and
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.


PURCHASE COMPANY SHARES

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.  To complete the
purchase  which ends  November,  2001,  the Company  will  expend  approximately
$150,000.


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 $1,350  per month and the lease  expires in the year 2003.

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.

On February 16, 2001, Meryman Environmental,  Inc. conducted a ground water test
and  determined  "the data  continues  to show an overall  decrease  in the mass
contamination  at the site." The Company is waiting for further  comments on the
report by the  Florida  Department  of Health  Pollutant  Storage  Tank  Cleanup
Program and the waste cleanup section FDEP Southwest District.

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, 2000.



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 ("OTC 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 OTC  Bulletin  Board
(symbol "Bovi").  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


                2000                             High               Low


           1st Quarter                        $ 1.5000          $ .7500

           2nd Quarter                          1.0500            .6500

           3rd Quarter                          1.5000            .7000

           4th Quarter                          1.5000            .5500


On March 20, 2001,  the Closing bid for Bovie's  Common Stock as reported by the
OTC Bulletin  Board was $.656 per share.  As of March 20, 2001, the total number
of shareholders of the Company's Common Stock was approximately  2,000, of which
approximately  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  $9.69  million as compared to
$9.94  million for 2000.  The increase in sales of $.25 million (2%) 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 2000 as compared to approximately 90% in 1999.

The Cost of goods sold decreased by $12,069  (.025%) from  $5,004,818 in 1999 to
$4,992,749  in 2000.  Consequently,  the  percentage  of gross profit from sales
increased  from 48% in 1999 to 49% in 2000.  The difference in cost of sales and
gross profit were  principally  due to an increase in sales and decrease in cost
of sales of the Company's family of cauteries. For years 2000 and 1999 cauteries
accounted for 41% and 42% of sales, respectively, and 36% for both years of cost
of goods sold.


<PAGE>

Research and development expenses increased from $379,832 to $513,020, from 1999
to 2000. The Company  continued to invest in the development of  electrosurgical
devices,  and other Company  products which are evidenced by  engineering  costs
increasing  from $281,114 in 1999 to $346,753 in 2000.  Research and development
costs are made up of material, engineering, and payroll costs.

The Company's  effective  federal income tax rate is 34%. As a result of the net
gain,  the  Company's  net  operating  loss tax  benefits  decreased  in 2000 by
$175,344, leaving a net operating loss carryover of $9.1 million.

General and  administrative  expenses of the Company  increased  $250,324 or 17%
from $1.45 million in 1999 to $1.7 million in 2000. This was mainly attributable
to the increase in trade show and advertising expenses of $200,000 together with
the costs associated with supporting additional personnel.
<PAGE>
Salaries  and related  costs  increased  by 6% from $1.7 million in 1999 to $1.8
million  in 2000.  The  increase  in  salaries  was due in part to the hiring of
additional  administrative,  quality  control  and  technical  personnel  needed
primarily to produce electrosurgical products.

Cost of professional services decreased by 25% from $508,117 in 1999 to $379,289
in 2000.  Professional fees were primarily  related to consulting,  auditing and
legal costs.

During 1999,  the Company  evaluated its DYLYN (tm) 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, to sell back the reactors
and the technology.  The Company incurred a non-recurring  loss of $2,718,985 on
the transaction.

The decrease in other expenses,  included the non-recurring  loss, resulted in a
increase  of  $2,670,906  in  operating  income and  $2,684,470  increase in net
income,  from  1999 to 2000.  Loss from  operations  was  $2,148,030  in 1999 as
compared to an  operating  gain of $522,876 in 2000.  Net loss of the Company in
1999 was $2,183,839 as compared to net gain in 2000 of $500,628.

Total other costs as a  percentage  of sales were 71% in 1999 as compared to 44%
in 2000.  These costs  primarily  decreased due to the loss  associated with the
sale of the DYLYN (tm) Technology  taken in 1999. For the year 2000, total other
costs, excluding the DYLYN (tm) transaction,  were not significantly higher than
in 1999.

