DENTAL CARE ALLIANCE INC, 424B1, 1997-11-04

DENTAL CARE ALLIANCE INC
424B1, 1997-11-04
MANAGEMENT SERVICES

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PROSPECTUS

2,000,000 SHARES

[GRAPHIC OMITTED]

COMMON STOCK
----------------

THE 2,000,000 SHARES OF COMMON STOCK, PAR VALUE $0.01 PER SHARE (THE
"COMMON STOCK"), OFFERED HEREBY ARE BEING ISSUED AND SOLD BY DENTAL CARE
ALLIANCE, INC. (THE "COMPANY"). PRIOR TO THIS OFFERING (THE "OFFERING"), THERE
HAS BEEN NO PUBLIC MARKET FOR THE COMMON STOCK OF THE COMPANY AND THERE CAN BE
NO ASSURANCE THAT AN ACTIVE TRADING MARKET WILL DEVELOP. SEE "UNDERWRITING" FOR
INFORMATION RELATING TO THE FACTORS TO BE CONSIDERED IN DETERMINING THE INITIAL
PUBLIC OFFERING PRICE. THE COMPANY'S COMMON STOCK HAS BEEN APPROVED FOR
QUOTATION ON THE NASDAQ NATIONAL MARKET UNDER THE SYMBOL "DENT."
- ----------------

SEE "RISK FACTORS" BEGINNING ON PAGE 8 FOR A DISCUSSION OF CERTAIN FACTORS

THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
----------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
================================================================================
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS(1) COMPANY(2)
- --------------------------------------------------------------------------------
Per Share ...... $ 12.00 $ 0.84 $ 11.16
- --------------------------------------------------------------------------------
Total(3) ...... $24,000,000 $1,680,000 $22,320,000
================================================================================
(1) The Company and the Selling Stockholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended. In addition, the Company has paid The
Nassau Group, Inc. ("Nassau") and related persons fees in the amount of
$79,587, will owe Nassau an additional $161,621 upon consummation of the
Offering and has issued or will issue to Nassau and related persons shares
of Common Stock and certain warrants to purchase Common Stock. See
"Principal and Selling Stockholders" and "Underwriting."

(2) Before deducting estimated expenses of $1,100,000, which are payable by the
Company.

(3) The Selling Stockholders have granted the Underwriters a 30-day option to
purchase up to 300,000 additional shares of Common Stock on the same terms
and conditions as the securities offered by the Company hereby, solely to
cover over-allotments, if any. The Company will not receive any proceeds
from the sale of additional shares by the Selling Stockholders. If such
option is exercised in full, the total Price to Public, Underwriting
Discounts and Commissions and Proceeds to Selling Stockholders will be
$27,600,000, $1,932,000 and $3,348,000, respectively. See "Principal and
Selling Stockholders" and "Underwriting."

----------------

THE SHARES OF COMMON STOCK ARE OFFERED BY THE SEVERAL UNDERWRITERS NAMED
HEREIN, SUBJECT TO PRIOR SALE, WHEN, AS AND IF DELIVERED TO AND ACCEPTED BY
THEM, AND SUBJECT TO CERTAIN OTHER CONDITIONS INCLUDING THE RIGHT OF THE
UNDERWRITERS TO WITHDRAW, CANCEL, MODIFY OR REJECT ANY ORDER IN WHOLE OR IN
PART. IT IS EXPECTED THAT DELIVERY OF THE SHARES WILL BE MADE ON OR ABOUT
NOVEMBER 7, 1997, AT THE OFFICES OF RAYMOND JAMES & ASSOCIATES, INC., ST.
PETERSBURG, FLORIDA.

RAYMOND JAMES & ASSOCIATES, INC. WILLIAM BLAIR & COMPANY

The date of this Prospectus is November 4, 1997
<PAGE>

[THE COMPANY'S STYLIZED LOGO . BELOW THE LOGO IS A MAP OF UNITED STATES
INCLUDING THE COMPANY'S LOGO AND LARGER SCALE DETAIL MAPS OF FLORIDA AND
MICHIGAN INDICATING THE LOCATIONS OF THE COMPANY'S OFFICES IN THOSE
STATES, WITH THE NAME OF EACH LOCATION SPECIFIED UNDER THE HEADINGS
"MICHIGAN MANAGED DENTAL CENTERS," "FLORIDA MANAGED DENTAL CENTERS" AND
"FLORIDA LICENSED DENTAL CENTERS." ALSO INCLUDED ARE PICTURES OF CERTAIN
MANAGED DENTAL CENTERS. BELOW THE MAP IS A CAPTION "MANAGED DENTAL
CENTERS PICTURED ARE MANAGED, BUT NOT OWNED, BY THE COMPANY."]

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK,
INCLUDING BY ENTERING STABILIZING BIDS, EFFECTING SYNDICATE COVERING
TRANSACTIONS OR IMPOSING PENALTY BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES,
SEE "UNDERWRITING."
--------------

THE COMPANY WILL FURNISH ITS STOCKHOLDERS WITH ANNUAL REPORTS CONTAINING
AUDITED FINANCIAL STATEMENTS CERTIFIED BY AN INDEPENDENT AUDITING FIRM AND
INTENDS TO DISTRIBUTE QUARTERLY REPORTS FOR THE FIRST THREE QUARTERS OF EACH
YEAR CONTAINING UNAUDITED FINANCIAL INFORMATION.

<PAGE>

PROSPECTUS SUMMARY

THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION AND THE CONSOLIDATED FINANCIAL STATEMENTS, INCLUDING NOTES THERETO
(THE "CONSOLIDATED FINANCIAL STATEMENTS"), APPEARING ELSEWHERE IN THIS
PROSPECTUS. DENTAL CARE ALLIANCE, INC. AND ITS SUBSIDIARIES (THE "COMPANY")
PROVIDES MANAGEMENT SERVICES TO DENTAL PRACTICES ("MANAGED DENTAL CENTERS") BY
ENTERING INTO ADMINISTRATIVE SERVICES AGREEMENTS (THE "MANAGEMENT AGREEMENTS")
WITH INDIVIDUAL DENTAL PROFESSIONAL CORPORATIONS OR PROFESSIONAL ASSOCIATIONS
(THE "PAS"). IN ADDITION, THE COMPANY PROVIDES LICENSING SERVICES TO MANAGED
DENTAL CENTERS AND CERTAIN NON-MANAGED PRACTICES (THE "LICENSED DENTAL CENTERS"
AND TOGETHER WITH THE MANAGED DENTAL CENTERS, THE "DENTAL CENTERS"). THE GENERAL
DENTAL AND SPECIALTY DENTAL PRACTITIONERS (SUCH AS ORTHODONTISTS, PERIODONTISTS
AND ORAL SURGEONS) WORKING AT THE MANAGED DENTAL CENTERS ("AFFILIATED DENTISTS")
ARE EMPLOYED BY OR CONTRACT WITH THE PAS, WHICH ARE NOT OWNED BY THE COMPANY.
THE COMPANY DOES NOT EMPLOY AFFILIATED DENTISTS NOR DOES IT CONTROL THE PRACTICE
OF DENTISTRY. IMMEDIATELY PRIOR TO CONSUMMATION OF THIS OFFERING, CERTAIN ASSETS
AND LIABILITIES OF DENTAL CARE ALLIANCE, INC., WILL BE CONTRIBUTED TO TWO
WHOLLY-OWNED SUBSIDIARIES TO BE NAMED DENTAL CARE ALLIANCE OF FLORIDA, INC. AND
DENTAL CARE ALLIANCE OF MICHIGAN, INC. WHICH WILL BE FORMED IMMEDIATELY PRIOR TO
THE CONSUMMATION OF THIS OFFERING (THE "CONTRIBUTION"). IN ADDITION, UNLESS
OTHERWISE INDICATED, INFORMATION SET FORTH IN THIS PROSPECTUS (I) ASSUMES THE
CONSUMMATION OF THE CONTRIBUTION, (II) ASSUMES NO EXERCISE OF THE UNDERWRITERS'
OVER-ALLOTMENT OPTION, (III) GIVES EFFECT TO A 81.54-FOR-1 STOCK SPLIT EFFECTED
IN OCTOBER 1997 (THE "STOCK SPLIT") AND (IV) HAS BEEN ADJUSTED TO REFLECT THE
MANDATORY CONVERSION OF ALL OUTSTANDING SHARES OF THE COMPANY'S SERIES A
PREFERRED STOCK INTO 654,359 SHARES OF COMMON STOCK (POST-STOCK SPLIT), UPON
CONSUMMATION OF THE OFFERING. INVESTORS SHOULD CAREFULLY CONSIDER THE
INFORMATION SET FORTH UNDER THE HEADING "RISK FACTORS."

THE COMPANY

Dental Care Alliance, Inc. is a dental practice management company
providing management and licensing services to dental practices in Florida and
Michigan. The Company seeks to develop a significant market presence in each of
its markets by entering into Management Agreements with established dental
practices and by increasing revenues and operating income at the Managed Dental
Centers. The Company provides management and licensing services to 20 Managed
Dental Centers, 15 of which are located in Florida and five of which are located
in Michigan. Additionally, the Company provides only licensing services to three
Licensed Dental Centers in Florida. The Company's management services include
personnel, operational and financial services and its licensing services include
marketing, advertising and purchasing services.

