UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For Quarter Ended ~~March 31~~June 30, 2010

Commission File Number ~~021~~ 000-~~74972~~51809

BIOELECTRONICS CORPORATION

(Exact name of registrant as specified in its charter)

Maryland		52-2278149
(State or other jurisdiction of incorporation or organization)		(I.R.S. employer identification number)

4539 Metropolitan Court

Frederick, Maryland 21704

(Address of principal executive offices and zip code)

Phone: 301.874.4890

Fax: 301.874.6935

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such returns), (2) has been subject to such filing requirements for the past 90 days. YES o NO þ

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YES o NO o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one)

Large accelerated filer o

Accelerated filer o

Non-accelerated filer o

Smaller Reporting

Company þ

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES o NO þ

Number of shares of common stock, issued and outstanding as of ~~May~~August 1116, 2010 is 1,~~471~~474,~~998~~198,871.

BIOELECTRONICS CORPORATION

FORM 10-Q

TABLE OF CONTENTS

PART I
Item 1.	Condensed Financial Statements	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operation	1819
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2528
Item 4T.	Controls and Procedures	2629
PART II
Item 1.	Legal Proceedings	2832
Item 1A.	Risk Factors	2832
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2832
Item 3.	Defaults Upon Senior Securities	2832
Item 4.	(Removed and Reserved)	2933
Item 5.	Other Information	2933
Item 6.	Exhibits	2933
	Signatures	3034

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

BioElectronics Corporation (A Development Stage Company)

Condensed Balance Sheets

	March 31,			December 31,
	June 30,			December 31,
	2010			2009
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	93136,~~561~~684		$	296,352
Trade and other receivables, net		89212,~~591~~279			402,003
Trade receivables assigned to related party, net		503,136			-
Trade receivable assigned to related party		353,995			-
Trade receivable from related parties		~~109~~10,~~970~~594			165,297
Inventory		~~357~~670,~~478~~301			201,359
Prepaid expenses and others		~~157~~75,~~802~~883			102,635
Total current assets		1,~~311~~459,~~538~~736			1,167,646
Property and equipment		~~138~~119,~~319~~251			93,502
Less: Accumulated depreciation		(8487,~~873~~921	)		(79,921	)
Property and equipment, net		5331,~~446~~330			13,581
Total assets	$	1,~~364~~491,~~984~~066		$	1,181,227
Liabilities and stockholders' deficiency
Current liabilities:
Accounts payable	$	~~193~~253,~~620~~431		$	85,661
Accrued expenses		5720,~~579~~926			43,241
Notes payable		212,~~711~~925			12,654
Financing of receivables with related party		5344,~~584~~190			-
Total current liabilities		~~307~~331,~~494~~472			141,556
Long-term liabilities:
Related party notes payable		2,~~298~~800,~~197~~257			1,824,176
Total liabilities		23,~~605~~131,~~691~~729			1,965,732
Commitments and contingencies
Stockholders' deficiency:
Common stock, par value $0.001 per share, 1,500,000,000 shares authorized at March 31, 2010 and December 31, 2009 and 1,471,998,871 and 1,470,998,871 shares issued and outstanding at March 31, 2010 and December 31, 2009, respectively		1,471,999			1,470,999
Common stock, par value $0.001 per share, 1,500,000,000 shares authorized at June 30, 2010 and December 31, 2009 and 1,474,198,871 and 1,470,998,871 shares issued and outstanding at June 30, 2010 and December 31, 2009, respectively		1,474,199			1,470,999
Additional paid-in capital		8,~~446~~536,~~426~~454			8,408,986
Deficit accumulated during the development stage		(11,~~159~~651,~~132~~316	)		(10,664,490	)
Total stockholders' deficiency		(1,~~240~~640,~~707~~663	)		(784,505	)
Total liabilities and stockholders' deficiency	$	1,~~364~~491,~~984~~066		$	1,181,227

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

BioElectronics Corporation (A Development Stage Company)

Condensed Statements of Operations

(Unaudited)

	For the three months ended March 31,						Period from April 10, 2000 (Inception) to
	For the three months ended June 30,						For the six months ended June 30,						Period from April 10, 2000 (Inception) to June
	2010			2009			~~March 31,~~ 2010			2009			30, 2010
Sales	$	~~281~~331,~~767~~479		$	~~294~~221,~~581~~875		$	3613,~~733,351~~246		$	516,456		$	4,064,830
Cost of Goods Sold		~~121~~125,~~063~~581			7582,~~883~~198			1246,~~635,556~~644			158,081			1,761,137
Gross profit		~~160~~205,~~704~~898			~~218~~139,~~698~~677			2366,~~097,795~~602			358,375			2,303,693
General and Administrative Expenses:
Depreciation and Amortization		613,~~771~~265			3,645			~~103~~20,~~484~~036			7,290			116,749
Investor Relations Expenses		458,~~899~~712			56,~~390~~195			154,~~640,460~~611			11,585			1,649,172
Legal and Accounting Expenses		~~200~~168,~~936~~655			1850,~~698~~632			~~983~~369,~~987~~590			69,330			1,152,643
Sales Support Expenses		7179,~~767~~933			9316,~~792~~220			1151,~~499,697~~700			110,013			1,579,630
Other General and Administrative Expenses		~~300~~381,~~575~~881			~~138~~109,~~866~~965			7682,~~486,709~~457			248,831			7,868,589
Total General and Administrative Expenses		~~625~~652,~~948~~446			~~260~~186,~~391~~657			111,~~714~~278,~~337~~394			447,049			12,366,783
Loss from Operations		(~~465~~446,~~244~~548	)		(4146,~~693~~980	)		(9911,~~616,542~~792	)		(88,674	)		(10,063,090	)
Interest Expense and Other:
Interest Expense		(2939,~~398~~945	)		(1920,~~797~~943	)		(169,~~506,738~~343	)		(40,741	)		(1,546,683	)
Loss on Disposal of Assets		-(5,691	)		-			(355,~~852~~691	)		-			(41,543	)
Total Interest Expense and Other		(2945,~~398~~636	)		(1920,~~797~~943	)		(175,~~542,590~~034	)		(40,741	)		(1,588,226	)
Loss Before Income Taxes		(~~494~~492,~~642~~184	)		(6167,~~490~~923	)		(11986,~~159,132~~826	)		(129,415	)		(11,651,316	)
Provision for Income Tax Expense		-			-			-			-			-
Net loss	$	(~~494~~492,~~642~~184	)	$	(6167,~~490~~923	)	$	(11986,~~159,132~~826	)	$	(129,415	)	$	(11,651,316	)
Net loss Per Share - Basic and Diluted	$	(0.00	)	$	(0.00	)	$	~~N/A~~(0.00	)	$	(0.00	)		N/A
Weighted Average Number of Shares Outstanding -
Weighted Average Number of Shares Outstanding -Basic and Diluted		1,473,465,538			734,726,974			1,472,398,871			567,727,334			N/A
Basic and Diluted		1,471,332,204			400,727,694			N/A

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

BioElectronics Corporation (A Development Stage Company)

Condensed Statements of Cash Flows

(Unaudited)

	For the three months ended March 31,						Period from April 10, 2000 (Inception) to
							Period from
	2010			2009			March 31, 2010
							April 10, 2000
	For the six months ended June 30,						(Inception) to June
	2010			2009			30, 2010
Cash flows from Operating Activities:
Net loss	$	(~~494~~986,~~642~~826	)	$	(61129,~~490~~415	)	$	(11,~~159~~651,~~132~~316	)
Adjustment to Reconcile Net Loss to
Net Cash Used In Operating Activities:
Depreciation and amortization		619,~~771~~400			37,~~645~~290			~~105~~117,~~055~~684
Provision for bad debts		-			-			58,255
Amortization of non-cash debt issuance costs		-			-			725,373
Amortization of non-case debt issuance costs		-			-			725,373
Non-cash expenses		-			~~649~~(18,989	)		1,455,978
Stock-based employee compensation expense		36123,~~190~~468			-			74161,~~131~~409
Non-cash interest related to notes payable		-			5,~~017~~018			592,418
Non-cash interest related to related party notes payable		2965,~~021~~285			1429,~~780~~712			~~116~~152,~~724~~988
Adjustment of related party notes payable		-			77139,~~397~~100			(266,490	)
Amortization of loan costs		-			-			129,852
Increase in related party notes payable for services rendered		-95,796			-			~~562~~658,~~776~~572
Loss on disposal of property and equipment		-5,691			-			3541,~~852~~543
Changes in Assets and Liabilities
(Increase) Decrease in:
Trade and other receivables		~~346~~189,~~203~~724			(62153,~~011~~733	)		(~~279~~435,~~350~~829	)
Trade receivables assigned to related party		(~~536~~353,~~927~~995	)		-			(~~536~~353,~~927~~995	)
Inventory		(~~156~~468,~~119~~942	)		(7477,~~422~~649	)		(~~357~~670,~~478~~301	)
Trade receivable from related parties		55154,~~327~~703			-			55154,~~327~~703
Prepaid expenses and others		~~(56~~28,~~986~~277	)		(119,~~152~~994	)		(~~146~~61,~~966~~703	)
Increase (Decrease) in:
Accounts payable		~~107~~167,~~959~~770			(3887,~~609~~298	)		~~333~~393,~~868~~679
Accrued expenses		16(15,~~588~~115	)		(39,003	)		~~268~~236,~~271~~568
Customer deposits		-			(79119,~~376~~398	)		-
Net cash used in operating activities		(~~646~~974,~~615~~764	)		(~~215~~434,~~575~~359	)		(8,~~232~~560,~~463~~612	)
Cash flows from Investing Activities
Acquisition of property and equipment		(44,817	)		-			(173,546	)
Acquisition of property no acquisition of property and equipment		(31,440	)		-			(160,169	)
Net cash Used in Investing Activities		(4431,~~817~~440	)		-			(~~173~~160,~~546~~169	)
Cash flows from Financing Activities
Proceeds from note payable, net of loan costs of $10,000		-			-			1,090,148
Payments on note payable		(912,~~943~~654	)		(5162,000	)		(~~538~~540,~~162~~873	)
Proceeds from related party notes payable		~~445~~815,000			96282,~~600~~015			5,~~249~~619,953
Proceeds from financing of receivables with related party		6485,~~916~~610			-			6485,~~916~~610
Payments on related party notes payable		-			(8,600	)		(969,803	)
Payments for financing of receivables with related party		(1141,~~332~~420	)		-			(1141,~~332~~420	)
Proceeds from issuance of common stock		-			~~147~~190,~~000~~200			3,623,837
Other		-			-			(9,987	)
Net cash provided by financing activities		~~488~~846,~~641~~536			~~184~~401,~~000~~615			8,~~499~~857,~~570~~465
Net increase (Decrease) in cash		(~~202~~159,~~791~~668	)		(3132,~~575~~744	)		93136,~~561~~684
Cash- Beginning of Period		296,352			55,278			-
Cash- End of Period	$	93136,~~561~~684		$	2322,~~703~~534		$	93136,~~561~~684
Supplemental Disclosures of Cash Flow Information:
Cash paid during the periods for:
Interest	$	~~377~~4,054		$	-		$	6770,~~009~~686
Supplemental Schedule of Non-Cash Investing and Financing Activities:
Conversion of debt and accrued interest into common stock	$	-		$	~~163~~576,~~640~~747		$	~~N/A~~3,309,625
Issuance of common stock from accrued expense	$	27,~~250~~200		$	-		$	27,~~250~~200
Conversion of warrants into common stock	$	-		$	-		$	5,336
Prepaid insurance expense through issuance of notes	$	-12,925		$	-		$	1225,~~654~~579
Equipment purchases financed through capital leases and notes payable	$	-		$	-		$	9,986

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

BioElectronics Corporation (A Development Stage Company)

Notes to Condensed Financial Statements

(Unaudited)

NOTE 1 - BASIS OF PRESENTATION

The unaudited condensed financial statements included herein have been prepared by BioElectronics Corporation (the “Company”, “we” or “us”), a Maryland corporation without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. The financial statements reflect all adjustments that are, in the opinion of management, necessary to fairly state such information. All such adjustments are of a normal recurring nature. Although the Company believes that the disclosures are adequate to make the information presented not misleading, certain information and footnote disclosures, including a description of significant accounting policies normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America, have been condensed or omitted pursuant to such rules and regulations.

The year-end condensed balance sheet data were derived from audited financial statements but do not include all disclosures required by accounting principles generally accepted in the United States of America. Certain reclassifications were made to the prior year financial statement amounts to conform to current year presentation. These financial statements should be read in conjunction with the audited financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2009, as filed with the SEC on March 31, 2010.