The Company  sells its products  through  distributors  both  overseas and in US
markets.  New distributors are contacted through response to Company advertising
in  international  medical  journals and/or at domestic or  international  trade
shows.

During 2000,  international  sales of the Company's product lines decreased by a
total of $188,031  (10%).  In 1999,  these sales were $1.8 million (19% of total
sales) as  compared to $1.6  million  (16% of total  sales) in 2000.  To enhance
European  sales,  the Company has recently  opened a sales office in Germany and
will commence  marketing its increased line of  electrosurgical  products in the
Spring of 2001.

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. In 1999 and 2000, commissions paid were $177,658
and $176,425, respectively.

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.

In order to provide  additional  working  capital,  the  Company  has  secured a
$600,000  credit  facility  with a  local  commercial  bank.  This  facility  is
renewable annually.

Financial Condition

As of  December  31,  2000,  cash  totaled  $278,662  as compared to $415,074 at
December 31, 1999.  Cash provided by operating  activities  was $657,500 in 2000
compared to $530,724 in 1999. Net working  capital of the Company was $2,506,882
and $2,365,530 on December 31, 2000 and 1999, respectively.

The amount of cash used in investing  activities was $126,728 in 1999,  compared
to $639,869 in 2000.  The Company  continued  to invest in  property,  plant and
equipment  needed  for future  business  requirements,  including  manufacturing
capacity.  The  Company  invested  $200,000 in a joint  venture  involving a new
unipolar low temperature plasma technology.

The net cash used by  financing  activities  was $154,043 in 2000 as compared to
$267,595  in 1999.  The most  significant  item of  financing  activity  in 2000
resulted from the repurchase of 400,000 Company common shares for $152,000, 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 needed
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 58% in  2000.  At  December  31,  2000,  the
Company's  ten largest trade  receivables  accounted  for  approximately  58% of
outstanding trade receivables as compared to 55% in 1999.

<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, have significant growth potential
because these 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, Aaron 900, Aaron 1200, and Aaron 1250, and soon
to be introduced, the Aaron 2100 high frequency generators.

From 1999 to 2000, the Company's electrosurgical sales decreased by 9% from $2.7
million to $2.5  million.  This  decrease was mainly  attributable  to less than
anticipated  sales from Maxxim.  With the  introduction  of new  electrosurgical
products, the Company expects electrosurgical sales to increase significantly in
2001. The Company through its private label capability anticipates opportunities
in  the  domestic  market  as  its   competitors  do  not  private  label.   The
electrosurgical  product market is larger than the Company's  traditional market
and is dominated by two main  competitors,  ValleyLab  and Conmed.  The combined
markets for these products exceed $100 million annually.


Non-Medical Products

In  2000,  the  Company  had  sales of $1.1  million  of its  flexible  lighting
products,   used  primarily  in  the   automotive   and  locksmith   industries.
Approximately $.9 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.  The Company's new  eletrosurgical  generators  are
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, 2000,  the Company had $150,000  outstanding on the line of credit and had a
balance of $-0- on its term loan. The Company  believes it is in compliance with
the bank's covenants at December 31, 2000.

The  Company's  future  results  of  operations  and the  other  forward-looking
statements  contained herein particularly the statements regarding growth in the
medical products  industry,  capital  spending,  research and  development,  and
marketing and general and administrative expenses, involve a number of risks and
uncertainties.  In addition to the factors discussed above,  among 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 V. Greco         Director           April, 1998

Nancy Keller            Chief Financial
                        Officer

Moshe Citronowicz       Executive Vice
                        President
                        Chief Operating
                        Officer
------------------
Andrew Makrides, Esq. age 59, 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 48,  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 65,  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 52, 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 60, became a director on October 1, 1995. Mr. Kromer
was 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 48, 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.