The dental services industry in the United States is highly fragmented.
According to the American Dental Association ("ADA"), in 1994 dental services in
the United States were provided by approximately 153,000 dentists, 87.7% of whom
practiced alone or with one other dentist. These solo practitioners and small
group practices have traditionally managed all aspects of their dental
practices, including the administrative, purchasing, accounting, marketing,
recruiting and business development functions.

The Company believes that recent trends in dental service reimbursement,
including the increased activity of third-party payors, are driving dentists to
form larger groups or contract with dental practice management companies. As
demand for dental services has increased, employers have sought to provide
dental benefits to employees at moderate incremental cost. These employers have
begun contracting with third-party payors who have added cost-effective dental
benefit programs to the services they provide. The programs offered include
various forms of dental care reimbursement, including traditional indemnity
insurance, preferred provider plans and capitated managed care plans. The
increased number and activity of third-party payors, particularly in the area of
managed care, has

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<PAGE>

contributed to the complexity of managing dental practices. In addition, the
growing presence of third-party payors has put increasing pressure on dental
providers to contain costs. Due to the high fixed costs inherent in the
practice of dentistry, such cost containment pressures will likely place solo
practitioners and small group practices at a significant disadvantage to larger
group practices and practice management companies which can spread their fixed
costs over a larger base of dentists and have greater negotiating leverage with
health maintenance organizations ("HMOs").

The Company believes it is well-positioned to capitalize on the recent
trends driving dental provider consolidation. Dr. Steven R. Matzkin, the
Company's Chairman of the Board, President and Chief Executive Officer, has
invested over 13 years developing a flexible and analytically driven management
approach. This management approach is flexible in that it can be applied to a
wide variety of dental practices, including urban, suburban, start-up, mature,
fee-for-service and managed care practices and addresses particular
inefficiencies at each Managed Dental Center. The Company's management approach
is analytically driven in that it compares certain financial and operational
data for each Managed Dental Center with targeted parameters to quickly evaluate
areas for improvement. The Company uses this management approach to design and
implement an integrated marketing, staffing and scheduling program to address
the specific needs of each of its Managed Dental Centers. These programs are
designed to: (i) focus the Affiliated Dentists and hygienists on the provision
of high quality dental care; (ii) maximize revenue per Managed Dental Center
through the implementation of marketing, case presentation, public relations and
patient-calling programs; (iii) increase market share by recruiting local dental
specialists (such as orthodontists, periodontists and oral surgeons) to be
employed at the Managed Dental Centers, thereby increasing total revenue per
Managed Dental Center and precluding the need to refer certain types of dental
procedures to third parties outside of the Company's network; and (iv) increase
the capacity for patient flow through incremental efficiencies, training, and if
necessary, facility expansion. The Company also uses its management approach to
customize an external expansion strategy to the characteristics of each existing
and targeted new market.

The Company's objective is to become a leading dental practice management
company in each of its target markets. To achieve this objective the Company
seeks to grow rapidly through a combination of internal growth and external
expansion. The key elements of its internal growth strategy are to: (i) increase
revenues and operating income at Managed Dental Centers primarily through the
implementation of customized marketing and productivity improvement programs and
the integration of specialty service providers into its network, (ii) facilitate
long-term patient relationships by stressing professionalism and the provision
of high quality care and (iii) recommend adjustments to the third-party payor
mix at each Managed Dental Center to maximize productivity and respond to local
market conditions. The key elements of its external expansion strategy are to:
(i) identify potential Managed Dental Centers which have the necessary
characteristics to excel in their specific local market, (ii) increase market
share in current markets by entering into Management Agreements with additional
high quality dental practices and (iii) expand into new markets by entering into
Management Agreements with well-established practices that can serve as
platforms for further expansion.

RECENT DEVELOPMENTS

In April 1997 the Company purchased the non-dental assets of, and entered
into a Management Agreement with respect to, a dental practice in Tampa,
Florida. This practice employs one dentist and two dental hygienists, and
reported revenue for the fiscal year ended December 31, 1996 of approximately
$950,000. In July 1997, the Company entered into a Management Agreement with
respect to four dental practices located in the Detroit, Michigan area. These
practices employ six dentists and two dental hygienists and reported aggregate
revenue for the fiscal year ended December 31, 1996 of approximately $3.4
million. In July 1997, the Company also entered into a Management Agreement with
respect to a dental practice in Flint, Michigan. This practice employs seven
dentists and 14 dental hygienists, and reported revenue for the fiscal year
ended December 31, 1996 of approximately $4.0 million. In August 1997, the
Company purchased the non-dental assets of, and entered into a Management
Agreement with respect to, a dental practice located in Tallahassee, Florida.
This practice

4
<PAGE>

employs one dentist and two dental hygienists and reported revenue for the
fiscal year ended December 31, 1996 of approximately $900,000. In September
1997, the Company purchased the non-dental assets of, and entered into a
Management Agreement with respect to, a dental practice in St. Petersburg,
Florida. This practice employs one dentist and one dental hygienist and
reported revenue for the fiscal year ended December 31, 1996 of approximately
$400,000. The Company intends for the Detroit area, Flint and Tallahassee
dental practices to be platform practices for further expansion in their
respective markets. In addition, the owners of certain PAs with which the
Company has Management Agreements have executed non-binding letters of intent
to acquire ten dental practices employing 50 dentists, many of whom are
part-time, and 23 dental hygienists, which practices reported aggregate revenue
for their respective last full fiscal years of approximately $10.0 million. If
such transactions are consummated, the acquiring PAs are expected to enter into
Management Agreements with the Company. There can be no assurance that any such
transactions will be consummated, that the Company will enter into Management
Agreements with respect to such practices or that any such practices will be
integrated successfully into the Company's network. See "Risk Factors--Risks
Associated with Expansion Strategy," "Use of Proceeds," "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
"Certain Transactions."

THE OFFERING

<TABLE>
<S> <C>
Common Stock offered by the Company ...... 2,000,000 shares

Common Stock to be outstanding
after the Offering ........................ 6,897,700 shares(1)

Use of proceeds ........................... To acquire the non-dental assets of additional
dental practices, to provide working capital and for
general corporate purposes. The Company may use
a portion of the proceeds to purchase businesses
complimentary to the business of the Company and
to lend money to PAs to finance the purchase of
assets of additional dental practices. The Company
cannot presently determine the allocation of
proceeds among the above listed uses of proceeds.
The Company will determine such allocation based
upon its future business needs. See "Use of
Proceeds," "The Company," "Risk Factors--Broad
Discretion of Management in Applying Proceeds of
Offering" and "Certain Transactions."

Nasdaq National Market symbol ............ DENT
</TABLE>

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(1) Does not include (i) an aggregate of 250,000 shares of Common Stock
reserved for issuance under the Company's Omnibus Executive Incentive
Compensation Plan (the "Omnibus Plan"), of which options for approximately
66,000 shares will be granted upon consummation of this Offering at a per
share exercise price of $12.00, (ii) an aggregate of 425,000 shares of
Common Stock reserved for issuance under the Company's 1997 Non-Qualified
Stock Option Plan (the "Non-Qualified Plan"), of which options to purchase
approximately 135,000 shares will be granted upon consummation of the
Offering at a per share exercise price of $12.00, (iii) 53,001 shares of
Common Stock to be reserved for issuance pursuant to warrants to be issued
upon consummation of the Offering at a weighted average exercise price
equal to $1.74 per share, (iv) 49,576 shares of Common Stock reserved for
issuance pursuant to outstanding options to purchase Common Stock at a
weighted average exercise price of $1.53 per share and (v) options to
purchase 17,771 shares at a per share exercise price of $12.00. See
"Management--Omnibus Executive Incentive Compensation Plan", "--Non
Qualified Stock Option Plan" and "Description of Capital Stock--Warrants
and Options to Purchase Common Stock."