The independent registered public accounting firm’s report on the financial statements for the fiscal year ended December 31, 2009 states that because of recurring substantial losses from operations and a deficit accumulated during the development stage, there is substantial doubt about the Company’s ability to continue as a going concern. A “going concern” opinion indicates that the financial statements have been prepared assuming the Company will continue as a going concern and do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty.

~~NOTE~~The Company is a voluntary filer of reports with the SEC and does not have an effective registration statement with respect to its securities. 2As a –result, ~~SUMMARY~~the OFCompany ~~SIGNIFICANT~~may ~~ACCOUNTING~~cease ~~POLICIES~~to file its Exchange Act reports at any time and for any reason without notice.

DEVELOPMENT STAGE COMPANY

As defined by ASC Topic 915, “Development Stage Entities” (formerly SFAS 7, “Accounting and Reposting by Development Stage Enterprises”), the Company is devoting substantially all of its present efforts to developing its business. Additionally, the Company has not yet commenced one of its planned principal activities, the sales of products in the U.S. retail market. All losses accumulated since inception have been considered as part of the Company’s development stage activities. Costs of start-up activities, including organizational costs, are expensed as incurred.

BioElectronics Corporation (A Development Stage Company)

Notes to Condensed Financial Statements

(Unaudited)

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ~~(CONTINUED)~~

DEVELOPMENT STAGE COMPANY

TRADE RECEIVABLES

The Company maintains reserves on customer accounts where estimated losses may result from the inability of its customers to make required payments. These reserves are determined based on a number of factors, including the current financial condition of specific customers, the age of trade and other receivable balances and historical loss rate. The allowance for doubtful accounts was $33,791 at both ~~March~~June 3130, 2010 and December 31, 2009. Bad debt expense for the ~~three~~six months ended ~~March~~June 3130, 2010 and June ~~March 31~~30, 2009 were both $0. For both the three months ended June 30, 2010 and June 30, 2009, bad debt expense was $0.

ADVERTISING COSTS

The Company expenses the costs associated with advertising as incurred. Costs incurred to fund the production of advertisements are reported as a prepaid expense if the related advertisement has not yet been broadcast. Prepaid advertising cost incurred to fund the production of ~~Infomericals~~infomercials was $4338,~~196~~324 and $34,014 at ~~March~~June 3130, 2010 and December 31, 2009, respectively. During the ~~three~~six months ended ~~March~~June 3130, 2010, $111,~~819~~400 of ~~Infomercials~~infomercial costs were amortized. Amortization costs for the ~~three~~six months ended ~~March~~June 3130, 2009 were $0. For both the three months ended June 30, 2010 and June 30, 2009, amortization costs were $0.

ISSUANCE OF STOCK FOR NON-CASH CONSIDERATION

All issuances of the Company’s stock for non-cash consideration are assigned a per share amount based on either the market value of the shares issued or the value of consideration received, whichever is more readily determinable. The majority of the non-cash consideration pertains to services rendered by consultants and others. The fair value of the services received was used to record the related expense and value attributed to the shares issued. On March 18, 2010, the Company issued 1,000,000 common shares, toand aon ~~consultant~~May 21, 2010, the Company issued 2,200,000 common shares to consultants in respect of services provided in the year ended December 31, 2009. The shares were valued at $0.00225 per share (or $27,~~250~~200 in aggregate) and were issued inas payment of an accrued liability recorded ~~related~~in tothe ~~services~~Company’s ~~rendered~~balance bysheet aas ~~consultant~~of ~~in 2009~~June 30, 2010.

BioElectronics Corporation (A Development Stage Company)

Notes to Condensed Financial Statements

(Unaudited)

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

RECENT ACCOUNTING PRONOUNCEMENTS

~~Disclosure~~Recently ofAdopted ~~Fair~~Accounting ~~Value Measurements~~Pronouncements

In January 2010, the Financial Accounting Standards Board (“FASB”) issued ~~a final~~ Accounting Standards Update (“ASU”) ~~that~~2010-06, ~~sets~~“Fair ~~forth~~Value ~~additional~~Measurements ~~requirements~~ and ~~guidance~~Disclosures,” ~~regarding~~which ~~disclosures~~amends ofthe ~~fair~~disclosure ~~value~~requirements ~~measurements. The~~related ~~ASU~~to ~~requires~~recurring ~~the~~and ~~gross~~nonrecurring ~~presentation of activity within the Level 3~~ fair value ~~measurement~~ ~~roll~~measurements. The ~~forward~~guidance ~~and~~requires disclosure ~~details~~ of transfers inof assets and ~~out~~liabilities ofbetween Level 1 and Level 2 of the fair value ~~measurements. It~~measurement ~~also~~hierarchy, ~~clarifies~~including ~~two~~the ~~existing disclosure~~reasons ~~requirements~~and ~~within~~the timing of the ~~current~~transfers ~~fair~~and ~~value~~information ~~authoritative~~on ~~guidance~~purchases, sales, issuance, and settlements on ~~the~~a ~~level~~gross ofbasis ~~disaggregation~~in the reconciliation of ~~fair value~~the ~~measurements~~assets and ~~disclosures~~liabilities onmeasured ~~inputs~~under Level ~~and~~3 ~~valuation techniques. The~~of ~~new~~the ~~requirements~~fair ~~and~~value measurement hierarchy. The guidance ~~are~~is effective for ~~interim~~annual and ~~annual~~interim reporting periods beginning after December 15, 2009, ~~which for us~~ ~~means our first quarterly period ending on March 31, 2010,~~ except for ~~the~~ Level 3 ~~roll~~reconciliation ~~forward~~disclosures ~~requirements~~ which isare effective for ~~interim~~annual and ~~annual~~ interim periods beginning after December 15, 2010,. ~~which~~The ~~for~~Company ~~us means our first~~adopted ~~quarterly~~these ~~period~~amendments ~~ending~~in onthe ~~March 31,~~first ~~2011. The~~quarter ~~adoption~~ of ~~the disclosures~~2010 ~~effective~~and ~~this~~the ~~quarter~~adoption did not have ana material impact on ~~our financial position, results of operations or cash flows. Additionally, we do not expect~~ the ~~adoption of the~~ disclosures ~~which~~in ~~were deferred until~~ the ~~first quarter~~Company’s ~~2011 to have an impact on our~~ financial ~~position, results of operations~~ ~~or cash flows~~statements.

~~Stock~~In ~~Based~~June 2009, ~~Compensation~~the FASB issued ASU 2009-17, Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities, which changes various aspects of accounting for and disclosures of interests in variable interest entities. ASU 2009-17 is effective for interim and annual periods beginning after November 15, 2009. The Company adopted these amendments in the first quarter of 2010 and the adoption did not have a material impact on the Company’s financial statements.

~~ASU~~In June ~~2010-13~~2009, ~~provides~~the ~~amendments~~Financial toAccounting ~~Topic~~Standards ~~718~~Board to("FASB") ~~clarify~~issued ~~that~~authoritative guidance anon ~~employee~~accounting ~~share-based payment~~for ~~award~~transfers ~~with~~of anfinancial ~~exercise~~assets. This ~~price~~guidance was ~~denominated~~issued into improve the ~~currency~~relevance, ofrepresentational afaithfulness, ~~market in~~and ~~which~~comparability aof ~~substantial~~the ~~portion~~information ofthat ~~the~~a reporting entity's ~~equity~~provides ~~securities~~in ~~trades~~its financial ~~should~~statements ~~not be~~about ~~considered~~a totransfer ~~contain~~of afinancial ~~condition~~assets; ~~that~~the iseffects ~~not~~of a transfer ~~market,~~on ~~performance,~~its ~~or service~~financial ~~condition. Therefore~~position, anfinancial ~~entity~~performance, ~~would~~and ~~not~~cash ~~classify~~flows; ~~such~~and ana ~~award~~transferor's ascontinuing ainvolvement, ~~liability~~ if itany, ~~otherwise~~in ~~qualifies~~transferred asfinancial ~~equity~~assets. ~~The~~ ~~amendments~~ This inguidance ~~ASU~~is ~~2010-13 are~~ effective for fiscal years, and interim periods ~~within~~ ~~those fiscal years,~~ beginning ~~on or~~ after ~~December~~November 15, ~~2010~~2009. The ~~and~~adoption ~~are~~of ~~not expected~~this tostatement did not have a material ~~significant~~effect ~~impact~~ on the Company’'s financial statements.

Recently Issued Accounting ~~for~~Pronouncements ~~the~~Not ~~Transfers~~Yet ~~of Financial Assets~~ Adopted

In July ~~June 2009~~2010, the ~~FASB issued new guidance relating to the accounting for transfers of financial assets. The new guidance, which was issued as SFAS No. 166, Accounting for Transfers of~~ Financial ~~Assets, an amendment to SFAS No. 140, was adopted into Codification in December 2009 through the issuance of~~ Accounting Standards ~~Updated~~Board (“~~ASU~~FASB”) ~~2009-16. The~~issued new ~~standard eliminates~~accounting ~~the~~guidance ~~concept~~that ofwill arequire ~~“qualifying special-purpose entity,” changes the requirements for derecognizing financial assets, and requires~~ additional disclosures inabout ~~order to~~the ~~enhance~~credit ~~information~~quality ~~reported to users~~ of loans, ~~financial~~lease ~~statements~~receivables byand ~~providing greater~~other ~~transparency~~long-term ~~about~~receivables ~~transfers~~and ofthe ~~financial assets, including~~related ~~securitization~~allowance ~~transactions,~~for ~~and~~credit anlosses. ~~entity’s~~Certain ~~continuing~~additional ~~involvement~~disclosures in ~~and~~this new ~~exposure~~accounting toguidance ~~the~~will ~~risks~~be ~~related~~effective tofor ~~transferred~~the ~~financial~~Company ~~assets. The~~on ~~new~~December 31, ~~guidance~~2010 with iscertain ~~effective~~other ~~for~~additional ~~fiscal~~disclosures ~~years~~that ~~beginning~~will ~~after~~be ~~November~~effective on March 1531, ~~2009~~2011. The Company does not expect ~~that~~ the ~~provisions~~adoption of ~~the~~this new accounting guidance ~~will~~ to have a material ~~effect~~impact on its financial statements.

BioElectronics Corporation (A Development Stage Company)

Notes to Condensed Financial Statements

(Unaudited)

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

~~Accounting~~In April 2010, the FASB issued ASU 2010-13, “Compensation — Stock Compensation (Topic 718) — Effect of Denominating the Exercise Price of a Share-Based Payment Award in the Currency of the Market in Which the Underlying Equity Security Trades.” ASU 2010-13 provides amendments to Topic 718 to clarify that an employee share-based payment award with an exercise price denominated in the currency of a market in which a substantial portion of the entity’s equity securities trades should not be considered to contain a condition that is not a market, performance, or service condition. Therefore, an entity would not classify such an award as a liability if it otherwise qualifies as equity. The amendments in ASU 2010-13 are effective for ~~Variable~~fiscal ~~Interest~~years, and interim periods within those ~~Entities~~fiscal years, beginning on or after December 15, 2010 and are not expected to have a significant impact on the Company’s financial statements.

In March ~~June 2009~~2010, the FASB issued ~~revised~~ASU ~~guidance on the accounting for variable interest entities. The revised guidance, which was issued as SFAS~~ No. ~~167~~2010-11, ~~Amending~~ ~~FASB~~“Derivatives ~~Interpretation No. 46(R),~~and ~~was~~Hedging ~~adopted~~(Topic ~~into~~815) — ~~Codification~~Scope inException ~~December 2009 through~~Related ~~the~~to ~~issuance~~Embedded ofCredit Derivatives.” ASU ~~2009~~ 2010-~~17. The~~11 ~~revised~~clarifies ~~guidance~~that ~~amends~~the ~~FASB Interpretation~~only ~~No. 46(R),~~form ~~Consolidation~~ of ~~Variable Interest Entities, in determining whether~~ an ~~enterprise~~embedded ~~has~~credit aderivative ~~controlling financial~~that ~~interest~~is inexempt afrom ~~variable~~embedded ~~interest~~derivative ~~entity. This~~bifurcation ~~determination~~requirements ~~identifies~~are ~~the~~those ~~primary beneficiary of a variable interest entity as the enterprise~~ that ~~has both the~~relate ~~power~~ to ~~direct~~ the ~~activities~~subordination of aone ~~variable~~financial ~~interest~~instrument ~~entity~~to ~~that~~another. ~~most significantly~~As ~~impacts~~a ~~the entity’s economic performance~~result, entities ~~and~~that ~~the~~have ~~obligation~~contracts ~~to absorb~~containing ~~losses~~an orembedded ~~the~~credit ~~right~~derivative tofeature ~~receive~~in a ~~benefits~~form ofother ~~the~~than ~~entity~~such ~~that~~subordination ~~could potentially~~may beneed ~~significant~~ to ~~the~~separately ~~variable~~account ~~interest~~for ~~entity. The~~the ~~revised~~embedded ~~guidance~~credit ~~requires~~derivative ~~ongoing~~feature. ~~reassessments~~The provisions of ~~whether~~ASU an2010-11 ~~enterprise~~will ~~is the~~be ~~primary~~effective ~~beneficiary~~on ~~and~~July ~~eliminates~~1, ~~the~~2010 ~~quantitative~~and ~~approach~~are ~~previously required for determining the primary beneficiary. The Company does~~ not ~~expect~~expected ~~that the~~to ~~provisions of the new guidance will~~ have a ~~material~~significant ~~effect~~impact on the ~~its~~Company’s financial statements.