Pursuant to the agreement with Maxxim Medical, Inc. ("Maxxim"), Mr. Davidson was
designated  by Maxxim to serve as a director of Bovie  Medical Corp. In October,
2000, Mr. Davidson  resigned as a director of Maxxim.  Pursuant to  instructions
from Maxxim that Mr.  Davidson  has ceased  acting as a director of the Company,
management  has deemed that he has  officially  resigned as a director of Bovie.
Maxxim has elected not to replace or redesignate a replacement for Mr. Davidson.
<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, 2000:


                                      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          2000  $ 123,764   2,388    7,235     --          --    --
 the Board            1999  $ 116,312   2,198    9,263     --          --    --
                      1998     99,478   1,918    9,809     --          --    --

J. Robert Saron
 President of Aaron
 Medical and          2000  $ 167,528   3,381  12,556      --          --    --
 Director             1999  $ 166,181   3,245  14,409      --          --    --
                      1998    144,559   2,814   9,809      --          --    --

Moshe Citronowicz
 Executive
 Vice President-      2000  $ 122,076    2,485  12,711     --          --    --
 Chief Operating      1999  $ 116,193    2,439  14,564     --          --    --
 Officer              1998    112,463   22,891   9,809   100,000       --    --

Nancy Keller          2000  $  70,702    1,954   6,599     --          --    --
Chief Financial       1999  $  38,060    1,444   4,165     --          --    --
Officer
</TABLE>

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

The following  table  summarizes (i) there were no options  granted to the Named
Executive Officers during the year ended December 31, 2000 (ii) the in the money
value of the options held by the named  Executive  Officers at December 31, 2000
was zero.


<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              --
J. Robert Saron       --             --             --              240,000              --
Moshe Citronowicz     --             --             --              175,000              --


-------------------
</TABLE>
<PAGE>
(a) The exercise price of the options was higher than the closing sale price for
the Common Stock.  The sales price as reported on OTC Bulletin Board on December
31, 2000 was $.60.

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,  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 $1,500.  Mr. Greco is
an officer and director of Alfred V Greco PLLC, Counsel to the corporation which
earned legal fees from the Company of $58,508 during 2000. There were no options
granted to the members of the Board of Directors in the year 2000.

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

In February 2000, the Company extended employment  contracts 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, 2000

                       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, 2000, 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        19.0%
 10300 49th St. North
 Clearwater, FL 33762

Directors

Andrew Makrides        Common        535,800(ii)  Beneficial         3.4%
 734 Walt Whitman Road
 Melville, NY 11746

George Kromer          Common        205,000(iii) Beneficial         1.3%
 P.O. Box 188
 Farmingville, NY 11738

Alfred Greco           Common        201,500(iv)  Beneficial         1.3%
 666 5th Ave.
 New York, NY 10103

J. Robert Saron        Common        673,805 (v)   Beneficial        4.3%
 Ashley Drive
 Seminole, FL

Moshe Citronowicz      Common        349,591 (vi)  Beneficial        2.2%
 7100 30th Avenue N.
 St. Petersburg, FL 33710

Officers and Directors
as a group                           1,965,696(a)                    12.5%

</TABLE>
<PAGE>
(a) Includes 990,000 shares reserved for options

(i) Based on common shares of 13,685,334  and 2,105,500  options  outstanding to
acquire shares. Officers and directors have 990,000 options to acquire shares at
December 31, 2000.

(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  205,000 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) Includes 175,000 shares reserved pursuant to 10 year options exercisable at
$.75 per share owned by Mr. Citronowicz.


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 $1,500 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  and  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. As of December 31, 2000, the Company owed the former
chairman $24,721.

See "Certain  Relationships  and Related  Transactions".  Presently  there is no
lawsuits between the Company and any former officer.


Alfred V. Greco

A director is the principal of Alfred V. Greco PLLC, the Company's counsel which
received  $58,508 in legal fees during 2000. 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 2000.
<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 March 26, 2001.