5
<PAGE>

SUMMARY FINANCIAL AND OPERATING DATA

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEARS ENDED DECEMBER 31, JUNE 30,
---------------------------------------- -----------------------------
1994 1995 1996 1996 1997
------------ ------------- ------------- ------------- ---------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA (1):
Management fees .................................... $ 673,304 $ 513,705 $1,289,828 $ 405,072 $2,471,759
Consulting and licensing fees ........................ 42,763 262,769 347,600 138,812 161,885
----------- ---------- ---------- ---------- ----------
Total revenues .................................... 716,067 776,474 1,637,428 543,884 2,633,644
----------- ---------- ---------- ---------- ----------
Managed dental center expenses:
Staff salaries and benefits ........................ -- -- 223,657 -- 601,383
Dental supplies .................................... -- -- 79,448 -- 213,334
Laboratory fees .................................... 98,222 373,010
Marketing .......................................... -- -- 38,128 -- 176,627
Occupancy .......................................... -- -- 106,501 -- 333,085
Other ............................................. -- -- 57,182 -- 326,494
----------- ---------- ---------- ---------- ----------
Total managed dental center expenses ............ -- -- 603,138 -- 2,023,933
----------- ---------- ---------- ---------- ----------
716,067 776,474 1,034,290 543,884 609,711
Salaries and benefits .............................. 408,716 400,669 521,683 261,642 373,016
General and administrative ........................... 204,901 234,577 260,558 118,476 135,970
Advisory services(2) ................................. -- 127,768 -- -- --
Depreciation and amortization ........................ 15,150 22,106 27,654 10,254 41,578
----------- ---------- ---------- ---------- ----------
Operating income (loss) ........................... 87,300 (8,646) 224,395 153,512 59,147
Interest income (expense), net ..................... 22,584 6,494 20,781 (5,058) 36,464
----------- ---------- ---------- ---------- ----------
Income (loss) before income taxes and
minority interest .............................. 109,884 (2,152) 245,176 148,454 95,611
Provision for income taxes ........................... 19,919 -- 35,500 -- 36,000
Minority interest .................................... 2,440 8,654 7,674 3,537 --
----------- ---------- ---------- ---------- ----------
Net income (loss) ................................. 87,525 (10,806) 202,002 144,917 59,611
Adjustment to redemption value of common
and preferred securities ........................ 39,951 85,709 (191,237) -- (10,500)
Cumulative preferred stock dividend ............... -- -- (6,485) -- (60,000)
----------- ---------- ---------- ---------- ----------
Net income (loss) applicable to common stock . $ 127,476 $ 74,903 $ 4,280 $ 144,917 $ (10,889)
=========== ========== ========== ========== ==========
Unaudited pro forma data(3):
Income (loss) before income taxes and
minority interest .............................. $ 109,884 $ (2,152) $ 245,176 $ 148,454 $ 95,611
Pro forma provision for income taxes ............... 42,000 -- 94,000 57,000 36,000
Minority interest in consolidated subsidiaries . 1,507 5,343 4,739 2,184 --
----------- ---------- ---------- ---------- ----------
Pro forma net income (loss) ........................ $ 66,377 $ (7,495) $ 146,437 $ 89,270 $ 59,611
=========== ========== ========== ========== ==========
Pro forma net income per common share ............... $ .03 $ .01
========== ==========
Weighted average common shares outstanding ......... 4,773,071 4,773,071
========== ==========
MANAGED DENTAL CENTER DATA:
Number of Managed Dental Centers(4) ............... 7 9 12 13 13
Net patient revenue at Managed
Dental Centers(5) ................................. $3,703,430 $4,515,019 $5,576,059 $2,669,892 $3,529,242
Number of Affiliated Dentists(6) ..................... 10 12 17 17 18
</TABLE>

6
<PAGE>

<TABLE>
<CAPTION>
JUNE 30, 1997
--------------------------------
PRO FORMA
ACTUAL AS ADJUSTED (7)
------------ -----------------
(UNAUDITED)
<S> <C> <C>
BALANCE SHEET DATA:
Working capital .................................... $ 851,382 $22,071,382
Total assets ....................................... 3,370,468 24,590,468
Long-term debt, including current maturities ...... 190,553 190,553
Redeemable common and preferred securities ......... 1,664,299 --
Stockholders' equity .............................. 641,516 23,525,815
</TABLE>

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(1) Effective October 1996, the Company revised the terms of all of its 12 then
existing Management Agreements such that the Company is responsible for
the payment of all non-professional expenses of the Managed Dental
Centers. Ten Management Agreements were also revised to base the Company's
management fee from a percentage of net profits at each PA to a percentage
of net patient revenues from each PA. Accordingly, prior to these
revisions to such 12 Management Agreements, all non-professional expenses
of the Managed Dental Centers and related revenues were reflected in each
PA's financial statements. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
(2) Represents non-cash charges for warrants issued in consideration for
certain financial advisory services.
(3) Pro forma adjusted to reflect a 38% income tax rate as if the Company was
taxed as a C Corporation prior to October 25, 1996, when the Company was
reorganized from Limited Liability Corporation status to C Corporation
status. See Notes 2 and 7 of Notes to Consolidated Financial Statements.
(4) Presented as of the end of the period.
(5) Net patient revenue is the total amount of revenue recorded by the PAs
during the period. Revenue is included from and after the date on which
the relevant PA executed a Management Agreement with the Company.
(6) Presented as of the end of the period. Affiliated Dentists include both
full-time and part-time Affiliated Dentists but exclude Dental Directors.
See "Business--Dental Directors."
(7) Adjusted to give pro forma effect to the conversion of mandatorily
redeemable preferred stock to Common Stock and to the termination of put
rights associated with certain Common Stock, and adjusted for the sale of
2,000,000 shares of Common Stock offered by the Company hereby at the
public offering price of $12.00 per share and the application of the
estimated net proceeds therefrom. See "Use of Proceeds" and
"Capitalization."

ALL REFERENCES IN THIS PROSPECTUS TO INDUSTRY FINANCIAL AND STATISTICAL
INFORMATION ARE BASED ON TRADE ARTICLES AND INDUSTRY REPORTS THAT THE COMPANY
BELIEVES TO BE RELIABLE AND REPRESENTATIVE OF THE DENTAL SERVICES INDUSTRY AT
THE DATE OF THIS PROSPECTUS, ALTHOUGH NO ASSURANCE TO THAT EFFECT CAN BE GIVEN.
THIS PROSPECTUS CONTAINS FORWARD-LOOKING STATEMENTS WHICH INVOLVE RISKS AND
UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE
ANTICIPATED IN SUCH FORWARD-LOOKING STATEMENTS AS A RESULT OF VARIOUS FACTORS,
INCLUDING THOSE SET FORTH UNDER "RISK FACTORS" AND ELSEWHERE IN THIS PROSPECTUS

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<PAGE>

RISK FACTORS

THE SHARES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK, INCLUDING THE
RISKS DESCRIBED BELOW. PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE
SPECIFIC FACTORS SET FORTH BELOW, AS WELL AS THE OTHER INFORMATION CONTAINED IN
THIS PROSPECTUS, BEFORE DECIDING TO INVEST IN THE COMMON STOCK OFFERED HEREBY.
THE FOLLOWING DISCUSSION IDENTIFIES IMPORTANT CAUTIONARY FACTORS THAT COULD
CAUSE THE COMPANY'S ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE PROJECTED IN
FORWARD LOOKING STATEMENTS OF THE COMPANY APPEARING IN THIS PROSPECTUS OR
OTHERWISE MADE BY, OR ON BEHALF OF, THE COMPANY. IN PARTICULAR, SUCH FORWARD-
LOOKING STATEMENTS, INCLUDING THOSE REGARDING THE ADDITION OF MANAGED DENTAL
CENTERS, EXPANSION WITHIN EXISTING AND INTO NEW MARKETS, THE ADEQUACY OF THE
COMPANY'S CAPITAL RESOURCES, THE FUTURE PROFITABILITY OF MANAGED DENTAL CENTERS
AND OTHER STATEMENTS REGARDING TRENDS RELATING TO, AND THE COMPANY'S ABILITY TO
IMPROVE, VARIOUS REVENUE AND EXPENSE ITEMS, COULD BE AFFECTED BY A NUMBER OF
RISKS AND UNCERTAINTIES, INCLUDING THOSE DESCRIBED BELOW.

RISKS ASSOCIATED WITH EXPANSION STRATEGY. The Company is party to
Management Agreements with PAs that own 20 Managed Dental Centers. The Company
intends to continue to expand its existing Managed Dental Centers and to enter
into Management Agreements with PAs that own additional dental centers. The
ultimate success of the Company's expansion strategy will depend on factors
which include the following:

ABILITY TO IDENTIFY AND ENTER INTO MANAGEMENT AGREEMENTS WITH SUITABLE
DENTAL PRACTICES. The Company intends to continue to devote a substantial
amount of time and resources to identifying suitable dental practices and
to negotiating Management Agreements with such practices. Identifying
suitable dental practices and negotiating Management Agreements with such
practices can be a lengthy and costly process. There can be no assurance
that the Company will be able to identify suitable Managed Dental Center
candidates, or that Management Agreements will be entered into with respect
to such candidates on terms favorable to and within time frames desired by
the Company, or at all. In the event that the execution of a planned
Management Agreement fails to occur or is delayed, the Company's quarterly
financial results may be materially lower than financial analysts'
expectations, which likely would cause a decline, perhaps substantial, in
the market price of the Common Stock. The foregoing factors could have a
material adverse effect on the Company's results of operations or financial
condition and the Company's ability to continue its expansion strategy.
Moreover, in connection with entering into such Management Agreements, the
Company may be required to incur indebtedness or assume other liabilities
which could have a material adverse effect on the Company's operating
results, liquidity and capital resources, or may cause the Company to issue
shares of its capital stock which could result in dilution to stockholders.