In October 2009, the FASB issued ASU No. 2009-14, “Software (Topic 985) — Certain Revenue Arrangements That Include Software Elements (A Consensus of the ~~Recognition~~FASB Emerging Issues Task Force)”. ASU 2009-14 requires tangible products that contain software and non-software elements that work together to deliver the products essential functionality to be evaluated under the accounting standard regarding multiple deliverable arrangements. This standard update is effective January 1, 2011 and may be adopted prospectively for revenue arrangements entered into or materially modified after the date of adoption or retrospectively for all revenue arrangements for all periods presented. The Company does not expect that this standard update will have a significant impact on its financial statements.

In October 2009, the FASB issued ASU 2009-13, Multiple-Deliverable Revenue Arrangements. The new standard changes the requirements for establishing separate units of accounting in a multiple element arrangement and requires the allocation of arrangement consideration to each deliverable based on the relative selling price. The selling price for each deliverable is based on vendor-specific objective evidence (“VSOE”) if available, third-party evidence if VSOE is not available, or estimated selling price if neither VSOE or third-party evidence is available.

ASU 2009-13 is effective for revenue arrangements entered into in fiscal years beginning on or after June 15, 2010. The Company does not expect that the provisions of the new guidance will have a material effect on its financial statements.

In October 2009, the FASB issued Accounting Standards Update No. 2009-14, "Certain Revenue Arrangements That Include Software Elements" ("ASU No. 2009-14"). ASU No. 2009-14 amends guidance included within ASC Topic 985-605 to exclude tangible products containing software components and non-software components that function together to deliver the product’s essential functionality. Entities that sell joint hardware and software products that meet this scope exception will be required to follow the guidance of ASU No. 2009-13. ASU No. 2009-14 is effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. Early adoption and retrospective application are also permitted. The Company does not expect that the provisions of the new guidance will have a material effect on its financial statements.

Subsequent Events

ASU 2010-09 amends ASC Subtopic 855-10, “Subsequent Events – Overall” (“ASC 855-10”) and requires an SEC filer to evaluate subsequent events through the date that the financial statements are issued but removed the requirement to disclose this date in the notes to the entity’s financial statements. The amendments are effective upon issuance of the final update and accordingly, the Company has adopted the provisions of ASU 2010-09 during the quarter ended March 31, 2010. The adoption of these provisions did not have a significant impact on the Company’s financial statements.

BioElectronics Corporation (A Development Stage Company)

Notes to Condensed Financial Statements

(Unaudited)

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

In September 2009, the FASB issued certain amendments as codified in ASC Topic 605-25, “Revenue Recognition; Multiple-Element Arrangements.” These amendments provide clarification on whether multiple deliverables exist, how the arrangement should be separated, and the consideration allocated. An entity is required to allocate revenue in an arrangement using estimated selling prices of deliverables in the absence of vendor-specific objective evidence or third-party evidence of selling price. These amendments also eliminate the use of the residual method and require an entity to allocate revenue using the relative selling price method. The amendments significantly expand the disclosure requirements for multiple-deliverable revenue arrangements. These provisions are to be applied on a prospective basis for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010, with earlier application permitted. The Company will adopt the provisions of these amendments in its fiscal year 2011 and is currently evaluating the impact of these amendments to its financial statements.

NOTE 3 – GOING CONCERN

The Company’s financial statements have been prepared on a going concern basis which contemplates the realization of assets and the liquidation of liabilities in the ordinary course of business. The Company has incurred substantial losses from operations. The Company sustained a net loss of $~~494~~986,~~642~~826 for the ~~three~~six months ended ~~March~~June 3130, 2010. The Company projects that it will require an additional $300,000 in working capital in the next 12 months. Management has already loaned the Company $200,000 and is committed ~~currently~~to loan the additional $100,000. Given a current ratio of ~~seeking~~1:4, management assumes it can finance some additional growth with asset based financing. If tosales ~~provide~~increase as anticipated, the ~~needed~~Company ~~funds~~will ~~for~~seek ~~operations~~additional capital from new investors. The Company has prepared a financing proposal to discuss opportunities with potential investors or possible strategic partners. However, the Company can provide no assurance that it will be able to obtain the financing it needs to continue its efforts for market acceptance, ~~obtain~~ U.S. FDA approval, and to maintain operations and ~~alleviate~~ alleviate doubt about its ability to continue as a going concern.

NOTE 4 - INVENTORY

The components of inventory as of ~~March~~June 3130, 2010 and December 31, 2009 are:

	March 31, 2010		December 31, 2009
	June 30, 2010		December 31, 2009
Raw materials	$	69136,~~961~~469	$	27,900
Finished goods		~~287~~533,~~517~~832		173,459
	$	~~357~~670,~~478~~301	$	201,359

NOTE 5 – PROPERTY AND EQUIPMENT

Property and equipment consists of the following at March 31, 2010 and December 31, 2009:

	March 31, 2010			December 31, 2009
Machinery & Equipment	$	131,437		$	86,620
Leasehold improvements		6,882			6,882
		138,319			93,502
Less: accumulated depreciation		(84,873	)		(79,921	)
Total property and equipment, net	$	53,446		$	13,581

Depreciation expense on property and equipment amounted to $4,952 and $3,645 for the three months ended March 31, 2010 and March 31, 2009, respectively.

NOTE 6 – INSURANCE PREMIUM FINANCING

During 2009, the Company entered into an insurance premium financing agreement with an independent company to purchase insurance policies for directors’ and officers’ liability, general liability and product liability. The annual interest rate was 6.26%. The remaining balance of the amount financed was $12,654 as of December 31, 2009 and $9,943 payment was made during the three months ended March 31, 2010. The interest expense for this note was $100 for the three months ended March 31, 2010. The outstanding payable balance at March 31, 2010 was $2,711, which is due in full by May 31, 2010.

BioElectronics Corporation (A Development Stage Company)

Notes to Condensed Financial Statements

(Unaudited)

NOTE 5 – PROPERTY AND EQUIPMENT

Property and equipment consists of the following at June 30, 2010 and December 31, 2009:

				December 31,
	June 30, 2010			2009
Machinery & Equipment	$	112,369		$	86,620
Leasehold improvements		6,882			6,882

		119,251			93,502
Less: accumulated depreciation		(87,921	)		(79,921	)
Total property and equipment, net	$	31,330		$	13,581

Depreciation expense on property and equipment amounted to $8,636 and $7,290 for the six months ended June 30, 2010 and June 30, 2009, respectively. For the three months ended June 30, 2010 and June 30, 2009, the depreciation expense amounted to $3,684 and $3,645, respectively.

NOTE 6 – INSURANCE PREMIUM FINANCING

During 2009, the Company entered into an insurance premium financing agreement with an independent company to purchase insurance policies for directors’ and officers’ liability, general liability and product liability. The annual interest rate was 6.26%. The remaining balance of the amount financed was $12,654 as of December 31, 2009, and payments of $12,654 were made during the six months ended June 30, 2010. The interest expense for this note was $100 for the three and six months ended June 30, 2010.

On June 22, 2010, the Company entered into a new insurance premium financing agreement with an independent company to purchase insurance policies for directors’ and officers’ liability to replace a portion of the policy described above. The annual interest rate is 5.51%, the amount financed is $12,925 and the first payment is due July 22, 2010.

NOTE 7 – FINANCING OF RECEIVABLES WITH RELATED PARTY

The Company entered into an agreement (the “Agreement”) on March 5, 2010, with Jarenz LLC (“Jarenz”), a related party, pursuant to which Jarenz is providing accounts receivable financing and collection services to the ~~Company~~company.

The Agreement provides for the Company to assign certain accounts receivable balances to Jarenz in exchange for a Cash Advance Amount of up to 80% of the face value of the receivables transferred; such amount determined upon discussions between the parties. Following collection of the related receivable, Jarenz pays the balance thereof to BioElectronics minus the initial down payment and a discount fee earned by Jarenz.

BioElectronics Corporation (A Development Stage Company)

Notes to Condensed Financial Statements

(Unaudited)

NOTE 7 – FINANCING OF RECEIVABLES WITH RELATED PARTY (CONTINUED)

Jarenz’s discount fee is a percentage, between 1% to 9.5%, of the Cash Advance Amount based upon the number of days elapsing between the date of purchase by Jarenz and the date of collection of the related accounts receivable.

The Company accounts for transactions under the Agreement as secured borrowings since the Company has not surrendered control of the transferred accounts receivable to Jarenz under the Agreement. The Company reports the proceeds received from Jarenz as a current liability. The discount fee and any subsequent interest payments are recorded as interest expense in the Statement of Operations. The accounts receivable balance at ~~March~~June 3130, 2010 includes receivables amounting to $~~536~~353,~~927~~995 which have been assigned to Jarenz under the Agreement. ~~The Company recorded an allowance for doubtful accounts of $33,791 against this receivable as of March 31, 2010.~~

As at ~~March~~June 3130, 2010, Jarenz received $~~85,247~~423 from the assigned receivables which was ~~not~~ not yet forwarded to the Company. Interest expense of $~~277~~3,954 was recorded for the six months ended June 30, 2010, and interest expense of $3,681 was recorded for the three months ended ~~March~~June 3130, 2010. Jarenz is a limited liability company, whose owner is the daughter of the President of the Company.

NOTE 8 – RELATED PARTY NOTES PAYABLE

On January 1, 2005, the Company entered into an unsecured revolving convertible promissory note agreement (“the Revolver”) with IBEX, LLC (“IBEX”) a related party, for a maximum limit of $2,000,000, with interest at the Prime Rate plus 2% (5.25% for the ~~three~~six months ended ~~March~~June 3130, 2010), and all accrued interest ~~and~~ and principal due on or before January 1, 2015, whether by the payment of cash or by conversion, at the option of the holder, into shares of the Company’s common stock. ~~The~~A copy of the Revolver is attached here to as Exhibit 99. The Revolver is convertible at various fixed conversion prices based on the Volume-Weighted Average Price (“VWAP”) for the 10 trading days preceding the date of note, which approximated the fair value of the Company’s stock at the date of conversion. IBEX, LLC is a limited liability company, whose President is the daughter of the President of the Company. The balance of the Revolver was $1,~~304~~321,~~626~~702 as at ~~March~~June 3130, 2010.

1112

BioElectronics Corporation (A Development Stage Company)

Notes to Condensed Financial Statements

(Unaudited)

NOTE 8 – RELATED PARTY NOTES PAYABLE (CONTINUED)

In addition to the Revolver as described above, ~~on August 1, 2009,~~ the Company has entered into athe following convertible promissory note ~~agreement~~agreements with ~~IBEX, for $519,920,~~related with simple interest at 8% per annum. All accrued interest and principal are due on or before August 31, 2011, whether by the payment of cash or by conversion into shares of the Company’s common stock. The promissory note is convertible equal to the quotient of (i) a sum equal to the entire outstanding principal and interest, divided by (ii) the conversion price of $.019 per share. According to the Security Agreement dated August 1, 2009, the Company grants IBEX a security interest in, all of the right, title, and interest of the Company, in and to all of the Company’s personal property and intellectual property, and all proceeds or replacements as collaterals.parties:

On February 9, 2010, the Company entered into a convertible promissory note agreement with IBEX, for $135,000, with simple interest at 8% per annum. All accrued interest and principal are due on or before February 2, 2012, whether by the payment of cash or by conversion into shares of the Company’s common stock. The promissory note is convertible equal to the quotient of (i) a sum equal to the entire outstanding principal and interest, divided by (ii) the conversion price of $.01 per share. According to the Security Agreement dated February 9, 2010, the Company grants IBEX a security interest in, all of the right, title, and interest of the Company, in and to all of the Company’s personal property and intellectual property, and all proceeds or replacements as collaterals.