                                         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
                                                      March 26, 2001

S/J. Robert Saron                                     Director
-------------------------------------
J. Robert Saron                                       March 26, 2001

S/George W. Kromer                                    Director
-------------------------------------
George W. Kromer                                      March 26, 2001


S/Nancy Keller                                        Chief Financial Officer
-------------------------------------
Nancy Keller                                          March 26, 2001


S/Alfred Greco                                        Director
-------------------------------------
Alfred Greco                                          March 26, 2001
</TABLE>
<PAGE>
PART II

ITEM 7.  FINANCIAL STATEMENT


BOVIE MEDICAL CORPORATION
INDEX TO FINANCIAL STATEMENTS



       Contents                                          Page



Consolidated Balance Sheet at December 31, 2000


Consolidated Statements of Operations for the
 years ended December 31, 2000 and 1999

Consolidated Statements of Shareholders' Equity
 for the years ended December 31, 2000 and 1999

Consolidated Statements of Cash Flows for the
 years ended December 31, 2000 and 1999

Notes to Consolidated Financial Statements

Consent of Certified Public Accountant

Independent Auditors' Report


<PAGE>


                        BOVIE MEDICAL CORPORATION
                        CONSOLIDATED BALANCE SHEET
                             DECEMBER 31, 2000


                                  ASSETS


<TABLE>
<CAPTION>

Current assets:
<S>                                                     <C>
Cash                                               $   278,662
Trade accounts receivable, net                       1,256,049
Inventories                                          1,994,564
Prepaid expenses                                       111,343
Deferred tax asset                                     175,010
Other Assets                                           111,179
                                                     ---------

Total current assets                                 3,926,807

Property and equipment, net                          1,552,179

Other assets:

Repair parts                                           317,698
Trade name                                           1,603,527
Patent rights, net                                     277,644
Deposits                                                35,719
Investment Joint Venture                               200,000
                                                    ----------
                                                     2,434,588
                                                    ----------
Total Assets                                       $ 7,913,574
                                                    ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.

<PAGE>


                         BOVIE MEDICAL CORPORATION
                        CONSOLIDATED BALANCE SHEET
                            DECEMBER 31, 2000
                                (Continued)


                   LIABILITIES AND STOCKHOLDERS' EQUITY

                               Liabilities
<TABLE>
<CAPTION>

Current liabilities:

<S>                                                         <C>
Accounts payable                                        $  439,144
Accrued expenses                                           350,425
Notes payable                                              572,931
Due to shareholders                                         57,425
Due to joint venture                                       100,000
                                                         ---------

Total current liabilities                                1,519,925


Stockholders' equity:


Preferred stock 10,000,000 shares
authorized, none outstanding                                    --

Common stock par value $.001;
  40,000,000 shares authorized,
  13,685,334 shares issued and outstanding
  on December 31, 2000                                      13,756
  Additional paid in capital                            19,991,488
  Accumulated deficit                                  (13,611,595)
                                                        ----------

Total stockholders' equity                               6,393,649
                                                        ----------

Total liabilities and
  stockholders' equity                                $  7,913,574
                                                         =========


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, 2000 AND 1999

<TABLE>


                                          2000              1999

<S>                                     <C>                <C>

Sales                                $ 9,935,886         $9,692,714
Cost of sales                          4,992,749          5,004,818
                                       ---------          ---------

Gross Profit                           4,943,137          4,687,896

Other costs:
Research and development                 513,020            379,832
Professional services                    379,289            508,117
Salaries and related costs             1,818,489          1,720,795
Selling, general and
 administration                        1,702,442          1,453,118
Write down of fixed assets                 7,021             55,079
Loss on sale of license
 and reactors                                 --          2,718,985
                                       ---------         ----------

Total other costs                      4,420,261          6,835,926
                                       ---------         ----------

Income (loss) from operations            522,876        (2,148,030)
                                       ---------         ---------

Other income and (expense):

Interest income                           28,746            21,964
Interest expense                         (66,803)          (61,023)
Miscellaneous                             15,809             3,247
                                        --------         ---------

                                         (22,248)          (35,812)
                                        --------         ---------
                                         500,628        (2,183,842)