INTEGRATION OF DENTAL PRACTICES. The integration of Managed Dental
Centers into the Company's network is a difficult, costly and time
consuming process which, among other things, requires the Company to
attract and retain competent and experienced management and administrative
personnel and to implement and integrate reporting and tracking systems,
management information systems and other operating systems. In addition,
such integration may require, among other things, the opening of new
facilities or the expansion of existing facilities, the expansion of
accounting controls and procedures and the elimination of duplicate
personnel. There can be no assurance that substantial unanticipated
problems, costs or delays associated with such integration efforts or with
such Managed Dental Centers will not arise or continue. Any such problems,
costs or delays could cause the Company's financial results in fiscal
quarters including and subsequent to the execution of the relevant
Management Agreements to be materially lower than financial analysts'
expectations, which likely would cause a decline, perhaps substantial, in
the market price of the Common Stock. In particular, the Company's expenses
related to any new Managed Dental Center may exceed the revenues it
realizes from such Managed Dental Center and, accordingly, the integration
of such Managed Dental Center may have a temporary or sustained negative
impact on the Company's

8
<PAGE>

results of operations or financial condition. As the Company pursues its
expansion strategy, there can be no assurance that the Company will be able
to successfully integrate new Managed Dental Centers in a timely manner or
at all, or that any new Managed Dental Center will have a positive impact
on the Company's results of operations and financial condition.

MANAGEMENT OF ADDITIONAL DENTAL CENTERS. The success of the Company's
expansion strategy will depend in part on the Company's ability to
effectively manage an increasing number of Managed Dental Centers, some of
which are expected to be located in markets geographically distant from
markets in which the Company presently operates. The addition of Managed
Dental Centers may impair the Company's ability to efficiently and
successfully provide management services to existing Managed Dental Centers
and to manage and supervise adequately the Company's employees. The Company
has no experience in managing more than 20 Managed Dental Centers, and the
Company's results of operations and financial condition could be materially
adversely affected if it is unable to do so effectively.

AVAILABILITY OF FUNDS FOR EXPANSION STRATEGY. The Company's expansion
strategy will require that substantial capital investment and adequate
financing be available to the Company. Capital is needed for (i) loans to
PAs to purchase the dental assets of dental practices, (ii) the acquisition
by the Company of the non-dental assets of dental practices, (iii) the
integration of operations of dental practices and (iv) the purchase of
additional equipment and technology. The Company believes that the net
proceeds from this Offering, cash flow from operations and borrowings
available under the Company's existing credit facility will be adequate to
meet the Company's anticipated capital needs through 1998, although there
can be no assurance to that effect. After 1998, the Company may be required
to obtain financing through additional borrowings or the issuance of
additional equity or debt securities. There can be no assurance that the
Company will be able to obtain such financing or that, if available, such
financing will be on terms acceptable to the Company. Any inability of the
Company to obtain suitable financing could cause the Company to limit or
otherwise modify its expansion strategy, which could have a material
adverse effect on the Company's results of operations and financial
condition.

ABILITY TO INCREASE REVENUES AND OPERATING INCOME OF MANAGED DENTAL
CENTERS. A key element of the Company's internal growth strategy is to
increase revenues and operating income at the Managed Dental Centers. There
can be no assurance that the Company's revenues and operating income from
new Managed Dental Centers will improve at rates comparable to the
historical improvement rates experienced by the Company's existing Managed
Dental Centers or at all, or that revenues or operating income from
existing Managed Dental Centers will continue to improve at such historical
rates or at all. Any failure by the Company in improving revenues or
operating income at its Managed Dental Centers could have a material
adverse effect on the Company's results of operations and financial
condition.

DEPENDENCE ON MANAGEMENT AGREEMENTS, THE PAS AND AFFILIATED DENTISTS. The
Company receives fees for services provided to the PAs under the Management
Agreements based on 74% of the net patient revenue under most of its Management
Agreements and between 50% and 55% of the net profit under its other Management
Agreements. The Company's revenue is dependent on revenue generated by the PAs
and, in some cases, net profits and, therefore, effective and continued
performance of the PAs during the terms of the Management Agreements is
essential to the Company's long term success. In any PA, the loss of an
Affiliated Dentist, dental hygienist or a long-term employee, or the inability
of the PA to attract and retain Dental Directors, could have a material adverse
effect on the revenues of the PAs and the Company. In particular, Dr. Dennis A.
Corona owns 13 of the PAs, and any conflicts, or impairment of the Company's
relationship, with Dr. Corona could have a material adverse effect on the
Company. In addition, the Company is a party to only 20 Management Agreements
and, accordingly, the expiration or termination of one or more Management
Agreements could have a material adverse effect on the revenues of the Company.
For example, it is anticipated that

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the Managed Dental Center in Flint, Michigan, will contribute in excess of 10%
of the Company's aggregate revenue in 1997 and may contribute in excess of 10%
in 1998. Further, the PA located in Port Charlotte, Florida, has the right to
terminate its Management Agreement during a 90-day period beginning in October
1998. Such Managed Dental Center contributed approximately 18% and 14% to the
Company's revenues in 1996 and for the six months ended June 30, 1997,
respectively. Each of this Management Agreement and the Management Agreement
with respect to the Managed Dental Center located in Kissimmee, Florida expires
in 2003. In addition, the Management Agreement with respect to the four Detroit
area practices expires in 2005. Any material loss of revenue by any of the PAs
or the expiration or termination of any of the Management Agreements could have
a material adverse effect on the Company's business, financial condition and
results of operations. In the event of breaches of the Management Agreements by
any of the PAs, there can be no assurance that the legal remedies available to
the Company will be adequate to compensate the Company for its damages
resulting from such breaches. See "Business-Management Agreements."

GOVERNMENTAL REGULATION. Business arrangements between dentists and
business corporations that provide dental practice management services are
regulated extensively at the state and federal levels. Below is a summary of
state and federal laws that may apply to the provision of dental management
services. Such provisions are further described in "Business--Governmental
Regulation."

CORPORATE PRACTICE OF DENTISTRY. The laws of many states prohibit
corporations that are not owned entirely by dentists from employing
dentists (and in some states, dental hygienists and dental assistants),
having control over clinical decision-making, or engaging in other
activities that are deemed to constitute the practice of dentistry. Florida
law specifically prohibits non-professional for-profit corporations from
employing dentists and dental hygienists, exercising control over patient
records, and making decisions relating to clinical matters, office
personnel, hours of practice, pricing, credit, refunds, warranties and
advertising. Michigan law imposes similar restrictions on the practice of
dentistry by non-professional for profit corporations.

Most states, including Florida and Michigan, also prohibit
non-professional for-profit corporations from owning, maintaining or
operating an office for the practice of dentistry. These laws have
generally been construed to permit arrangements under which the dentists
are not employed by or otherwise controlled as to clinical matters by the
party supplying facilities and non-professional services. Both Florida and
Michigan law require that dentists or their professional corporations
maintain complete care, custody and control of all equipment and materials
used in the practice of dentistry.

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<PAGE>

arranging for the purchase, lease or order of any item or service that is
covered by a federal program. Such laws would be violated and the Company
could be materially adversely affected if the Affiliated Dentists make
referrals to entities that are related to the Company or its owners for the
purpose of securing, directly or indirectly, payment or other remuneration.

ADVERTISING RESTRICTIONS. Many states, including Florida and Michigan,
prohibit dentists from using, except in limited circumstances, advertising
which includes any name other than their own, or from advertising in any
manner that is likely to lead a person to believe that a nondentist is
engaged in the practice of dentistry. Florida law also requires all
advertising to identify the dentist who assumes total responsibility for
the advertisement and may not include the name of a person who is neither
actually involved in the practice of dentistry at the advertised location
nor an owner of the practice being advertised. Similarly, Michigan law
requires that the name of each dentist performing services at a location be
clearly disclosed by sign or lettering at such location. In addition,
Michigan and Florida law impose additional restrictions on advertisements
by specialists.

LIMITATIONS ON DELEGATION. Some states, including Florida and Michigan,
regulate the manner in which dentists delegate certain tasks to
nondentists.

ANTI-FRAUD LAWS. State and federal laws prohibit any person from
knowingly and willfully making any false statement or misrepresentation of
a material fact in seeking payment for items or services. In addition,
federal law imposes civil monetary penalties for filing claims that the
filing party "should know" are not appropriate under rules applicable to
governmentally funded health care programs.

SELF-REFERRAL LAWS. Many states, subject to certain exceptions, prohibit
referrals for health services if the referring dentist has an ownership
interest in, or a compensation arrangement with, the entity receiving the
referral. Many states require the dentist to disclose such interests to
patients. Federal law (commonly referred to as Stark II) also prohibits
referrals for services or items covered by Medicare or Medicaid by a
dentist to an entity with which the dentist has a compensation arrangement
or in which the dentist has an ownership interest. Stark II and most state
self-referral laws have exceptions for services referred within a group
practice and for in-office ancillary services that are directly supervised
by the referring dentist.

The Michigan self-referral law contains no exceptions or safe harbors.
However, enforcement authorities have yet to apply such law to referrals
for in-office ancillary services or within a group practice. In addition,
Michigan law prohibits referrals by a dentist to an entity in which the
dentist has a "financial interest." To date, the term "financial interest"
has only been interpreted to mean a direct ownership interest and has not
been interpreted to include a compensation interest, such as an employment
or personal services arrangement. If Michigan law were interpreted or
applied by enforcement authorities differently in the future, the Company
could be materially adversely affected.