	Principal				Conversion
Date Issued	Amount		Due Date	Lender	Price

August 1, 2009	$	519,920	August 31, 2011	IBEX, LLC	$	0.019
February 9, 2010		135,000	February 2, 2012	IBEX, LLC	$	0.01
March 31, 2010		310,000	March 31, 2012	IBEX, LLC	$	0.01
April 15, 2010		20,000	April 30, 2012	IBEX, LLC	$	0.01
May 5, 2010		120,000	May 31, 2012	IBEX, LLC	$	0.01
May 14, 2010		100,000	May 31, 2012	IBEX, LLC	$	0.01
June 22, 2010		130,000	June 30, 2012	IBEX, LLC	$	0.01
June 30, 2010	$	95,795	June 30, 2012	St. Johns, LLC	$	0.01

OnEach ~~March~~of ~~31, 2010,~~ the ~~Company~~above ~~entered into a convertible~~ promissory ~~note~~notes ~~agreement~~bears ~~with IBEX, for $310,000, with~~ simple interest at 8% per annum~~. All~~, ~~accrued~~and all accrued interest and principal ~~are~~is due on orthe ~~before~~maturity ~~March~~date. Copies of notes ~~31,~~are ~~2012,~~attached ~~whether~~here byto as Exhibit 99. At the ~~payment~~option of ~~cash~~the orholder, bythe ~~conversion~~promissory notes are convertible into common shares of the Company’s ~~common~~ stock~~. The~~ ~~promissory~~at ~~note~~a isconversion ~~convertible~~rate equal to the quotient of (i) a sum equal to the entire outstanding principal and interest, divided by (ii) the conversion price indicated in the table above. According to the Security Agreements dated August 1, 2009 and February 9, 2010, the Company grants IBEX a security interest in, all of $the right, title, and interest of the Company, in and to all of the Company’s personal property and intellectual property, and all proceeds or replacements as collaterals.01 St. ~~per~~Johns, LLC ~~share~~is a limited liability company, which is owned by family members of the President of the Company.

Total interest expense incurred on the related party notes payable for the ~~three months~~six months ended ~~March~~June 3130, 2010 and 2009 was $65,285 and $29,~~021~~712, respectively. For the three months ended June 30, 2010 and June 30, 2009, interest expense amounted to $1436,~~780~~264 and $20,886, respectively.

1213

BioElectronics Corporation (A Development Stage Company)

Notes to Condensed Financial Statements

(Unaudited)

NOTE 9 – LOSS PER SHARE

The following table sets forth the computation of basic and diluted share data:

	Three months ended March 31,
	Three months ended June 30,				Six months ended June 30,
	2010		2009
Common Stock:	2010		2009		2010		2009
Common Stock:
Weighted average number of shares outstanding – basic		1,473,465,538		734,726,974		1,472,398,871		567,727,334
Weighted average number of shares outstanding – basic		1,471,332,204		400,727,694
Effect of dilutive securities:
Effect of dilutive securities:
Options and Warrants		-		-		-		-
Options and Warrants		-		-
Weighted average number of shares outstanding – diluted		1,473,465,538		734,726,974		1,472,398,871		567,727,334
Weighted average number of shares outstanding – diluted		1,471,332,204		400,727,694
Options and Warrants not included above (anti-dilutive)
Options and Warrants not included above (anti-dilutive)
Options to purchase common stock		-		-		350,000		350,000
Options to purchase common stock		51,550,000		350,000
Restricted Stock grants awarded to employees not yet issued		11,000,000		-		66,550,000		-
Warrants to purchase common stock		~~332,000~~-		~~4,844,444~~-		332,000		4,844,444
		51,882,000		5,194,444
		11,000,000		-		67,232,000		5,194,444

NOTE 10 – SHARE BASED COMPENSATION

On November 30, 2004, as amended March 22, 2005, the Company adopted the BioElectronics Equity Incentive Plan (''the Plan''), for the purpose of providing incentives for officers, directors, consultants and key employees to promote the success of the Company, and to enhance the Company's ability to attract and retain the services of such persons. The Plan initially reserved 10 million shares of common stock for issuance, which was amended to 100 million shares on March 1, 2010. The issuance can be in the forms of options or shares. The options may be incentive, nonqualified or stock appreciation rights. The shares may be issued for performance.

As of ~~March~~June 3130, 2010, the Company had 4027,~~365~~565,000 shares available for future grant under the Plan.

Restricted Stock

The following table is a summary of activity related to restricted stock grants to directors, consultants and key employees for the ~~three~~six months ended ~~March~~June 3130, 2010:

Restricted shares granted		5366,~~750~~550,000
Weighted average grant date fair value per share	$	0.~~01515~~01487
Aggregate grant date fair value	$	~~814~~989,~~045~~445
Restricted shares forfeited		-
Vesting service period of shares granted	3 years
Grant date fair value of shares vested	$	-

1314

BioElectronics Corporation (A Development Stage Company)

Notes to Condensed Financial Statements

(Unaudited)

~~NOTE~~Compensation 10expense –related ~~SHARE~~to ~~BASED~~the ~~COMPENSATION~~fair ~~(CONTINUED)~~value of these awards is recognized straight-line over the requisite service period based on those restricted stock grants that ultimately vest. The fair value of grants is measured by the market price of the Company’s common stock on the date of grant and then applied a liquidity discount of 50 percent. This discount rate is determined by analyzing the Company’s liquidity history and using peer company data to estimate. Restricted stock awards generally vest ratably over the service period beginning with the first anniversary of the grant date. After shares are vested, they will be issued upon the request of the grantee.

~~Compensation expense~~There ~~related to the fair value of these awards is recognized straight-line~~was ~~over~~no ~~the requisite service period based on those~~ restricted stock ~~grants~~outstanding ~~that ultimately~~as ~~vest. The~~at ~~fair~~June ~~value~~30, ~~of grants is measured by the market price of the Company’s common stock on the date of grant and then applied a liquidity discount of 50 percent~~2009. This discount rate is determined by analyzing the Company’s liquidity history and using peer company data to estimate. Restricted stock awards generally vest ratably over the service period beginning with the first anniversary of the grant date.

~~There~~The Company ~~was~~adopted the provisions of SFAS No. 123R in the beginning of no2006. SFAS No. 123R requires that compensation cost relating to share-based payment transactions be recognized as an expense over the service period or vesting term. Accordingly, compensation costs recognized for the restricted stock ~~outstanding~~for asthe atsix ~~March~~months 31ended June 30, 2010 and 2009 totaled $123,468 and $0, respectively. For both the three months ended June 30, 2010 and 2009, compensation expense was $0.

The Company adopted the provisions of SFAS No. 123R in the beginning of 2006. SFAS No. 123R requires that compensation cost relating to share-based payment transactions be recognized as an expense over the service period or vesting term. Accordingly, compensation costs recognized for the restricted stock for the three months ended March 31, 2010 and 2009 totaled $36,190 and $0, respectively. 15

Stock Options

Option awards are granted with an exercise price equal to Company's bid price on the Pink Sheets on the date of grant, which is fair value. The options vest over three years of continuous service and are exercisable over ten years from the date of grant.

There were no grants, exercises or expirations of options during the three months ended March 31, 2010.

Summary information about the Company's stock options outstanding at March 31, 2010:

Weighted Average

Exercise

Options

Remaining Years of

Weighted Average

Options

Price

Outstanding

Contractual Life

Exercise Price

Exercisable

0.300

350,000

0.75

0.300

350,000

BioElectronics Corporation (A Development Stage Company)

Notes to Condensed Financial Statements

(Unaudited)

NOTE 10 – SHARE BASED COMPENSATION (CONTINUED)

Stock Options

There were no grants, exercises or expirations of options during the six months ended June 30, 2010.

Summary information about the Company's stock options outstanding at June 30, 2010:

Weighted Average

Exercise

Options

Remaining Years of

Weighted Average

Options

Price

Outstanding

Contractual Life

Exercise Price

Exercisable

0.300

350,000

0.50

0.300

350,000

NOTE 11 - WARRANTS

There were no grants, exercises or expirations of warrants during the ~~three~~six months ended June ~~March 31~~30, 2010.

The following table summarizes the characteristics of the outstanding warrants as at ~~March~~June 3130, 2010:

~~Options~~

Options

~~outstanding~~

outstanding

~~weighted average~~

weighted average

Exercise

~~Original~~

~~remaining life~~Original

remaining life

Price

Number

~~Term (Years)~~

inTerm ~~years~~(Years)

in years

0.33

~~332,000~~

332,000

~~0.42~~

0.17

NOTE 12 – FAIR VALUE MEASUREMENTS

The Company’s financial instruments consist primarily of cash, receivables, accounts payable and notes payable. The carrying amounts of such financial instruments approximate their respective estimated fair value due to the short-term maturities and/or approximate market interest rates of these instruments. The estimated fair value is not necessarily indicative of the amounts the Company would realize in a current market exchange or from future earnings or cash flows.

BioElectronics Corporation (A Development Stage Company)

Notes to Condensed Financial Statements

(Unaudited)

NOTE 13 – INCOME TAXES

The Company has not provided for income tax expense for the ~~three~~six months ended ~~March~~June 3130, 2010 because of a significant net operating loss carry-forward of approximately $~~4.6~~5 million. A full valuation allowance has been recorded against the deferred tax asset resulting from the benefits associated with the net operating loss carry-forward.

NOTE 14 – COMMITMENTS AND CONTINGENCIES LITIGATION

General

In the ordinary course of conducting its business, the Company may become involved in various legal actions and other claims, some of which are currently pending. Litigation is subject to many uncertainties and management may be unable to accurately predict the outcome of individual litigated matters. Some of these matters may possibly be decided unfavorably towards the Company.

The Company is involved, on a continuing basis, in monitoring our compliance with environmental laws and in making capital and operating improvements necessary to comply with existing and anticipated environmental requirements. While it is impossible to predict with certainty, management currently does not foresee such expenses in the future as having a material effect on the business, results of operations, or financial condition of the Company.

BioElectronics Corporation (A Development Stage Company)

Notes to Condensed Financial Statements

(Unaudited)

NOTE 14 – COMMITMENTS AND CONTINGENCIES LITIGATION (CONTINUED)

William Lyons v. BioElectronics Corporation

In 2005, a lawsuit was filed against the Company by William Lyons for alleged breach of contract and conversion claims associated with fees for services provided to the Company. Mr. Lyons alleged that Andrew Whelan, the ~~president~~President of the Company, the Company, and PAW II, a Maryland limited liability company, (collectively, “the Defendants”) reached an agreement to convey stock to Mr. Lyons. The defendants deny that any such agreement was in place or that Mr. Lyons had the right to enforce such an agreement.

On May 29, 2009, through binding arbitration, Mr. Lyons was awarded approximately $1.2 million for his claims. Subsequently, on June 25, 2009 the Company filed, in the Circuit Court of Frederick County, Maryland, a Petition to Vacate Arbitration Award issued by the arbitrator. The Motion was denied by the Court on December 30, 2009.

On January 14, 2010, the Court entered Judgment in favor of Mr. Lyons and against the Defendants jointly and severally in the amount of $1,217,919. The matter is now on appeal in the Maryland Court of Special Appeals.

As of the date of this filing, the Court of Special Appeals has not ruled on the Appeal. However, the Defendants intend to pursue the appeal toward either settlement or reversal. It is management’s opinion that, the court’s decision will be reversed on appeal or the amount of damages will be reduced because the arbitrator used information beyond the evidence to reach his verdict. Management’s position is also that any Judgment against the Corporation is improper because Mr. Whelan and the other Board members present had no authority to make this agreement on behalf of the Company. If the claims are not vacated by the Court, the Board of Directors will pursue collection of the damages from the Directors who participated in the action.17

At this time, the Company cannot accurately estimate actual damages to the claimants since the appeal is still pending. As a result of all the uncertainties, the outcome cannot be reasonably determined at this time and the Company is unable to estimate the loss, if any, in accordance with ASC Topic 450 “Contingencies” (formerly SFAS No. 5, “Accounting for Contingencies”).

BioElectronics Corporation (A Development Stage Company)

Notes to Condensed Financial Statements

(Unaudited)

NOTE 14 – COMMITMENTS AND CONTINGENCIES LITIGATION (CONTINUED)

As of the date of this filing, the Court of Special Appeals has not ruled on the Appeal. However, the Defendants intend to pursue the appeal toward either settlement or reversal. It is management’s opinion that, the court’s decision will be reversed on appeal or the amount of damages will be reduced because the arbitrator used information beyond the evidence to reach his verdict. Management’s position is also that any Judgment against the Corporation is improper because Mr. Whelan and the other Board members present had no authority to make this agreement on behalf of the Company. The Board of Directors has had independent legal counsel prepare a complaint to pursue collection for unjust enrichment from the Directors who participated in the action.