Income tax expense                      (175,219)               --
Income tax benefit                       175,219                --
                                         -------         ---------

Net income (loss)                     $  500,628      $ (2,183,842)
                                         =======         =========



</TABLE>
<PAGE>


                            BOVIE MEDICAL CORPORATION
                      CONSOLIDATED STATEMENT OF OPERATIONS
                FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999
                                   (CONTINUED)

<TABLE>

    <S>                                           <C>                <C>
                                                  2000              1999
                                                  ----              ----
   Net earnings (loss) per share               $  .04              $(.07)
                                                 ====               =====


   Weighted average number
     of common shares outstanding             13,896,991         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, 2000 AND 1999

<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 shareholder 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
                         =========     ========  =========    ==========   ======  ==========    ==========      =========


Balance as of
January 1, 2000          2,145,500           --         --    14,045,334  $14,116  20,111,957   (14,112,223)    $6,013,850

Common shares issued for
cash at $.75 per share   ( 40,000)           --         --        40,000       40      29,960            --     $   30,000

Subscription receivable
paid in cash                   --            --         --            --       --       1,171            --     $    1,171

Common shares purchased
from shareholder for cash
at $.38 per share and
retired                        --            --         --      (400,000)    (400)   (151,600)           --     $ (152,000)

Income for period              --            --         --            --       --          --       500,628     $  500,628
                         ---------     --------   --------     ----------   ------  ----------    ----------     ---------
Balance as of
December 31, 2000      $ 2,105,500          --          --     13,685,334  $13,756 $19,991,488   $13,611,595    $6,393,649
                         =========     ========  =========     ==========   ======  ==========    ==========     =========

</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, 2000 AND 1999


<TABLE>
<CAPTION>

                                                 2000                   1999
                                                 ----                   ----
Cash flows from operating activities:
<S>                                             <C>                     <C>
Net income (loss)                             $  500,628            $(2,183,842)

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

Depreciation and amortization                    396,810                321,172
Shares issued for rent                                --                  6,974
Write down inventory of repair
parts                                                 --                 33,445
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                               ( 46,001)              (207,214)
Prepaid expenses                                ( 24,898)              (  8,005)
Inventories                                     (312,172)              (201,231)
Other receivables                                 19,964                 16,908
Accounts payable                                  36,890                 16,696
Accrued expenses                                  86,279               ( 38,243)
                                                --------               --------

Total adjustments                                156,872              2,714,566
                                                --------              ---------

Net cash provided
 (used in) operations                          $ 657,500            $   530,724
                                                ========              =========
</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, 2000 AND 1999
                                 (Continued)

<TABLE>
                                                 2000                  1999
                                                 ----                  ----

<S>                                            <C>                 <C>

Net cash provided by (used in)
 operating activities                          $ 657,500         $   530,724

Cash flows from investing activities:

Increase in fixed assets                        (256,081)           (126,728)
Increase in security deposits                   ( 30,954)                 --
Purchase of technology                          (252,834)                 --
Partnership contribution                        (100,000)                 --
                                               ---------          ----------

Net cash used in investing
 activities                                     (639,869)           (126,728)

Cash flows from financing activities

Common shares issued                              30,000             177,374
Loans from shareholders                         ( 43,553)           (  2,147)
Repurchase and retirement of common stock       (152,000)           (425,000)
Reduction in subscription receivable               1,170                  --
Reduction of notes payable                      ( 39,660)           (117,822)
Borrowing - line of credit                        50,000             100,000
                                               ---------           ---------
Net cash used in
 financing activities                          ( 154,043)          ( 267,595)
                                               ----------          ---------

Net increase in cash                           ( 136,412)            136,401

Cash at beginning of year                        415,074             278,673
                                               ---------           ---------
Cash at end of year                           $  278,662          $  415,074
                                                =========          =========


Cash paid during the twelve months ended December 31:

                                                 2000                  1999
                                                 ----                  ----

Interest                                        $64,500            $  60,751
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, 2000 AND 1999

SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2000

1. The Company  agreed to fund the Jump joint  venture for  $200,000 of which it
only funded $100,000 in 2000.

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
(tm)  coating  process  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, 2000.