The laws described above provide for civil and criminal penalties for their
violation. These laws have been subject to limited judicial and regulatory
interpretation. They are enforced by regulatory agencies that are vested with
broad discretion in interpreting their meaning. The Company's agreements and
activities have not been examined by federal or state authorities under these
laws and regulations. For these reasons, there can be no assurance that a review
of the Company's business arrangements or the operation of the Managed Dental
Centers will not result in determinations that would adversely affect the
Company's operations or that the Management Agreements or certain of their
provisions will be held valid and enforceable. In addition, these laws and their
interpretation vary from state to state. The laws and regulations of certain
states into which the Company seeks to expand may require the Company to change
the form of relationships entered into with dentists in a manner that restricts
the Company's operations in those states. See "Business-Governmental
Regulation."

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<PAGE>

NON-COMPETITION COVENANTS. The Management Agreements generally require each
PA to use its best efforts to enter into employment agreements with the
Affiliated Dentists, which agreements include covenants not to compete with the
PA within a specified geographic area (generally from one to five miles) for a
period of from one to three years after termination of employment. In most
states, including Florida and Michigan, a covenant not to compete will be
enforced only to the extent it is necessary to protect a legitimate business
interest of the party seeking enforcement, does not unreasonably restrain the
party against whom enforcement is sought, and is not contrary to the public
interest. This determination is made based on all the facts and circumstances of
the specific case at the time enforcement is sought. For this reason, it is
uncertain whether a court will enforce such a covenant in a given situation. In
addition, there is little judicial authority regarding whether a management
company's interest under a management agreement will be viewed as the type of
protectable business interest that would permit it to enforce such a covenant or
to require a PA to enforce such covenants against the Affiliated Dentists. Since
the intangible value of a Management Agreement depends primarily on the ability
of the PA to preserve its business, which could be harmed if Affiliated Dentists
went into competition with the PA, a determination that these provisions are
unenforceable could have a material adverse effect on the Company. See
"Business-Management Agreements."

COMPETITION. The dental practice management segment of the dental services
industry is highly competitive and is expected to become increasingly
competitive. The Company currently competes with other dental practice
management companies in its existing markets, including Coast Dental Services,
Inc. in Florida. There are also a number of dental practice management companies
currently operating in other parts of the country which may enter the Company's
existing markets in the future. Many of such competitors and potential
competitors have substantially greater financial resources than the Company,
have established large dental practice networks or otherwise enjoy competitive
advantages which may make it difficult for the Company to compete against them
or enter into additional Management Agreements on terms acceptable to the
Company. In addition, as the Company seeks to expand its operations into new
markets, it is likely to face competition from dental practice management
companies which already have established a strong presence in such markets.

The business of providing dental services is highly competitive in each of
the markets in which the Managed Dental Centers operate or in which operations
are contemplated. The Affiliated Dentists compete with other dentists who
maintain single or satellite offices, as well as with dentists who maintain
group practices, operate in multiple offices or are members of competing dental
practice management networks. Many of these dentists have established practices
and reputations in their markets. In addition to competing against established
practices for patients, the Managed Dental Centers compete with such practices
in the retention and recruitment of general dentists, specialists and hygienists
to staff the Managed Dental Centers. If the availability of dentists begins to
decline in the Company's existing or targeted markets, it may become
increasingly difficult to attract and retain the dental professionals to staff
such sites. There can be no assurance that the Managed Dental Centers will be
able to compete effectively with such other practices. See
"Business-Competition."

POTENTIAL CONFLICTS OF INTEREST OF THE COMPANY'S PRESIDENT RELATING TO THE
PAS. Profit Dental Management Corp. ("Profit"), an entity controlled by Dr.
Matzkin, receives consulting fees from PAs in Michigan relating to the four
Detroit-area practices to which the Company provides management services, as
well as payments on a note relating to the sale of these practices by Dr.
Matzkin in 1993 (the "Note"). Consulting payments and payments under the Note
aggregate $216,000 per year and will continue through 2005. The Company is
currently considering the acquisition of the capital stock of Profit. It is
anticipated that such acquisition will not happen prior to 1998 and will be
consummated only upon approval of the outside members of the Board of Directors.
Dr. Matzkin and/or his affiliates also (i) own some of the dental laboratories
that perform laboratory services for the Affiliated Dentists and (ii) are the
lessors under real property and/or capital equipment leases with certain of the
PAs. In 1996, the amount paid by the Managed Dental Centers to such laboratories
was $145,000, of which $60,000 was advanced by the Company and remains
outstanding at December 31, 1996. In 1996, the amount paid by Managed Dental
Centers for leases was $218,000. As a result of the foregoing, potential
conflicts of interest may arise in certain matters including, but not limited
to, matters related to

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<PAGE>

applicable Management Agreements between the Company and Dr. Matzkin and/or the
PAs and Dr. Matzkin. There can be no assurances that the Company will not be
adversely affected by matters in which Dr. Matzkin and his affiliates have
potential conflicts of interest. The Company believes, however, that all
transactions between Dr. Matzkin and his affiliates, on the one hand, and the
Company and the PAs, on the other hand, are fair to the Company and the PAs and
on terms no less favorable to the Company and the PAs than would have been
reached through arm's-length negotiations with unrelated third parties. The
risks disclosed in the sections "Fee-Splitting and Anti-Kickback Laws" and
"Self-Referral Laws" under the caption "--Governmental Regulation" apply to
referrals to the dental laboratories and the space and equipment leases
described herein. See "Business-Management Agreements" and "Certain
Transactions."

RISKS ASSOCIATED WITH NOTES FROM, ADVANCES TO AND MANAGEMENT FEE RECEIVABLE
FROM PAS. The Company has made and intends to continue to make loans to PAs to
finance the purchase of the dental assets of Managed Dental Centers. These loans
are evidenced by notes and secured by the dental assets of such Managed Dental
Centers, some of which are intangible and not readily convertible into cash, and
are personally guaranteed by the Affiliated Dentists who own the PAs. Such loans
are recorded on the Company's balance sheet as "Notes Receivable from PAs" until
repaid. At December 31, 1996 and June 30, 1997, Notes Receivable from PAs were
$198,395 and $173,756, respectively. Management believes that such loans will
increase in the future as the Company expands its network of Managed Dental
Centers. In addition, in the event that the percentage of revenue retained by
any PA is not sufficient to pay its expenses, as is often the case with newly
integrated Managed Dental Centers and occurs from time to time with other
Managed Dental Centers, the Company may elect to advance funds to cover such
expenses. Such advances are recorded on the Company's balance sheet as "Advances
to PAs" until repaid. At December 31, 1996 and June 30, 1997, Advances to PAs
were $16,454 and $287,127, respectively. The failure of any of the PAs to repay
such notes or advances could have a material adverse effect on the Company's
results of operations and financial condition. Further, any decision by the
Company to continually make loans or advances to PAs, the sustained inability of
PAs to repay such loans or advances or the inability of PAs to collect patient
receivables with the result that the relevant PA is unable to pay its expenses,
could necessitate adjustments to the Management Agreements with such PAs to
allow the PAs to retain a higher percentage of net patient revenue or could
require the Company to record additional reserves with respect to such loans or
advances, either of which events could have a material adverse effect on the
Company's results of operations and financial condition. To date there have been
no such downward adjustments to any of the Management Agreements, nor do the
Management Agreements provide for any form of retroactive downward adjustment.
The risks disclosed in the risk factors sections "Fee-Splitting and
Anti-Kickback Laws" and "Self-Referral Laws" under the caption "--Governmental
Regulation" apply to the notes and advances described herein.

RISKS OF PROVIDING DENTAL SERVICES. The Affiliated Dentists provide dental
services to the public and are exposed to the risk of professional liability and
other claims. Such claims, if successful, could result in substantial damage
awards to the claimants which may exceed the limits of any applicable insurance
coverage. The Company does not control the practice of dentistry by the
Affiliated Dentists or the compliance with regulatory and other requirements
directly applicable to the Affiliated Dentists and their practices. Each
Affiliated Dentist has undertaken, however, to comply with all applicable
regulations and requirements, and the Company is indemnified under the
Management Agreements for claims against the Company arising from the
performance of dental services provided by the Affiliated Dentists. Each PA and
Affiliated Dentist is required to have professional liability insurance with
limits of not less than $300,000 per claim and with aggregate policy limits of
not less than $1.0 million per Affiliated Dentist and the Company is named as an
additional insured party on most such liability insurance policies. There can be
no assurance that a future claim or claims will not be successful and, if
successful, will not exceed the limits of available insurance coverage and the
financial resources of the applicable PAs and the Affiliated Dentists, or that
any such insurance coverage will continue to be available at acceptable costs
and on favorable terms. See "Business--Insurance" and "Management Agreements."

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<PAGE>

RISKS ASSOCIATED WITH IMPLEMENTATION OF NEW MANAGEMENT INFORMATION SYSTEMS.
The Company's management information systems are not fully automated, and
therefore the Company does not have real-time access to certain information at
its Managed Dental Centers. The Company is evaluating new software packages that
will replace its existing management information systems with fully automated
systems. Failure or significant delays in achieving integration or complications
with respect to the change to new software packages could have a material
adverse effect on the Company's results of operations and financial condition.