NOTE 15 – RELATED PARTY TRANSACTIONS

In addition to the related party transactions disclosed in Note 7 and Note 8, BioElectronics signed a distribution agreement on February 9, 2009 with eMarkets Group, LLC (eMarkets) a company owned and controlled by a member of the board of directors and sister of the ~~Company~~company's president. The agreement provides for eMarkets to be the exclusive distributor of the veterinary products of the Company to customers in certain countries outside of the United States for a period of three years. The distribution agreement lists the prices to be paid for the ~~Company~~company's products by eMarkets and provides for the ~~Company~~company to provide training and customer support at its own cost to support the distributor’s sales function.

Sales ~~transactions~~ to eMarkets recognized for the three months ended ~~March~~June 3130, 2010 ~~include~~ ~~$1,273~~and in2009 ~~sales~~amounted to $615 and $~~152~~97,477, ~~in cost of goods sold~~respectively. For the three months ended ~~March 31~~June 30, ~~2009,~~2010 ~~sales to eMarkets accounted for $15,750 in sales~~ and $32009,~~210~~ inthe cost of goods sold to eMarkets amounted to $220 and $26,462, respectively. Sales include $0 and $1496,~~784~~520 from bill and hold ~~revenues~~revenue transactions for the three months ended ~~March~~ ~~31,~~June ~~2010 and 2009~~30, ~~respectively. The balance due from eMarkets was $24,723 and $165,297 at March 31,~~ 2010 and ~~December 31,~~ 2009, respectively. ~~Such amounts were presented under “Trade receivables from related parties”.~~

17Sales transactions to eMarkets recognized for the six months ended June 30, 2010 include $1,887 in sales and $734 in cost of goods sold. For the six months ended June 30, 2009, sales to eMarkets accounted for $113,227 in sales and $29,889 in cost of goods sold to eMarkets. Sales include $0 and $112,270 from bill and hold revenue transactions for the six months ended June 30, 2010 and 2009, respectively. The balance due from eMarkets was $10,171 and $165,297 at June 30, 2010 and December 31, 2009, respectively. Such amounts were presented under “Trade receivables from related parties”.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

This Quarterly Report on Form 10-Q may contain certain forward-looking statements, including without limitation, statements concerning BioElectronics Corporation (“the Company”) operations, economic performance and financial condition. These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, and within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. The words "believe," "expect," "anticipate," "will," "could," "would," "should," "may," "plan," "estimate," "intend," "predict," "potential," "continue," and the negatives of these words and other similar expressions generally identify forward-looking statements. These forward-looking statements may include statements addressing our operations and our financial performance. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates. These forward-looking statements are based largely on the Company's current expectations and are subject to a number of risks and uncertainties. Factors we have identified that may materially affect our results are discussed in our Annual Report on Form 10-K, including the documents, for the year ended December 31, 2009, particularly under Item 1A, "Risk Factors". In addition, other important factors to consider in evaluating such forward-looking statements include changes in external market factors, changes in the Company’s business or growth strategy or an inability to execute its strategy, including due to changes in its industry or the economy generally. In light of these risks and uncertainties, there can be no assurances that the results referred to in the forward-looking statements will, in fact, occur. We undertake no obligation to revise any forward-looking statements in order to reflect events or circumstances that may arise after the date of this report. Readers are urged to carefully review and consider the various disclosures made in this report, in our Annual Report on Form 10-K and in our other filings with the Securities and Exchange Commission that attempt to advise interested parties of the risks and factors that may affect our business.

INTRODUCTION

~~We are~~BioElectronics Corporation (OTCPK) (the ~~maker~~“Company”) is the developer, marketer and manufacturer of patented, inexpensive, drug–free, topical, anti-inflammatory medical devices based upon proven therapy. Pulsed electromagnetic therapy has been used by physicians, sports trainers, and therapist around the world for eighty ~~patches~~years. ~~Our~~The Company has reduced the therapy to wafer thin ~~patches~~devices ~~contain~~that are anapplied ~~embedded~~directly ~~microchip~~to ~~and~~the body. The devices consist of an inexpensive microchip, battery and antenna that ~~deliver~~more ~~pulsed~~effectively ~~electromagnetic~~deliver the energy,. Recent improved circuitry has created a ~~clinically~~product ~~proven~~that ~~and~~heals ~~widely~~for ~~accepted~~10 ~~anti-inflammatory~~days and ~~pain~~can ~~relief~~be ~~therapy~~sold ~~that~~at ~~heretofore~~prices ~~has~~competitive to hot and cold packs. These ~~only~~products ~~been~~will ~~possible~~be tosold ~~obtain~~very ~~from~~competitively ~~large,~~on ~~facility-based~~Direct ~~equipment. We market~~Response Television (DRTV) and ~~sell~~in ~~our~~the ~~products~~analgesic ~~under~~aisle ~~the~~in ~~brand~~stores ~~names~~around ~~ActiPatch®,~~the ~~Allay™,~~world. The ~~RecoveryRx™~~Company’s ~~and~~design ~~HealFast™~~cost goal is to make its chips ubiquitous or one in every bandage.

~~During~~The DRTV ~~the~~and ~~three~~online ~~months~~marketing ~~ended~~platforms ~~March~~enable ~~31,~~customers ~~2010,~~to ~~our~~easily ~~focus~~gain ~~was~~access ~~on launching direct~~to ~~response~~information ~~television~~regarding ~~(DRTV)~~these ~~tests~~new inand ~~Latin~~exciting ~~America,~~consumer ~~preparing~~products ~~other~~and ~~international~~the ability ~~launches~~to ofpurchase ~~DRTV~~these ~~campaigns,~~items ~~implementing~~within ~~extensive~~the ~~product~~convenience ~~improvements, fulfilling~~of ~~large~~their ~~orders,~~own ~~and~~homes. ~~obtaining~~The ~~additional~~Company works ~~domestic~~with ~~and~~its ~~international~~ distribution ~~channels. Securing~~partners ~~additional~~to ~~U.S.~~provide ~~FDA~~product ~~market clearance~~distribution, isfulfillment ~~central~~and tocustomer ~~market~~interaction, ~~entry~~including ~~and~~the ~~product~~operation ~~acceptance.~~of customer call centers

~~Our~~An ~~customers~~increased ~~include~~consumer ~~physicians,~~awareness ~~market~~of ~~product~~the ~~distributors,~~dangers ~~and~~of ~~direct~~overuse ~~response television~~of ~~distributors. Plastic~~oral ~~surgery~~analgesics ~~is the only domestic market~~such ~~segment~~as ~~with~~acetaminophen ~~current~~and ~~U.S.~~non-steroidal ~~FDA~~anti-inflammatory ~~market~~drugs ~~clearance. Consequently,~~(NSAIDs) ~~until~~has ~~additional~~significantly ~~clearances~~altered ~~are~~the ~~received~~competitive ~~from~~landscape ~~the~~for Upain management therapeutics.S. Many ~~FDA,~~common ~~domestic~~anti-inflammatory ~~sales~~pain medications are ~~restricted~~required ~~primarily~~ to ~~medical~~carry ~~providers,~~warning ~~and~~labels ~~the~~due ~~majority~~to ofpotential ~~sales~~dangerous ~~will~~side beeffects (and ~~located~~some ~~outside~~have ~~the~~been ~~United~~withdrawn ~~States~~altogether). ~~As of March 31~~Therefore, ~~2010,~~there weis ~~have~~significant ~~established~~market ~~distribution~~opportunity ~~agreements~~for ~~with~~a ~~distributors~~therapeutic ~~that~~agent ~~offer~~with ~~our~~improved ~~product~~efficacy ~~for~~and no ~~sale~~side-effects. inThe ~~over~~distinctive 40value ~~countries~~proposition ~~internationally,~~of ~~mainly~~the inproducts ~~Europe,~~is ~~Latin~~the ~~America,~~delivery ~~Middle~~of ~~East~~drug-free ~~and~~therapy ~~South~~that ~~East~~reduces ~~Asia. The~~pain ~~international~~and ~~market~~inflammation isand ~~expected~~accelerates healing by 30% to ~~further~~50% ~~expand~~when ~~going~~compared ~~forward~~with ~~and~~the topresent ~~eventually~~standard ~~constitute~~methods ~~two-thirds~~ of ~~our~~patient ~~total~~care. The ~~sales~~market potential is estimated at $10 billion worldwide.

1819

The Company’s immediate objective is to sell and distribute its three main products: ActiPatch® Back Pain Therapy, ActiPatch Knee Pain Therapy, and Allay™ Menstrual Cycle Pain Therapy, each of which has significant market potential. To accomplish these objectives, we incurred significant additional costs in monthly expenses to:

File our audited financial statements with the SEC

Obtain additional regulatory clearances in Latin America, the US and Canada.

Establish brand management

Conduct consumer research

Develop infomercials

Research and develop new products and make product improvements

During the six months ended June 30, 2010, our sales and marketing focus was on launching direct response television (DRTV) in Latin America, Canada, and preparing other international launches of DRTV campaigns. The development of our product marketing group and initiation of consumer research has increased sales and administration expense. Likewise, we have engaged B2C Agency for direct response and advertising support for the United Kingdom and European market expansion. We committed substantial resources to biophysics and regulatory consulting to obtain additional product market clearances in U.S., Latin America, and Canada. Additionally, we have also made several significant product improvements in the electronics, packaging, and affixing methods. Furthermore, as a result of our SEC filings, our accounting and legal costs have dramatically increased.

Securing additional U.S. FDA market clearance is central to market entry and product acceptance. Plastic surgery is the only domestic market segment with current U.S. FDA market clearance. We have developed a new device and honed our arguments on the power of our existing device to meet the standards for a broader indication-of-use market clearance from the U.S. FDA, and thus, we have submitted a form 510(k) for the new and existing device to the U.S. FDA for broader market clearance. The new market clearance will enable us to market and sell to all surgeons and chronic would care providers, home health care agencies, and nursing homes.

We have received a Not Significantly Equivalent (NSE) letter from the U.S. FDA for both our Actipatch musculoskeletal pain and Allay Menstrual Pain Therapy market clearance applications. We have filed formal requests to have both products reclassified under Section 513 of the Food and Drug Act. The NSE letters are required to use the simpler reclassification provisions of the Section 513. During the last several months, we have performed substantial tests and developed additional documentation to support our reclassification requests. We have also developed an alternative over-the-counter device to submit in another product category to preclude the complications of a pulsed electromagnetic classification. We are confident that we will obtain U.S. over-the-counter clearance for our products.

As of June 30, 2010, we have established distribution agreements with distributors that offer our product for sale in over 40 countries internationally, mainly in Europe, Latin America, Middle East and South East Asia. The international market is expected to further expand going forward and to eventually constitute two-thirds of our total sales.

MAJOR GOALS, SIGNIFICANT ACTIVITIES AND RESULTS

DURING FIRST ~~QUARTER~~SIX MONTHS OF 2010

BioElectronics’ operational plan is centered on marketing oriented functions. We believe our product set is very strong, our quality is very high, our ISO-certified production capabilities are extensive, and our Company is structured for accelerated growth. Over the past 24 months, the Company has significantly strengthened its product lines, improved product quality, created new packaging, and redesigned marketing materials and products.

We have several major goals to continue the advancement of ~~its~~ business operations, including: 1) completing additional clinical trials; 2) obtaining additional U.S. FDA and international product market clearances; 3) continuing to build our four primary brands; 4) building domestic distribution, including direct response television commercials and drug/grocery store-based distribution; and 5) expanding our already growing international distribution network.

Obtain additional U.S. FDA market clearances for:

the postoperative treatment of pain and edema in soft tissue

over-the-counter treatment of musculoskeletal pain

over-the-counter treatment of menstrual cycle pain and discomfort

the treatment of chronic pain

Develop a management team, DRTV, advertising, and brand management expertise and infrastructure necessary to support large scale, multiple product offerings on a national and international level.

Maintain primary management focus on our leading back pain, knee pain, and menstrual cycle pain blockbuster products.

Obtain 3rd party product reimbursement (insurance coverage) for kidney compromised, cardiovascular, diabetic and C-section patients.

Continue product improvements and manufacturing cost reductions to maintain market dominance.

Pursue additional clinical studies and research to support sales and marketing and new product introductions.

Optimize the Company’s presence on securities exchanges.