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           $  1,269,110
               Work in process               490,620
               Finished goods                234,834
                                           ---------

                   Total                $  1,994,564
                                           =========

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

                          BOVIE MEDICAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1.  SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

As of December 31, 2000, the inventory of parts was as follows:

       Raw materials                                        $  537,917
       Allowance for excess or obsolete parts                 (220,219)
                                                               -------

                                                            $  317,698
                                                              ========

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.  The
Company now includes revenues from freight in gross sales and cost of freight in
cost of goods sold.

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 $152,599 and $67,120 for 2000 and 1999 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  carryforwards.  Deferred  tax assets  and  liabilities  are
measured  using  enacted tax rates  expected  to apply to taxable  income in the
years in which those  temporary  differences  are  expected to be  recovered  or
settled.  The effect on deferred tax assets and  liabilities  of a change in tax
rates is recognized in income in the period that includes the enactment date.

<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,  formerly 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.

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.

Bovie'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 many types of surgery.  The Company manufactures many types
of cauteries.
<PAGE>


                            BOVIE MEDICAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2.  DESCRIPTION OF BUSINESS (CONTINUED)

Bovie 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.

The Company  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 Company has developed a 120 watt  electrosurgical  coagulation  device (ECU)
which it began marketing the Aaron 1200 in 1998.

During 2000, the Company  expanded it's  electrosurgical  product line by adding
the Aaron  1250.  The  Company now  markets  five  multipurpose  electrosurgical
generators ranging in power from 30 watts to 200 watts.

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.

Jump Unipolar Low Temperature Focused Plasma Technology

In February,  2000,  the Company  entered into a joint venture  agreement with a
German  corporation,  Jump Agentur  Fuer  Elektrotechnik  GMBH.  Pursuant to the
agreement,  Bovie is to advance  $200,000 to the  partnership  to cover costs of
further research and development for the production of two commercial prototypes
for dermatology and general surgery,  and shall make available its facilities in
Florida for  development,  manufacturing  and  marketing  of the products of the
joint venture.  The Company is responsible to expend it's best efforts to secure
all  necessary  financing  for the  research,  development  and marketing of the
products estimated to be an amount up to $1,500,000.

The joint  venture  acquired  an  exclusive  license to  produce  and market any
surgical device  utilizing this  technology.  As of December 31, 2000, Bovie had
advanced  $100,000 to the joint  venture  and  expensed  $21,924 in  development
costs.

The  technology  utilizes a gas  ionization  process  utilizing only one working
electrode.  The device  produces a stable thin  focused beam of ionized gas that
can be controlled in a wide range of temperatures and intensities, providing the
surgeon  with  precision,  minimal  invasiveness  and an absence  of  conductive
currents during surgery.

This  electrosurgical  device has been developed and patented in both Europe and
the U.S., and is awaiting FDA submission and approval. The initial intended uses
are in the areas of Dermatology and Plastic Surgery. Other contemplated uses for
the technology are cardiovascular, thoracic, gynecological and other surgeries.


NOTE 3.  TRADE ACCOUNTS RECEIVABLE

As of December 31, 2000 the trade accounts receivable were as follows:

      Trade accounts receivable                              $ 1,313,675
      Less: allowance for doubtful accounts                   (   57,626)
                                                               ---------

      Trade accounts receivable, net                         $ 1,256,049
                                                               =========


<PAGE>
                            BOVIE MEDICAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 4.  PROPERTY, PLANT AND EQUIPMENT

As of  December  31, 2000 property,  plant  and  equipment  consisted  of  the
following:

        Equipment                                   $   559,694
        Building                                        637,485
        Furniture & Fixtures                            417,528
        Leasehold Improvements                          280,677
        Molds                                           330,794
                                                      ---------
                                                      2,226,178
        Less: Accumulated depreciation                  673,999
                                                      ---------

        Net property, plant, and equipment          $ 1,552,179
                                                      =========

Depreciation  expenses  for the  years  ended  December  31,  2000 and 1999 were
$172,903 and $185,426, respectively.