RISKS ASSOCIATED WITH MANAGED CARE CONTRACTS. As an increasing percentage
of the population is covered by managed care organizations that provide dental
coverage, the Company believes that its success will, in part, be dependent upon
its ability to assist the PAs in negotiating favorable contracts with health
maintenance organizations ("HMOs"), health insurance companies and other third
party payors. Most of these contracts are terminable by either party on 90 days
notice. There can be no assurance that the Company will be successful in
negotiating, managing or maintaining managed care arrangements on behalf of the
PAs. In addition, the health care industry has experienced a trend toward cost
containment as government and private third-party payors seek to impose lower
reimbursement and utilization rates and negotiate reduced payment schedules with
service providers. The Company believes that these trends may result in a
reduction from historical levels in per patient revenue of the Managed Dental
Centers. To the extent that patients or enrollees covered by these contracts
generate an increasing percentage of the revenues generated by the PAs, the
Company's operating margins may be adversely affected. Any such reduction of
operating margins could have a material adverse effect on the Company's results
of operations and financial condition. Total PA revenue derived from managed
care patients, which the Company believes to be significant, is comprised of two
components, capitated amounts paid by HMOs and amounts paid directly by such
patients or through other insurance for services not covered under managed care
contracts. The Company tracks, as a separate component of revenue, the
capitation revenue paid by managed care companies to each Managed Dental Center,
but has not tracked separately amounts paid directly by such patients or through
other insurance covering such patients. In 1996, the Managed Dental Centers
generated approximately $586,000 of capitation revenue, although the Company
believes that amounts paid directly by such patients or through other insurance
for services not covered under managed care contracts represents a significantly
larger amount of patient revenue.

RISKS OF BECOMING SUBJECT TO LICENSURE. Federal and state laws regulate
insurance companies, HMOs and certain other managed care organizations. Many
states also regulate the establishment and operation of networks of health care
providers. In most states, including Florida and Michigan, these laws do not
apply to discounted fee for service arrangements. The Company believes that it
is in compliance with the laws of the states of Florida and Michigan with
respect to the operation of its Dental Centers, but there can be no assurance
that interpretations of these laws by the regulatory authorities in Florida or
Michigan or in the states in which the Company expands will not require
licensure or a restructuring of some or all of the Company's operations. In the
event that the Company is required to become licensed under these laws, the
licensure process can be lengthy and time consuming and, unless the regulatory
authority permits the Company to continue to operate while the licensure process
is progressing, the Company would experience a material adverse change in its
business while the licensure process is pending. In addition, many of the
licensing requirements mandate strict financial and other requirements which the
Company may not be able to meet. Further, if licensed, the Company would be
subject to continuing oversight by, and reporting to, the relevant regulatory
agency. The regulatory framework of certain jurisdictions may limit the
Company's expansion into, or ability to continue operations within, such
jurisdictions if the Company is unable to modify its operational structure to
conform with such regulatory framework. Any limitation on the Company's ability
to expand could have a material adverse effect on the Company. In addition,
there are state insurance law regulatory risks associated with the Company's
role in negotiating and administering managed care contracts on behalf of the
PAs. State insurance laws are subject to broad interpretation by regulators. In
the event that the Company or the PAs are determined to be engaged in the
business of insurance, the Company could be required to either seek licensure as
an insurance company or change the form of its relationships with the
third-party payors. There can be no assurances

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<PAGE>

that the Company's operations would not be adversely affected if the Company or
the PAs were to become subject to state insurance regulations. See
"Business--Governmental Regulation."

GEOGRAPHIC CONCENTRATION. The Company's operations are concentrated in the
Florida and Michigan markets and any adverse economic or regulatory developments
or action within these markets could have a material adverse effect on the
Company's business. In addition, the Company's expansion strategy is dependent,
in part, upon entering into Management Agreements with platform practices in new
markets. The Company's strategy of focused expansion within new markets
increases the risk to the Company that adverse economic or regulatory
developments in one or more of these new markets may have a material adverse
effect on the Company's business, financial condition and operating results.

RISKS ARISING FROM HEALTH CARE REFORM. There can be no assurance that the
laws and regulations of the states in which the Company operates or may desire
to operate in the future will not change or be interpreted in the future to
restrict or adversely affect the Company's relationships with Affiliated
Dentists or the operation of Managed Dental Centers. Proposals that may be
introduced, could, if adopted, have a material adverse effect on the Company's
financial condition and results of operations. It is uncertain what legislative
programs, if any, will be adopted in the future, or what actions Congress or
state legislatures may take regarding health care reform proposals or
legislation.

ACCOUNTING TREATMENT FOR PHYSICIAN PRACTICE MANAGEMENT COMPANIES. The
Emerging Issues Task Force, an advisory committee of the Financial Accounting
Standards Board, is currently evaluating certain matters relating to accounting
practices for physician practice management companies, which the Company expects
will include a review of the consolidation of the financial statements of
professional corporations and professional associations with which such
companies have management agreements. Any required material changes to the
accounting practices of physician practice management companies resulting from
this review could have a material adverse effect on the Company's reported
results of operations.

DEPENDENCE ON KEY INDIVIDUALS. The success of the Company is dependent upon
the continued services of the Company's senior management. The Company's success
is also dependent upon the continued services rendered to the PAs by the Dental
Directors. The loss of the services of these individuals, including Dr. Steven
Matzkin, the Company's Chairman of the Board, President and Chief Executive
Officer, and Mitchell Olan, the Company's Vice President and Chief Operating
Officer, or impairment of the Company's relationship with Dr. Dennis A. Corona,
a Dental Director and the owner of 13 of the Florida PAs, or any other Dental
Director, could have a material adverse effect on the Company. The Company
believes that its future success also will depend in part upon its ability to
attract and retain qualified management personnel. Competition for such
personnel is intense and the Company competes for qualified personnel with
numerous other employers, some of whom have greater financial and other
resources than the Company. There can be no assurance that the Company will be
successful in attracting and retaining such personnel. See "Management."

CONTROL BY PRINCIPAL STOCKHOLDERS. Upon completion of the Offering, the
current stockholders of the Company will own approximately 71.0% of the
outstanding shares of Common Stock. Included in this percentage are shares of
Common Stock owned by Dr. Steven Matzkin and the SRM Children's Trust, a trust
for the benefit of Dr. Matzkin's children, which in the aggregate will own
approximately 47.3% of the outstanding shares of Common Stock. Accordingly, the
Company's current stockholders, as a group, will have the ability to control
all matters requiring stockholder approval, including the election of the
Company's directors and any amendments to the Company's Amended and Restated
Certificate of Incorporation (the "Certificate") and Amended and Restated
Bylaws (the "Bylaws"), and to control the business of the Company. Such control
could preclude any acquisition of the Company and could adversely affect the
market price of the Common Stock. See "Principal and Selling Stockholders" and
"Description of Capital Stock."

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<PAGE>

SHARES ELIGIBLE FOR FUTURE SALE. Upon completion of the Offering, the
Company will have outstanding 6,897,700 shares of Common Stock, of which the
2,000,000 shares sold in the Offering will be freely tradeable without
restriction or further registration under the Securities Act. The remaining
4,897,700 shares (the "Restricted Shares") are subject to certain restrictions
described below. Holders of the Restricted Shares will be eligible to sell a
portion of such shares pursuant to Rule 144 ("Rule 144") under the Securities
Act beginning in January 1998, subject to manner of sale, volume, notice and
information requirements of Rule 144. In addition, the Company has granted
certain registration rights with respect to 4,693,851 shares of Common Stock.
Notwithstanding the eligibility of certain shares to be sold following the
completion of the Offering, such shares are subject to certain additional
restrictions on transfer pursuant to certain agreements described below. See
"Description of Capital Stock--Registration Rights."

The Company and its executive officers, directors, and current stockholders
have agreed that they will not, directly or indirectly, offer, sell, offer to
sell, contract to sell, pledge, grant any option to purchase or otherwise sell
or dispose (or announce any offer, sale, offer of sale, contract of sale,
pledge, grant of any option to purchase or other sale or disposition) of any
shares of Common Stock or any securities convertible into, or exercisable or
exchangeable for, Common Stock or other capital stock of the Company, or any
right to purchase or acquire Common Stock or other capital stock of the Company,
for a period of 180 days after the date of this Prospectus, without the prior
written consent of Raymond James & Associates, Inc. ("Raymond James"), except
for (i) bona fide gifts or transfers effected by such stockholders other than on
any securities exchange or in the over-the-counter market to donees or
transferees that agree to be bound by similar agreements (the "Lock-up
Agreements"), (ii) sales made by Selling Stockholders to the Underwriters of up
to 300,000 shares to cover over- allotments, if any, and (iii) pledges of shares
held by Dr. Matzkin. Raymond James, in its sole discretion, without notice, may
release some or all of the shares subject to Lock-up Agreements from time to
time.

Additionally, the Company intends to file registration statements under the
Securities Act to register all shares of Common Stock subject to then
outstanding stock options and Common Stock issuable pursuant to the Omnibus
Plan. The Company expects to file these registration statements following the
closing of the Offering, and such registration statements are expected to become
effective upon filing. Shares covered by these registration statements will
thereupon be eligible for sale in the public markets, subject to the Lock-up
Agreements. Following the Offering, the Company may issue its Common Stock from
time to time in connection with the acquisition of the non-dental assets of
dental practices. Such securities may be issued in registered transactions or in
transactions exempt from registration under the Securities Act.