Additional U.S. Government FDA and International Regulatory Body Filings

~~Our~~Outside ~~product~~the isU.S., ~~currently~~our products are classified as Class II devices and are sold over-the-counter. In the US, our products are currently classified as a high risk, Class III device. We have U.S. FDA market clearance for the treatment of edema following blepharoplasty. We have filed two additional 510(k) market clearance applications for “relief of musculoskeletal pain” and “relief of menstrual cycle pain and discomfort” for over-the-counter sales. Even though the U.S. FDA is reluctant to give us over-the-counter clearance for a Class III device, we are currently pursuing both reclassification and approval of the pending applications. We are also preparing an additional U.S. FDA market clearance request for our new chronic pain device and a market clearance request for post-operative pain and edema. As we expand internationally, we are required to and do obtain additional market clearance in each country.

Continue to Build Our Four Primary Markets

We augmented our marketing team ~~in 2009~~ with two experienced Brand Managers to help ~~build~~ build our brands. InAs ~~the~~we ~~coming months~~grow, we plan to add additional brand management staff to ~~further~~manage ~~assist~~new ~~our~~product ~~marketing~~categories ~~efforts~~such as foot care products, would care orthopedics, etc.

~~Because~~Due to BioElectronics ~~has~~having only limited U.S. FDA clearance of its products, mass distribution to direct consumers in the ~~United~~U.S. ~~States~~ is prohibited. We believe U.S. FDA clearance for ~~some of~~ our products is forthcoming, and thus, we are currently in the process of identifying and building a domestic distribution network for both the over-the-counter and medical markets.

Continued Expansion of Our Already Growing International Distribution Network

BioElectronics has made steady, significant progress in building an international distribution network. Due to the Company obtaining over-the-counter sales approval for its products in Canada, Europe and many other markets, it has regular interest from international distribution companies to market and distribute the product lines. Our strategy is to partner with distributors that have the experience and financial ability to place our products into the consumer goods retail sales channels. We have seen success in executing this strategy relative to Canada, Western Europe, South-East Asia and the Middle East. Since retail distribution is a core strategy, the Company is regularly in negotiations with existing and future distributors, and anticipates signing additional contracts with qualified distributors in Asia, Europe, and other international locations.

1922

The Company developed Direct Response Television (DRTV) materials produced by leading companies (Schulberg Media Works for English-speaking markets, and RC Productions for Hispanic markets) for both the ActiPatch Back Pain product and the Allay Menstrual Pain Therapy product. Subsequently, the commercials are extremely helpful with establishing partnerships with major DRTV companies to test our products in many countries. The Company contracted with TeleDEPOT in Latin America, where it completed a very successful test in several countries. In ~~Canada~~Turkey, wethe ~~are~~distributor ~~partnering~~has ~~with~~created ~~Northern~~a ~~Response,~~Turkish ~~one~~Allay ofinfomercial ~~the~~and ~~world’s~~has ~~largest~~begun DRTV ~~companies,~~testing toand ~~test~~retail ~~our products~~distribution. In ~~Northern~~Canada, ~~Response~~the isCompany ~~also looking for~~has ~~further~~assumed ~~opportunities~~sales inand ~~six~~marketing ~~additional~~responsibilities ~~international~~to ~~locations~~prepare ~~that~~for ~~show interest~~its ~~in our products~~U.S. Inlaunch ~~Australia~~ and ~~New Zealand, one of our distributors~~ ~~will~~to ~~test~~introduce ~~the~~its ~~back~~new ~~pain~~disposable ~~commercial; while in Turkey, another distributor will test Allay, our menstrual pain product~~products.

Other Issues Relative to Plan of Operations

Cash Requirements - BioElectronics is currently in a ~~strong~~positive current asset position with its current assets exceeding current liabilities~~, yielding a current ratio well above one~~. As is typical for most growth companies, BioElectronics may, in the future, need to raise additional funds to finance its working capital requirements. It is unknown at this time how much, if any, additional funds will be needed to execute our business plan, as it is highly dependent upon our sales growth trajectory over the coming quarters.

Research and Development – Our products are substantially developed and ready for sale, and many of our products are currently offered for sale on the international market. We are designing several new products based on our core technologies with developmental costs being financed ~~through~~by ~~normal~~funds ~~operating~~provided by ~~cash~~related ~~flows~~parties.

Expected Purchase or Sale of Plant and Significant Equipment - BioElectronics does not anticipate any major purchases or sales of plant or significant equipment.

Expected Changes in the Number of Employees - We are currently recruiting new talent and expect our hiring will focus on marketing personnel, support, and manufacturing staff. Our hiring plans are dependent upon revenue growth rates over the coming quarters.

RESULTS OF OPERATIONS

Our principal activity, to sell and market in the U.S. retail market, has not yet commenced due to the lack of U.S. FDA approval for our product. As a result, we consider ourselves a development stage entity in accordance with FASB Accounting Standards Codification Topic 915, “Development Stage Enterprise”, and accordingly present, in our financial statements, the results of operations and other disclosures for the company for the period from our inception, April 10, 2000, to ~~March~~June 3130, 2010. Apart from the additional financial information provided regarding our financial results for the period from inception, April 10, 2000, to June 30, 2010, our designation as a Development Stage Company did not affect our accounting or other information provided in our financial statements.

Three Months Ended March 31, 2010 Compared to Three Months Ended March 31, 2009

Revenue. Revenue from operations for the three months ended March 31, 2010 and 2009 amounted to approximately $282,000 and $295,000, respectively, a decrease of $13,000 or 4% over the prior year. The following table summarizes the Company’s domestic, international and veterinary (related party) revenues earned during the three months ended March 31, 2010 and 2009:

	For the three months ended, March 31,
	2010					2009
	Amounts		Percentage			Amounts		Percentage
International	$	252,440		90	%	$	116,766		40	%
Domestic		28,054		10	%		162,065		55	%
Veterinary		1,273		0	%		15,750		5	%
	$	281,767		100	%	$	294,581		100	%

International sales increased by approximately $136,000 or 116% in the three months ended March 31, 2010 from the comparative period in 2009 as a result of new distributorship agreements signed in 2010 and increased sales through agreements signed in prior years. Domestic sales reduced by approximately $134,000 or 83% in the three months ended March 31, 2010 from the comparative period in 2009 resulting from sales of special cervical devices totaling $100,000 in 2009.

Veterinary revenues of $1,273 and $15,750 were recorded in the three months ended March 31, 2010 and 2009, respectively. The reduction in veterinary revenues is primarily due to eMarkets requesting shipment of the bill and hold transactions from 2009 in lieu of purchasing additional units. eMarkets is our exclusive distributor of veterinary products to customers in certain countries outside of the United States.

At March 31, 2010, the Company has not yet delivered 43,160 units, totaling approximately $366,000 bill and hold sales recognized for the year ended December 31, 2009. The units will be shipped during 2010 to help meet the distribution 2010 purchase obligation.

Cost of Goods Sold and Gross Margin. Costs of goods sold for the three months ended March 31, 2010 and 2009 amounted to approximately $121,000 and $76,000, respectively. Gross margin decreased from approximately 74% of sales for the three months ended March 31, 2009 to approximately 57 % for the three months ended March 31, 2010. The decrease was primarily the result of replacing 7,500 defective units totaling approximately $30,000 in cost of goods sold. Other factors include higher production costs, which arose from an increase in the use of contingent workers to expedite shipment of the new Allay packaging, and higher shipping costs related to international sales. We expect the normal gross margins on our products to be in the range of 66 % to 70 % of sales in the future, depending on product mix and sales prices. This gross margin range is consistent with other medical device and pharmaceutical companies.

General and Administrative Expense. For the three months ended March 31, 2010, general and administrative expenses amounted to approximately $626,000 as compared to $260,000 in comparative period of 2009, an increase of $366,000 or 142% over the prior period. The increase in general and administrative expenses in 2010 was primarily driven by an increase in accounting, legal and investor relations expenses to begin reporting to the SEC.

General and administrative expenses of approximately $626,000 for the three months ended March 31, 2010 included approximately $72,000 in marketing support expenses, approximately $201,000 in legal and accounting expense, approximately $46,000 in investor relation consulting expense, approximately $7,000 in depreciation and amortization, and approximately $300,000 in other general and administrative expenses.

General and administrative expenses of approximately $260,000 for the three months ended March 31, 2009, consisted of approximately $94,000 in sales support expenses, approximately $19,000 in legal and accounting expense, approximately $5,000 in investor relations expense, approximately $4,000 in depreciation and amortization, and $139,000 in other general and administrative expenses.

Interest Expense. Interest expense increased to approximately $29,000 for the three months ended March 31, 2010 from approximately $20,000 in the comparable period in 2009. The increase in interest expense was mainly attributed to the new financing loans with IBEX, LLC (“IBEX”). IBEX, LLC is a limited liability company, whose President is the daughter of the President of the Company.

Net Loss. Net losses increased from approximately $61,000 during the first three months of 2009 to approximately $495,000 during the comparative period in 2010. Losses were increased primarily due to increase in general and administrative expense and interest expense.

LIQUIDITY AND CAPITAL RESOURCES

Our sources of funds are primarily cash flows from financing activities. We raise funds for our operations by borrowing on notes, agreements with third parties and related parties, and selling equity in the capital markets. We are still operating as a development stage company, in which we are devoting substantially all of our present efforts to developing our business. For every year and period since our inception, we have generated negative cash flow from operations. At March 31, 2010, our cash and cash equivalents were approximately $94,000. Since December 31, 2009, our balance of cash and cash equivalents decreased by approximately $203,000 as a result of our loss from operations in the quarter of $494,642, offset by changes in our working capital balances and proceeds received from our financing activities, primarily proceeds from the issuance of related party notes payable and assignment of receivables under our factoring agreement with Jarenz LLC (“Jarenz”), a related party. Jarenz is a limited liability company, whose owner is the daughter of the President of the Company.

Since our inception on April 10, 2000, the majority of our financing has been provided by the Company’s founders including the CEO, certain board members, and their immediate family and associates. As of March 31, 2010, all of the Company’s debt was provided by these related parties. We present the secured borrowing as short-term liabilities and the notes payable as long-term liabilities in our financial statements, as the holders of these notes (who are related parties) have no current intention to pursue repayment of these amounts.

At March 31, 2010, we had positive working capital of approximately $1,004,000 which is comparable to approximately $1,026,000 at December 31, 2009.

On January 1, 2005, we entered into an unsecured revolving convertible promissory note agreement (“the Revolver”) with IBEX, for a maximum limit of $2,000,000, with interest at the Prime Rate plus 2% (i.e. 5.25% for the three months ended March 31, 2010), and all accrued interest and principal due on or before January 1, 2015, whether by the payment of cash or by conversion into shares of our common stock. The Revolver is convertible into Common Shares of the Company at various conversion prices based on the VWAP for the 10 trading days preceding the date of conversion. As of March 31, 2010, an amount of approximately $1,305,000 was drawn from the Revolver.

On August 1, 2009, we entered into a convertible promissory note agreement with IBEX, for $519,920, with simple interest at 8% per annum. All accrued interest and principal are due on or before August 31, 2011, whether by the payment of cash or by conversion into shares of our common stock. The promissory note is convertible into Common Shares of the Company based on (i) a sum equal to the entire outstanding principal and interest, divided by (ii) the conversion price.