NOTE 5. RENTAL AGREEMENTS

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 $1,350  per month and the lease  expires in the year 2003.  In
May of 2000, the Company renewed the lease for three years at $16,194 per year.

The following is a schedule of future minimum rental payments as of December 31,
2000:

                                      Year                       Amount
                                      ----                       ------
                                      2001                    $  16,194
                                      2002                       16,194
                                      2003                        5,396


Total  consolidated rent expense for the Company was $22,973 in 2000 and $25,584
in 1999.

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.
In October  1999,  this  dispute  was  settled  for  $150,000  which  included a
consulting  fee.  The  Company  paid  $50,000  down and  $5,000 per month for 20
months. The balance due the former officer on December 31, 2000 was $24,721.

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 $13,918
of accrued interest, is $32,704.
<PAGE>

                            BOVIE MEDICAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 7.  INTANGIBLE ASSETS

At December 31, 2000, the intangible assets consisted of the following:


      Classification                                   Amount

      ECU Technology                                $  529,571
      Multifunction Cautery                             59,400
      Patent rights                                     87,769
      Goodwill                                         188,000
      Trade name                                     1,877,299
                                                     ---------

                                                     2,742,039

      Less: Accumulated Amortization                   860,868
                                                     ---------

                                                   $ 1,881,171
                                                    ==========


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
2000 and 1999 was $164,474 and $171,021, respectively.


NOTE 8. LONG-TERM DEBT

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

         Bonds payable                             $   20,000
         Mortgage payable                             394,422
         Term loan                                      8,509
         Line of credit- bank                         150,000
                                                      -------

                                                   $  572,931
                                                      =======

<PAGE>

                            BOVIE MEDICAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 8. LONG-TERM DEBT (CONTINUED)

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.

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 net of
$150,000  already  advanced.  The annual interest rate on the loan is the bank's
prime rate plus one percent. The line expires September 23, 2001. 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,
2000 was $150,000.


<PAGE>

                            BOVIE MEDICAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 9. OPTIONS

As of December 31, 2000, 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
          1,518,500                                  0.750
          ---------                                  -----

          2,105,500                               $  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  143,000 warrants  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, 2000, 2,105,500  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>

                                                       2000          1999
                                                       ----          ----
<S>                                               <C>                <C>
Net earnings (Loss) - as reported)                  $ 500,628    $ (2,183,839)
Net earnings (Loss) - pro forma                       500,628      (2,241,174)
Gain(Loss) per share                                    .04           (.130)
Gain (Loss) per share-pro forma                         .04           (.134)
</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:                           2000           1999
                                                       ----          ----
        <S>                                            <C>          <C>

        Accounts receivable                        $   57,647    $   57,647
        Inventories                                   289,457       289,457
        Net operating loss carryforwards            3,181,000     3,356,344
        Patent rights, primarily due to
        amortization                                  103,747       131,034
                                                    ---------     ---------

        Total gross deferred tax assets             3,631,851     3,834,482

        Less: Valuation allowance                   3,456,841     3,659,472
                                                    ---------     ---------

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

The Company had NOLs of  approximately  $9,088,000  at December 31, 2000.  These
NOLs and corresponding  estimated tax assets, computed at a 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            263,000           92,000
         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          2,184,000          764,000
                                            ---------        ---------

          Total                           $ 9,088,000      $ 3,181,000
                                            =========        =========
</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 likely they will not 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  $3,456,841  as of January 1, 2000 was decreased by
$175,344 as a consequence  of using part of the deferred tax assets in 2000. The
Company  believes it is likely 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
the Company. 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 2000 and 1999 of $32,188 and $46,763
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 $58,508 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 $1,500 per month.

NOTE 13.  PROPERTIES

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 exceedes 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.