Sales of substantial amounts of Common Stock in the public market, or the
availability of such shares for future sale, could adversely affect the market
price of the Common Stock and could impair the Company's future ability to raise
additional capital through an offering of its equity securities. See "Shares
Eligible for Future Sale" and "Underwriting."

NO PRIOR MARKET; POSSIBLE VOLATILITY OF STOCK PRICE. Prior to the Offering,
there has been no public market for the Common Stock and there can be no
assurance that an active public market for the Common Stock will develop or, if
a trading market does develop, that it will continue after the Offering. The
initial public offering price has been determined by negotiations among the
Company and the Underwriters. See "Underwriting" for a description of the
factors considered in determining the initial public offering price. The market
price of the Common Stock could be subject to significant fluctuations in
response to variations in financial results or announcements of material events
by the Company or its competitors. Quarterly operating results of the Company,
changes in general conditions in the economy or the dental services industry, or
other developments affecting the Company or its competitors, could cause the
market price of the Common Stock to fluctuate substantially. The Company has
historically experienced seasonal fluctuation in its quarterly revenue.
Specifically, the first and fourth quarters reflect the highest volume, while
the third quarter has traditionally had the lowest volume. The Managed Dental
Centers in Florida have traditionally experienced increased patient visits in
November through March due to an increase in the population base during these
months, while patient visits

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decrease during the summer. In addition, the equity markets have, on occasion,
experienced significant price and volume fluctuations that have affected the
market prices for many companies' securities and that have often been unrelated
to the operating performance of these companies. Concern about the potential
effects of health care reform measures has contributed to the volatility of
stock prices of companies in health care and related industries and may
similarly affect the price of the Common Stock following the Offering. Any such
fluctuations that occur following completion of the Offering may adversely
affect the market price of the Common Stock.

CERTAIN ANTI-TAKEOVER PROVISIONS. Certain provisions of Delaware Law and
the Certificate and Bylaws may make a change in control of the Company more
difficult to effect, even if a change in control were in the stockholders'
interest. In addition, the Certificate allows the Board of Directors to
determine the terms of preferred stock which may be issued by the Company
without approval of the holders of the Common Stock, and thereby enables the
Board of Directors to inhibit the ability of the holders of the Common Stock to
effect a change in control of the Company. See "Description of Capital
Stock-Provisions with Possible Antitakeover Effect."

The Company has entered into an employment agreement with Dr. Matzkin which
requires the Company to pay certain amounts to Dr. Matzkin upon his termination
following certain events, including a change in control of the Company. Such
agreement may inhibit a change in control of the Company. See
"Management-Employment Agreements."

BROAD DISCRETION OF MANAGEMENT IN APPLYING PROCEEDS OF OFFERING. The
Company intends to use the net proceeds of the Offering to acquire the
non-dental assets of dental practices, to purchase the capital stock of Profit,
to provide working capital and for other general corporate purposes.
Accordingly, the Company's management will have broad discretion in applying the
net proceeds of the Offering. See "Use of Proceeds."

IMMEDIATE AND SUBSTANTIAL DILUTION. Purchasers of shares of Common Stock in
the Offering will experience immediate and substantial dilution of approximately
$8.70 in the pro forma net tangible book value per share of Common Stock from
the initial public offering price of $12.00 per share. See "Dilution."

ANTITRUST. The Company and the PAs with which it has Management Agreements
are subject to a range of antitrust laws that prohibit anti-competitive conduct,
including price fixing, concerted refusals to deal and divisions of markets.
Among other things, these laws may limit the ability of the Company to enter
into management agreements with separate practice groups that compete with one
another in the same geographic market. These laws do not apply to dentists
within the same practice group, such as dentists within a single PA, but might
be applicable as to Affiliated Dentists within the Company's separate Managed
Dental Centers in the same geographic market. In addition, these laws prevent
acquisitions of practices that would be integrated into existing professional
groups if such acquisitions substantially lessen competition or tend to create a
monopoly.

17
<PAGE>

THE COMPANY

The Company is the successor to the businesses of Golden Care Holdings L.C.
("GCH") and its majority-owned subsidiaries, Prophet Management of Florida,
L.C., a Florida limited liability company ("Prophet"), and Golden Care Network,
L.C., a Florida limited liability company ("Golden Care"), which were formed in
1992 and 1993, respectively, and commenced operations in 1993. Prophet provided
management services and Golden Care provided licensing services to dental
practices. These companies utilized the management approach developed by Dr.
Matzkin, the Company's President and Chief Executive Officer, through the
management of over 25 dental practices between 1982 and 1993. Dental Care
Alliance, Inc. was incorporated in 1996. See Note 1 to the Consolidated
Financial Statements of the Company.

The address of the Company's principal executive offices is 1343 Main
Street, Sarasota, Florida 34236 and its telephone number is (941) 955-3150.

RELATIONSHIP BETWEEN THE COMPANY AND THE PAS

The Company provides management and licensing services to 20 Managed Dental
Centers, 15 of which are located in Florida and five of which are located in
Michigan. In addition, the Company provides only licensing services to three
Licensed Dental Centers in Florida. The dental practice at each of the Managed
Dental Centers is owned by a separate PA. The Company has subcontracted the
day-to-day management of four Managed Dental Centers located in Michigan to an
affiliate of the PA that owns the practices conducted at such Managed Dental
Centers. The PAs receive their revenue from payments by or for patients, while
the Company receives fees from the PAs for providing management services and
support to the Managed Dental Centers and providing licensing services to all
Dental Centers. The Affiliated Dentists and dental hygienists are employed by or
contract with, and are compensated by, the PAs. The Company, or its
subcontractor for the four Detroit-area Managed Dental Centers, employ and
compensate all administrative and support staff, including receptionists, office
managers and dental assistants located in each Managed Dental Center.

The Company provides management and administrative services to the Managed
Dental Centers, allowing the Affiliated Dentists to focus exclusively on the
provision of dental care. The Affiliated Dentists provide general dentistry
services, such as examinations, cleanings, fillings, fitting of fixed and
removable dental prostheses, restorative and cosmetic dentistry, endodontics,
oral surgery and implantology, orthodontics and periodontics. The PAs maintain
full control over the dental practices of the Affiliated Dentists and set
prices for all dental services. Each PA makes all final decisions regarding
advertising and marketing programs related to its practice while the Company
assists in the development and implementation of advertising and marketing
programs. The Company purchases all non-dental inventory and supplies and, as
directed by the PAs, all dental inventory and supplies for each Managed Dental
Center.

The Company from time to time has made loans to newly formed PAs with
which it has entered into Management Agreements to purchase the dental assets
of the related dental practices. In return the PAs execute promissory notes to
the Company in the amount of such loans. At June 30, 1997, the total
outstanding balance of such loans was $173,756. The notes underlying such loans
generally have terms ranging from two to five years, bear interest at rates
ranging between 10% and 18.5% and are secured by the assets of the related
dental practice. The PAs to which such loans are made are newly formed and have
no assets other than the assets of the dental practices being acquired and no
liabilities other than the liabilities relating to the loans. In addition, the
Company from time to time makes working capital advances to individual PAs,
although it is not obligated contractually or otherwise to make any such
advances. The extension of loans and advances to PAs by the Company is not
conditioned upon entering into Management Agreements with the Company.
Extension of any such loans or advances is entirely within the Company's
discretion. These advances are due within 12 months of issuance, bear interest
at 8%, subject to adjustment based on changes in the rates at which the

18
<PAGE>

Company may borrow from its lenders. All advances made to PAs are guaranteed by
the relevant PA owner, although there is no independent collateral for these
working capital advances. A repayment default under such advances is also a
default under the relevant Management Agreement which permits the Company,
among other things, to liquidate the assets of the dental practice. At June 30,
1997, the total outstanding balance of such advances was $287,127. There have
been no revisions to the terms of any such loans or advances. The PAs are
current in the payment of their loans or advances and the Company believes that
the financial condition of the PAs to which it has made loans or advances is
satisfactory. Prior to making any loan or advance, the Company analyzes the
collectibility of the receivables resulting from such loans or advances based
on the projected cash flow of the relevant PA and the estimated fair market
value of the assets to be owned or owned by such PA. The Company, through its
obligations under the Management Agreements, is able to assess on a periodic
basis the collectibility of its receivables since it has access to the billing
and collection information relating to the PAs' patient receivables and
operational cash flow, and evaluate on a periodic basis outstanding receivables
versus accounts payable and revenue trends. Accordingly, the Company is in a
position to quickly assess the ability of each PA to meet its obligations under
the notes and advances. As a result, the Company is able to react quickly in
the event that there is a material change in the creditworthiness of any of the
PAs. The Company also analyzes any historical trends of the PAs relating to bad
debts or the inability of the PAs to generate collectible patient receivables.
The Company assesses the guaranty of its PA owners for financial stability and
creditworthiness through periodic reviews which include analysis of credit
reports, bank references, personal and business tax returns, personal financial
statements and related financial information. In addition, the reputation of
each PA owner in the business community and the length and quality of the PAs'
relationship with the Company, are examined by the Company to assess the PA
owners as guarantors of the loans and advances.