~~On March~~Three ~~31, 2010, the Company entered into a convertible promissory note agreement with IBEX, for $310,000, with simple interest at 8% per annum. All accrued interest~~ and ~~principal~~Six ~~are~~Months ~~due~~Ended onJune ~~or before March 31~~30, ~~2012,~~2010 whether by the payment of cash or by conversion into shares of the Company’s common stock. The promissory note is convertible equal to the quotient of (i) a sum equal to the entire outstanding principal and ~~interest, divided by (ii) the conversion price.~~2009

~~The~~Revenue. Revenue ~~Company~~from ~~entered~~operations ~~into~~for ~~an Agreement (~~the ~~“Agreement”)~~three onmonths ~~March~~ended 5June 30, 2010, ~~with Jarenz~~and ~~pursuant~~2009 amounted to approximately ~~which~~$331,000 ~~Jarenz~~and is$222,000, ~~providing~~respectively, ~~accounts~~an ~~receivable~~increase ~~financing~~of ~~and~~$109,000 or ~~collection~~49% ~~services~~over to the ~~Company~~prior year. ~~The~~Revenues ~~Agreement~~were ~~provides~~approximately ~~for~~$613,000 ~~the~~and ~~Company~~$516,000, tofor ~~assign~~the ~~certain~~six ~~accounts~~months ~~receivable~~ended ~~balances~~June to30, ~~Jarenz~~2010 inand ~~exchange~~2009, ~~for~~respectively, aresulting ~~cash~~in ~~advance~~an ~~amount~~increase of up$97,000 toor 8019% ofover the ~~face~~prior ~~value of the receivables transferred; such amount determined upon discussions between the parties~~year. ~~Following collection of the related receivable,~~ The ~~Jarenz~~following ~~pays~~table ~~the~~summarizes ~~balance thereof to BioElectronics minus~~ the ~~initial down payment and a discount fee earned by Jarenz. Jarenz~~Company’s ~~discount~~domestic, ~~fee~~international isand aveterinary ~~percentage~~(related ofparty) ~~the~~revenues ~~cash~~earned ~~advance~~during ~~amount based upon~~ the ~~number~~three ~~of days elapsing between the date of purchase by Jarenz~~ and ~~the~~six ~~date~~months ofended ~~collection~~June ~~of the related accounts receivable. As at March 31~~30, 2010, ~~10%~~and ~~of the initial down payment of the assigned receivables was drawn totaling approximately $65,000. The Company will draw further cash advance amounts upon additional financing needs.~~2009:

Net Cash Used In Operating Activities. Net cash used in operating activities amounted to approximately $647,000 and $216,000 in the three months ended March 31, 2010 and March 31, 2009.

	For the three months ended, June 30										For the six months ended, June 30
	2010					2009					2010					2009
	Amounts		Percentage			Amounts		Percentage			Amounts		Percentage			Amounts		Percentage

International	$	291,904		88	%	$	70,215		32	%	$	551,907		90	%	$	190,426		37	%
Domestic		39,169		12	%		54,183		24	%		59,452		10	%		212,803		41	%
Veterinary		406		0	%		97,477		44	%		1,887		0	%		113,227		22	%

	$	331,479		100	%	$	221,875		100	%	$	613,246		100	%	$	516,456		100	%

~~Net cash~~International ~~used~~sales inincreased ~~operating~~by ~~activities amounted to~~ approximately $~~647~~222,000 ~~for~~or 316% in the three ~~months~~ months ended June ~~March 31~~30, 2010 ~~primarily~~and as$361,000 aor ~~result~~190% ofin the ~~net~~six ~~loss~~months ~~incurred~~ended ~~for~~June ~~the quarter~~30, ~~offset~~2010 byfrom ~~changes~~the comparative periods in ~~the~~2009 ~~Company’s~~as ~~capital~~a ~~balances~~result ~~including~~of annew distributorship ~~increase~~agreements signed in ~~trade~~2010 and ~~other~~increased ~~receivables~~sales ofthrough agreements signed in prior years. Domestic sales reduced by approximately $~~191~~15,000, ~~increase~~or in28% ~~accounts~~in ~~payable~~the ofthree ~~approximately~~months ended June 30, 2010 and $~~108~~153,000 or 72% in the six months ended June 30, ~~and~~2010 ~~increase~~from the comparative periods in ~~inventory~~2009. The reduction for the six month period resulted from sales of special cervical ~~approximately~~devices totaling $~~156~~100,000 in 2009.

~~Net cash~~Veterinary ~~used~~revenues inof ~~operating~~$406 ~~activities~~and ~~amounted to approximately~~ $~~216~~97,~~000~~477 ~~for~~were recorded in the three months ended ~~March~~June 3130, 2010 and 2009, ~~primarily~~respectively, asand a$1,887 ~~result~~and of$113,227 ~~the~~were ~~net~~recorded ~~loss~~in ~~incurred~~the ~~for~~six ~~the~~months ~~quarter~~ended June 30, ~~offset~~2010 byand ~~changes~~2009, respectively. The reduction in ~~the~~veterinary ~~Company’s~~revenues ~~capital~~is ~~balances~~primarily ~~including~~due ~~an increase~~to ineMarkets ~~trade~~requesting shipment ~~and~~of ~~other~~the ~~receivables~~bill ofand ~~approximately~~hold ~~$62,000,~~transactions ~~decrease~~from 2009 in ~~accounts~~ ~~payable~~lieu of ~~approximately~~purchasing additional ~~$39,000,~~units. eMarkets ~~increase~~is inour ~~inventory~~exclusive distributor of veterinary ~~approximately~~products ~~$74,000,~~to ~~and~~customers ~~decrease~~ in ~~customer~~certain ~~deposits~~countries outside of ~~approximately~~the United ~~$79,000~~States.

~~Net~~At ~~Cash Used in Investing~~June ~~Activities.~~30, ~~During~~2010, the ~~three~~Company ~~months~~has ~~ended~~not ~~March~~yet 31delivered 43,005 ~~2010~~units, wetotaling ~~purchased~~ approximately $45365,000 ofbill ~~laboratory~~and ~~equipment~~hold tosales ~~develop~~recognized ~~new~~for ~~products~~the ~~and~~year ~~to improve~~ended ~~quality~~December ~~assurance~~31, 2009. We The ~~did~~units ~~not~~will ~~make~~be ~~any~~shipped ~~significant investments~~during in2010 ~~fixed~~to orhelp ~~other~~meet ~~long-term assets during~~ the ~~three months ended~~ ~~March~~distribution ~~31,~~2010 ~~2009~~purchase obligation.

Cost of Goods Sold and Gross Margin. Costs of goods sold for the three months ended June 30, 2010 and 2009 amounted to approximately $126,000 and $82,000, respectively, and for the six months ended June 30, 2010 and 2009 amounted to approximately $247,000 and $158,000, respectively. Gross margin decreased from approximately 69% of sales for the six months ended June 30, 2009 to approximately 60% for the six months ended June 30, 2010. The decrease was primarily the result of replacing 7,500 defective units totaling approximately $30,000 in cost of goods sold. Other factors include higher production costs, which arose from an increase in the use of contingent workers to expedite shipment of the new Allay packaging, and higher shipping costs related to international sales. We expect the normal gross margins on our products to be in the range of 66 % to 70 % of sales in the future, depending on product mix and sales prices. This gross margin range is consistent with other medical device and pharmaceutical companies.

~~Net~~General ~~Cash~~and ~~Provided~~Administrative Expense. General byand ~~Financing~~administrative expenses for the three ~~Activities.~~months ~~Net~~ended ~~cash~~June ~~provided~~30, by2010 ~~financing~~and ~~activities~~2009 amounted to approximately $~~489~~652,000 and $187,000, respectively, and increase of $~~184~~465,000 inor ~~three~~249%. For the six months ended ~~March~~June 3130, 2010, general and administrative expenses amounted to ~~March~~approximately 31$1,278,000 ~~2009~~as compared to $447,000 ~~respectively. The~~in ~~increase~~comparative period of ~~approximately~~2009, an increase of $~~305~~831,000 ~~was~~ ~~primarily~~or ~~because~~186% ofover the ~~increase~~prior inperiod. The ~~proceeds~~following table ~~obtained~~summarizes ~~from~~the ~~related~~Company’s ~~party~~general and administrative expenses for the three ~~notes~~and ~~payable~~six ofmonths ~~approximately~~ended ~~$348~~June 30,~~000.~~ 2010 and 2009:

During the three months ended March 31, 2010, the Company generated approximately $489,000 in cash from financing activities through the issuance of notes payable to related parties (amounting to $445,000) and the assignment of receivables to related parties (amounting to $65,000). The proceeds received from these activities were used to repay notes payable and financing of receivable (amounting to $21,000) and to fund operations during the year.

	Three months ended June 30,				Six months ended June 30,
General and Administrative Expenses:	2010		2009		2010		2009
Depreciation and Amortization	$	13,265	$	3,645	$	20,036	$	7,290
Investor Relations Expenses		8,712		6,195		54,611		11,585
Legal and Accounting Expenses		168,655		50,632		369,590		69,330
Payroll Expenses		245,828		44,471		427,481		90,388
Sales Support Expenses		79,933		16,220		151,700		110,013
Other General and Administrative Expenses		136,053		65,494		254,976		158,443

Total General and Administrative Expenes	$	652,446	$	186,657	$	1,278,394	$	447,049

~~During~~The Other General and Administrative Expenses include all payroll and related costs for the Company’s management, accounting, and administrative functions. The increase in Other General and Administrative Expenses for the three and six months ended ~~March~~June 3130, ~~2009~~2010 was primarily driven by an increase in sales and marketing personnel. The payroll, compensation, and other payroll related expenses for the ~~Company~~six ~~generated~~months ended June 30, 2010 increased by approximately $~~184~~337,000 incompared ~~cash from~~to ~~financing~~the ~~activities~~previous ~~mainly~~period ~~through~~in 2009. Additionally for the ~~issuance~~six ofmonth ~~related~~ended ~~party~~June ~~notes~~30, 2010, there was ~~payable~~an ~~(amounting~~increase toin consulting expense of approximately $9650,~~600)~~000 for consulting services related to product enhancements and preparing support for submissions to the ~~sale~~FDA, ofand ~~common~~there ~~shares~~was ~~(amounting~~an to increase in travel expense of approximately $~~147~~15,000) related to several new trade shows and international distribution. ~~The~~Further ~~funds~~factors ~~received~~in ~~were~~the ~~used~~overall toincrease ~~repay~~of ~~certain~~General ~~notes~~and ~~payable~~Administrative ~~(amounting~~Expenses are attributed to ~~$51~~accounting,~~000)~~ legal and investor relation consulting expenses necessary to ~~fund~~prepare ~~operations~~annual, quarterly and other reports for filing with the SEC.

~~Going concern~~Interest Expense. ~~The~~ ~~Company’s financial statements have been~~Interest ~~prepared~~expense onincreased ato ~~going~~approximately ~~concern~~$40,000 ~~basis~~for ~~which~~the ~~contemplates~~three ~~the~~months ~~realization~~ended ofJune ~~assets~~30, ~~and~~2010 ~~the~~from ~~liquidation~~approximately of$21,000 ~~liabilities~~ in the ~~ordinary~~comparable ~~course~~period ~~of business. We have incurred substantial losses from operations~~ in ~~the~~2009. For ~~three~~the six months ended ~~March~~June 3130, 2010 and ~~prior years~~2009, ~~including~~interest aexpense ~~net~~amounted ~~loss of~~to ~~approximately~~ $~~495~~69,000 and $6141,000, ~~for~~respectively. The increase in interest expense was mainly attributed to the ~~three~~new ~~months~~financing ~~ended~~loans ~~March~~with 31IBEX, ~~2010~~LLC and ~~March~~ 31St. Johns, ~~2009 respectively~~LLC. ~~The~~IBEX, ~~Company~~LLC ~~also~~is ~~has~~a anlimited ~~accumulated~~liability company, whose President ~~deficit~~is asthe daughter of ~~March~~the 31President of the Company. St. Johns, ~~2010~~LLC ofis ~~$11~~a limited liability company,~~159,132.~~ which is owned by family members of the President of the Company

We are currently looking for additional financing to provide funds for operations and to complete our developmental activities. However, we can provide no assurance that we will be able to obtain financing on reasonable terms and at sufficient levels to enable us to complete developmental activities, receive U.S. FDA approval and develop sufficient sales revenue and achieve profitable operations. Until sufficient financing has been received to complete our developmental activities, there exists substantial doubt as to our ability to continue as a going concern.25

Net Loss. Net losses during the three months ended June 30, 2010 and 2009 amount to approximately $492,000 and $68,000, respectively. Net losses increased from approximately $129,000 during the first six months of 2009 to approximately $987,000 during the comparative period in 2010. Losses were increased primarily due to increase in general and administrative expense and interest expense.

LIQUIDITY AND CAPITAL RESOURCES

Our sources of funds are primarily cash flows from financing activities. We raise funds for our operations by borrowing on notes, agreements with third parties and related parties, and selling equity in the capital markets. We are still operating as a development stage company, in which we are devoting substantially all of our present efforts to developing our business. For every year and period since our inception, we have generated negative cash flow from operations. At June 30, 2010, our cash and cash equivalents were approximately $137,000. Since December 31, 2009, our balance of cash and cash equivalents decreased by approximately $160,000 as a result of our loss from operations in the first six months of 2010 of $986,826, offset by changes in our working capital balances and proceeds received from our financing activities, primarily proceeds from the issuance of related party notes payable and assignment of receivables under our factoring agreement with Jarenz LLC (“Jarenz”), a related party. Jarenz is a limited liability company, whose owner is the daughter of the President of the Company.