On February 16, 2000, Meryman Environmental,  Inc. conducted a ground water test
and  determined  "the data  continues  to show an overall  decrease  in the mass
contamination  at the site." The Company is waiting for a further  determination
by the Florida  Department of Health Pollutant  Storage Tank Cleanup Program and
the waste cleanup section FDEP Southwest District.


NOTE 14.  COMMITMENTS AND CONTINGENCIES

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

Leases (See Note 5 - Rental Agreements)

There was no commitment for  construction  or purchase of property,  plant,  and
equipment approximated at December 31, 2000.

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.

<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, 2000 for
the purchase of $2,105,000  shares of 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 2001.

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.


The Company  believes it is in compliance  with the banks  covenants at December
31, 2000.

NOTE 15.  EARNINGS PER SHARE

In 2000,  the  Company  sustained a $.04 gain per share.  Because the  Company's
option  exercise  price for its warrants was higher than the market price of the
shares on December 31, 2000, the warrants had an anti-dillutive  effect and were
not used to compute any diluted earnings per share.


NOTE 16. REPURCHASE OF SHARES

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.  To complete the
purchase  which ends  November,  2001,  the Company  will  expend  approximately
$150,000.

<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 2000 and 1999.

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 41% and 42% of  Company's  sales  for 2000 and  1999,
respectively.

One  significant  customer  accounted  for 8% of revenues in both 2000 and 1999,
respectively.  In 2000,  that customer  accounted for $.9 million of non-medical
sales,  which is 83% of that segments sales. The Company's ten largest customers
accounted for  approximately 53% of net revenues for 2000. At December 31, 2000,
the ten customers  receivables  accounted for  approximately  58% of outstanding
accounts receivable.

Summary  information by geographic  area and  significant  industry  segment for
years ended December 31, 2000 and 1999 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            $  7,252        --        --           --
International                     1,832                199                  91        --        --           --
                                  -----                ---               -----
                                $ 9,597             $  625 (1)        $  7,343        --        --           --
                                =======             ====== ==         ========

Segment
Medical Products                $ 8,566             $  790            $  6,947      $ 20      $ 54        $ 165
Non-medical Products              1,031               (165)                396         2         7           20
                                  -----                ---               -----        --        --          ---
                                $ 9,597             $  625 (1)        $  7,343        22        61          185
                                  =====                ===               =====        ==        ==          ===


2000 - (in thousands)
Geographic Area
Domestic                        $ 8,291            $   340            $ 7,713        --        --           --
International                     1,644                160                101        --        --           --
                                  -----               ----              -----
                                $ 9,935            $   500            $ 7,814        --        --           --
                                 ======               ====              =====

Segment
Medical Products                $ 8,822            $   630            $ 7,033        26        60          148
Non-medical products              1,113              ( 130)               781         3         7           25
                                  -----               ----              -----        --       ---          ---
                                $ 9,935            $   500            $ 7,814       $29     $  67        $ 173
                                  =====               ====              =====        ==       ===          ===

</TABLE>
<PAGE>

                            BOVIE MEDICAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 17. INDUSTRY SEGMENT REPORTING


                                                 2000              1999
                                                 ----              ----

Assets and liabilities outside the U.S.A.
 Total assets                                   $ 100             $  91
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, 2000.

During 2000, a portion of the Company's  consolidated net sales and consolidated
gain 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 26, 2001, included
in the Annual Report to Stockholders of Bovie Medical Corporation.





Bloom and Company
s/Bloom and Company
Hempstead, New York
March 26, 2001

<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, 2000 and the related  consolidated  statements of
operations,  and  stockholders'  equity,  and cash  flows  for the  years  ended
December 31, 2000 and 1999.  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,  2000 and the  results of its  operations,  and cash flows for the
years ended  December 31, 2000 and 1999 in conformity  with  generally  accepted
accounting principles.


BLOOM AND COMPANY



Hempstead, New York
March 26, 2001
<PAGE>