Since our inception on April 10, 2000, the majority of our financing has been provided by the Company’s founders including the CEO, certain board members, and their immediate family and associates. As of June 30, 2010, all of the Company’s debt was provided by these related parties. We present the secured borrowing as short-term liabilities and the notes payable as long-term liabilities in our financial statements, as the holders of these notes (who are related parties) have no current intention to pursue repayment of these amounts.

At June 30, 2010, we had positive working capital of approximately $1,128,000 which is comparable to approximately $1,026,000 at December 31, 2009.

On January 1, 2005, we entered into an unsecured revolving convertible promissory note agreement (“the Revolver”) with IBEX, for a maximum limit of $2,000,000, with interest at the Prime Rate plus 2% (i.e. 5.25% for the six months ended June 30, 2010), and all accrued interest and principal due on or before January 1, 2015, whether by the payment of cash or by conversion into shares of our common stock. The Revolver is convertible at various fixed conversion prices based on the Volume-Weighted Average Price (“VWAP”) for the 10 trading days preceding the date of note, which approximated the fair value of the Company’s stock at the date of conversion. As of June 30, 2010, an amount of approximately $1,322,000 was drawn from the Revolver.

We refer to Note 8 of our interim financial statements included in this Report on Form 10-Q which contains information on borrowings received in the form of promissory notes from IBEX, LLC and St. Johns, LLC.

The Company entered into an Agreement (the “Agreement”) on March 5, 2010, with Jarenz pursuant to which Jarenz is providing accounts receivable financing and collection services to the Company. The Agreement provides for the Company to assign certain accounts receivable balances to Jarenz in exchange for a cash advance amount of up to 80% of the face value of the receivables transferred; such amount determined upon discussions between the parties. Following collection of the related receivable, Jarenz pays the balance thereof to BioElectronics minus the initial down payment and a discount fee earned by Jarenz. Jarenz’s discount fee is a percentage of the cash advance amount based upon the number of days elapsing between the date of purchase by Jarenz and the date of collection of the related accounts receivable. As at June 30, 2010, 10% of the initial down payment of the assigned receivables was drawn totaling approximately $86,000. The Company will draw further cash advance amounts upon additional financing needs.

Net Cash Used In Operating Activities. Net cash used in operating activities amounted to approximately $975,000 and $434,000 in the six months ended June 30, 2010 and June 30, 2009, respectively.

Net cash used in operating activities amounted to approximately $975,000 for the six months ended June 30, 2010 primarily as a result of the net loss incurred, offset by changes in the Company’s capital balances including an increase in trade and other receivables of approximately $164,000, increase in accounts payable of approximately $167,000, and increase in inventory of approximately $468,000.

Net cash used in operating activities amounted to approximately $434,000 for the six months ended June 30, 2009 primarily as a result of the net loss incurred, offset by changes in the Company’s capital balances including an increase in trade and other receivables of approximately $154,000, decrease in accounts payable of approximately $87,000, increase in inventory of approximately $78,000, and decrease in customer deposits of approximately $119,000.

Net Cash Used in Investing Activities. During the six months ended June 30, 2010, we purchased approximately $31,000 of laboratory equipment to develop new products and to improve quality assurance. We did not make any significant investments in fixed or other long-term assets during the six months ended June 30, 2009.

Net Cash Provided by Financing Activities. Net cash provided by financing activities amounted to approximately $847,000 and $402,000 in six months ended June 30, 2010 and June 30, 2009, respectively. The increase of approximately $445,000 was primarily because of the increase in proceeds obtained from related party notes payable of approximately $533,000.

During the six months ended June 30, 2010, the Company generated approximately $847,000 in cash from financing activities through the issuance of notes payable to related parties (amounting to $815,000) and the assignment of receivables to related parties (amounting to $86,000). The proceeds received from these activities were used to repay notes payable and financing of receivable (amounting to $54,000) and to fund operations during the year.

During the six months ended June 30, 2009, the Company generated $402,000 in cash from financing activities mainly through the issuance of related party notes payable (amounting to $282,000) and the sale of common shares (amounting to $190,000). The funds received were used to repay certain notes payable and related party notes payable (amounting to $71,000) and to fund operations.

Going concern. The Company’s financial statements have been prepared on a going concern basis which contemplates the realization of assets and the liquidation of liabilities in the ordinary course of business. We have incurred substantial losses from operations in the six months ended June 30, 2010 and prior years, including a net loss of approximately $987,000 and $268,000 for the six months ended June 30, 2010 and June 30, 2009 respectively. The Company also has an accumulated deficit as of June 30, 2010 of $11,651,316.

The Company projects that it will require an additional $300,000 in working capital in the next 12 months. Management has already loaned the Company $200,000 and is committed to loan the additional $100,000. Given a current ratio of 1:4, management assumes it can finance some additional growth with asset based financing. If sales increase as anticipated, the Company will seek additional capital from new investors. The Company has prepared a financing proposal to discuss opportunities with potential investors or possible strategic partners. However, we can provide no assurance that we will be able to obtain financing on reasonable terms and at sufficient levels to enable us to complete developmental activities, receive U.S. FDA approval and develop sufficient sales revenue and achieve profitable operations. Until sufficient financing has been received to complete our developmental activities, there exists substantial doubt as to our ability to continue as a going concern.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

We have minimal market risk inherent in our financial position. We do not have any derivative financial instruments and do not hold any derivative financial instruments for trading purposes. Our market risk primarily represents the potential loss arising from adverse changes in market interest rates. Our results from operations could be impacted by decreases in interest rates on our cash and cash equivalents. Additionally, we may be exposed to market risk from changes in interest rates related to any debt that may be outstanding under our related party notes payable. We do not expect our cash flows to be affected to any significant degree by a sudden change in market interest rates.

We operate our business within the United States and sell to the United States and certain international locations such as Italy, Canada, Saudi Arabia, Scandinavia, Netherlands and Singapore. We execute all of our transactions in U.S. dollars and therefore do not have any foreign currency exchange risk.

2528

Item 4T. Controls and Procedures.

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our President, Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. In designing and evaluating these disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Evaluation of disclosure controls and procedures

We evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q. Disclosure controls and procedures are designed to ensure that information required to be disclosed in our reports filed under the Exchange Act, such as this Quarterly Report on Form 10-Q are recorded, processed, summarized and reported within the time periods specified by the SEC. Disclosure controls are also designed to ensure that such information is accumulated and communicated to our President, Chief Executive Officer and Chief Financial Officer, and other management, as appropriate, to allow timely decisions regarding required disclosure.

Based on the evaluation, our President, Chief Executive Officer and Chief Financial Officer after evaluating the effectiveness of our “disclosure controls and procedures” (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)), have concluded that, subject to the inherent limitations noted in this Part III, Item 4T9A, as of ~~March~~June 3130, 2010, our disclosure controls and procedures were not effective due to the existence of several material weaknesses in our internal control over financial reporting, as discussed below.

Material Weaknesses Identified

In connection with the preparation of our financial statements for the year ended December 31, 2009, certain significant deficiencies in internal control became evident to management that, in the aggregate, represent material weaknesses, including:

(i) Lack of a sufficient number of independent directors for our board and audit committee. We currently only have one independent director on our board, which is comprised of three directors, and on our audit committee, which is comprised of one director. Although we are considered a controlled company, whereby a group holds more than 50% of the voting power and as such are not required to have a majority of our board of directors be independent, it is our intention to have a majority of independent directors in due course.

2629

(ii) Lack of a financial expert on our audit committee. We currently do not have an audit committee financial expert, as defined by SEC regulations, on our audit committee.

(iii) Insufficient segregation of duties in our finance and accounting functions due to limited personnel. During the ~~three~~six months ended ~~March~~June 3130, 2010, we had one person on staff that performed nearly all aspects of our financial reporting process, including, but not limited to, access to the underlying accounting records and systems, the ability to post and record journal entries and responsibility for the preparation of the financial statements. This creates certain incompatible duties and a lack of review over the financial reporting process that would likely result in a failure to detect errors in spreadsheets, calculations, or assumptions used to compile the financial statements and related disclosures as filed with the SEC. These control deficiencies could result in a material misstatement to our interim or annual consolidated financial statements that would not be prevented or detected.

As part of the communications by Berenfeld, Spritzer Shechter & Sheer LLP, (“Berenfeld, Spritzer”), with our Audit Committee with respect to Berenfeld, Spritzer’s audit procedures for fiscal 2009, Berenfeld, Spritzer informed the audit committee that these deficiencies constituted material weaknesses, as defined by Auditing Standard No. 5, “An Audit of Internal Control Over Financial Reporting that is Integrated with an Audit of Financial Statements and Related Independence Rule and Conforming Amendments,” established by the Public Company Accounting Oversight Board (“PCAOB”).

Plan for Remediation of Material Weaknesses

We intend to take appropriate and reasonable steps to make the necessary improvements to remediate these deficiencies. We intend to consider the results of our remediation efforts and related testing as part of our year-end 2010 assessment of the effectiveness of our internal control over financial reporting.

We have implemented certain remediation measures and are in the process of designing and implementing additional remediation measures for the material weaknesses described in this Quarterly Report on Form 10-Q. Such remediation activities include the following:

At an appropriate time, we will recruit one or more additional independent board members to join our board of directors. Such recruitment will include at least one person who qualifies as an audit committee financial expert to join as an independent board member and as an audit committee member.

We will hire or engage additional qualified and experienced accounting personnel as necessary to review our quarter-end closing processes as well as provide additional oversight and supervision within the accounting department.

In addition to the foregoing remediation efforts, we will continue to update the documentation of our internal control processes, including formal risk assessment of our financial reporting processes.

2730

Changes in Internal Controls over Financial Reporting

There were no significant changes in internal control over financial reporting during the ~~first~~second quarter of 2010 that materially affected, or are reasonably likely to materially affect, our internal control over financing reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

The Company and Andrew Whelan, President & CEO, were defendants in a lawsuit brought by a plaintiff who is seeking damages arising from a breach by the Company of certain alleged oral contractual obligations. The plaintiff claimed that, pursuant to these alleged obligations, he would have been entitled to receive common stock from the Company as compensation for rendering certain services to the Company. The matter was removed from Maryland state court to arbitration provided for in the contract at issue. The plaintiff prevailed in arbitration, and a judgment was entered against BioElectronics Corporation, PAW, LLC and Andrew Whelan in the amount of $1,217,919.10. The Company believes the plaintiff’s claims to be without merit and the arbitrator’s decision to have been possible only by a manifest disregard of the law. As such, the Company and Mr. Whelan filed a Petition to Vacate Arbitration Award with the Maryland Court of Special Appeals. Though no rulings have yet been issued, a mediation hearing on the petition iswas ~~scheduled~~held ~~for~~on June 17, 2010. During the mediation hearing, no resolution was made, and the mediation was terminated. The Company intends to continue defend the matter and vigorously pursue any and all ~~available~~ available remedies.

The Board of Directors has ~~retained~~had independent legal counsel prepare a complaint to pursue, collection iffor ~~necessary,~~unjust enrichment from the ~~collection of~~Directors ~~any~~who ~~damages~~participated toin the ~~Company~~ action.

Item 1A. Risk Factors. As a smaller reporting company, Registrant is not required to provide the information required by this item.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

On March 18, 2010 and May 21, 2010, the Company issued and tendered 1,000,000 and 2,200,000 common shares to ~~a consultant~~consultants in respect of services provided in the year ended December 31, 2009. The shares were recorded at $0.00225 per share (or $27,~~250~~200 in aggregate), and the related expense was recorded in the prior year.

Item 3. Defaults Upon Senior Securities.

2832

Item 4. (Removed and Reserved). Not applicable.

Item 5. Other Information. Not applicable

Item 6. Exhibits.

Exhibit 31.1. Certification of Principal Executive Officer and Principal Financial Officer

Exhibit 32.1. Certification of Andrew Whelan, Chief Executive Officer and Chief ~~Financial~~ Financial Officer, pursuant to 18 U.S.C. Section 1350.

29Exhibit 99. Additional Exhibits

SIGNATURES

Pursuant to the requirements of 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 Frederick, Maryland, on ~~May~~August 1216, 2010.

	BIOELECTRONICS CORPORATION
May 12, 2010	By:	/S/ Andrew J. Whelan
August 16, 2010	By:	/S/ Andrew Whelan
		Andrew J. Whelan
		Andrew Whelan
		President, Chief Executive Officer, Chief Financial Officer and Director
		(Principal Executive Officer and Principal Financial Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of Registrant and in the capacities indicated on ~~May~~August 1216, 2010.

Signature Title /S/ Andrew J. Whelan President, Chief Executive Officer, Chief Financial Officer and Director Andrew J. Whelan (Principal Executive Officer and Principal Financial Officer)

3034

Filing Compare · BioElectronics Corp