None of the PA owners are officers, directors or employees of the Company.
Dr. Dennis A. Corona, the owner of PAs operating a majority of the Managed
Dental Centers, owns 2% of the Company's Common Stock prior to the Offering. No
other PA owner owns any Common Stock. In addition, four Managed Dental Centers
in Michigan are owned by PAs commonly controlled by Dr. Ross Johnson. See Note
12 to the Consolidated Financial Statements.

The PAs are primarily liable for repayment of the notes and advances to
the Company with the PA owners being secondarily liable for repayment under the
notes and advances. The PAs and PA owners bear the primary risk under the notes
and advances. The Company also bears the risk of non-payment to the extent that
the assets of PAs and the PA owners are insufficient to pay the outstanding
balances under the notes or advances upon any default. See "Risk Factors-Risk
Associated with Notes from, Advances to and Management Fee Receivable from
PAs."

The PAs take reserves against, and, when appropriate, write-off bad debt
on, patient receivables. For the year ended December 31, 1996, reserves and
write-offs for bad debt on patient receivables aggregated approximately $30,000
on net patient revenues of $5,576,000. To date, there have been no defaults
under, or write-offs in connection with, notes receivable from or advances to
PAs, although there can be no assurance that there will be no such defaults or
write-offs in the future. As there has to date been no default or material
delinquency under any of the notes or advances, the Company has not established
any reserves for such defaults. The Company will consider establishing reserves
against such defaults should future circumstances demonstrate the need for such
reserves.

The Management Agreements for PAs that have acquisition loans from the
Company and for most PAs with working capital advances provide that the PAs
must meet their repayment obligations under any outstanding indebtedness,
whether owed to the Company or any third party, prior to paying any management
fees. A default under any such obligation is by its terms a default under the
Management Agreement. In the event of such a default the Company or its
designee is entitled to purchase the assets and liabilities or the capital
stock of the relevant PA at a price equal to 60% of the annualized gross
revenues of such PA over the previous 24 months, minus any liabilities,
including outstanding indebtedness, if any, to the Company of the PA at the
date of purchase. In such event, the Company would evaluate whether, at its
option, to have another PA owner or other licensed dentist assume control of
the practice and continue to generate management fees or to liquidate the
assets of such PA.

19
<PAGE>

The Company assists in marketing its network to health insurance companies,
HMOs and other third-party payors who have an established presence in regional
markets served, or expected to be served, by the PAs and supervises the PAs'
relationships with such third-party payors.

The Company has expanded and expects to continue to expand through the
addition of Dental Centers to its network. Prior to April 1997, the Company had
entered into Management Agreements with respect to PAs that had purchased both
the non-dental assets and the dental assets of such practices. In three cases
since that time, the Company has acquired the non-dental assets of dental
practices it has agreed to manage, while the PA has acquired the dental assets.

USE OF PROCEEDS

The net proceeds to the Company from the sale of the 2,000,000 shares of
Common Stock offered by the Company (at the initial public offering price of
$12.00 per share), after deducting underwriting discounts and commissions and
estimated offering expenses, are estimated to be $21.2 million. Such net
proceeds will be used primarily (i) to acquire the non-dental assets of
additional dental practices, (ii) to provide working capital and (iii) for
general corporate purposes. The Company may use a portion of the net proceeds
of this Offering to purchase businesses complementary to the business of the
Company and to lend money to PAs to be formed in the future by existing or
future PA owners for the purpose of acquiring the dental assets of certain
additional dental practices. The Company cannot presently determine the
allocation of proceeds among the above listed uses of proceeds. The Company
will determine such allocation based upon its future business needs. The
Company is currently considering the acquisition of the capital stock of
Profit. It is anticipated that such acquisition will not happen prior to 1998
and will be consummated only upon approval of the outside members of the Board
of Directors. The owners of certain PAs with which the Company has Management
Agreements have executed non-binding letters of intent to acquire ten dental
practices, which practices reported aggregate revenue for their last full
fiscal year of approximately $10.0 million. It is estimated that the aggregate
purchase price for the dental and the non-dental assets of these practices will
be approximately $6.0 million. The structure and timing of such potential
transactions have not been finally determined. Such potential transactions are
subject, among other things, to the negotiation of definitive agreements. If
such transactions are consummated, the acquiring PAs are expected to enter into
Management Agreements with the Company. No assurance can be given that any such
acquisitions will be consummated by the PA owner, that the Company will enter
into Management Agreements with respect to such practices or that any such
practices will be successfully integrated into the Company's network. See "Risk
Factors--Broad Discretion of Management in Applying Proceeds of Offering" and
"--Risks Associated with Expansion Strategy." Pending such applications, the
net proceeds will be invested in investment grade, short-term, interest-bearing
securities. The Company will not receive any of the proceeds from the sale of
any Common Stock by the Selling Stockholders pursuant to the over-allotment
option, if exercised. See "Principal and Selling Stockholders."

DIVIDEND POLICY

The Company presently intends to retain all earnings for the operation and
development of its business and does not anticipate paying any cash dividends
on the Common Stock in the foreseeable future. Any future determination as to
the payment of cash dividends will depend on a number of factors, including
future earnings, capital requirements, the financial condition and prospects of
the Company and any restrictions under credit agreements existing from time to
time, as well as such other factors as the Company's Board of Directors may
deem relevant.

20
<PAGE>

DILUTION

Purchasers of Common Stock offered hereby will experience an immediate and
substantial dilution in the pro forma net tangible book value of the Common
Stock from the initial public offering price. At June 30, 1997, the pro forma
net tangible book value of the Company was $1,512,280, or $.31 per share pro
forma. Net tangible book value per share is determined by dividing the Company's
net tangible book value (tangible assets less total liabilities), by the number
of shares of pro forma Common Stock outstanding. Pro forma information gives
effect to the conversion of the mandatorily convertible Series A Preferred Stock
to 654,359 shares of Common Stock upon completion of this Offering and reflects
the termination of put rights relating to 530,010 shares of Common Stock. After
giving effect to the sale of 2,000,000 shares of Common Stock offered hereby (at
the initial public offering price of $12.00 per share), after deducting
underwriting discounts and commissions and estimated offering expenses, the pro
forma net tangible book value of the Company at June 30, 1997 would have been
$22,732,280 or $3.30 per share. This represents an immediate increase in pro
forma net tangible book value of $2.99 per share to existing stockholders and an
immediate dilution in pro forma net tangible book value of $8.70 per share to
new investors purchasing shares of Common Stock in the Offering. The following
table illustrates this per share dilution:

<TABLE>
<S> <C> <C>
Initial public offering price ....................................... $ 12.00
Pro forma net tangible book value at June 30, 1997 .................. $ .31
Increase attributable to new investors .............................. 2.99
--------
Pro forma net tangible book value after the Offering ............... 3.30
--------
Dilution in pro forma net tangible book value to new investors ...... $ 8.70
========
</TABLE>

The following table sets forth, on a pro forma basis at June 30, 1997, the
differences between the existing stockholders and the new investors purchasing
shares in the Offering with respect to the number of shares of Common Stock
purchased from the Company, the total consideration paid to the Company and the
average price per share at the initial public offering price of $12.00 per
share, without giving effect to underwriting discounts and commissions and
offering expenses:

<TABLE>
<CAPTION>
SHARES PURCHASED(1) TOTAL CONSIDERATION
----------------------- ------------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
----------- --------- ------------- --------- ---------------
<S> <C> <C> <C> <C> <C>
Existing stockholders(2) ...... 4,897,700 71.0% $ 2,279,290 8.7% $ .47
New investors .................. 2,000,000 29.0 24,000,000 91.3 $12.00
--------- ------ ------------ ------
Total ........................ 6,897,700 100.0% 26,279,290 100.0%
========= ====== ============ ======
</TABLE>

- ----------------
(1) Assuming the Underwriters' over-allotment option is exercised in full,
existing stockholders will hold 4,597,700 shares, or 66.7% of the total
number of shares outstanding after the Offering, and the number of shares
held by new investors will increase by 300,000 shares to 2,300,000 shares,
or 33.3% of the total shares of Common Stock outstanding after the
Offering. See "Principal and Selling Stockholders."

(2) Does not include (i) an aggregate of 250,000 shares of Common Stock
reserved for issuance under the Omnibus Plan, of which options for
approximately 66,000 shares will be granted upon consummation of this
Offering at a per share exercise price of $12.00, (ii) an aggregate of
425,000 shares of Common Stock reserved for issuance under the
Non-Qualified Plan, of which options for approximately 135,000 shares will
be granted upon consummation of the Offering at a per share exercise price
of $12.00, (iii) 53,001 shares of Common Stock to be reserved for issuance
pursuant to warrants to be issued upon consummation of the Offering at a
weighted average exercise price equal to $1.74 per share, (iv) 49,576
shares of Common Stock reserved for issuance pursuant to outstanding
options to purchase Common Stock at a weighted average exercise price of
$1.53 per share and (v) options to purchase 17,771 shares at a per share
exercise price of $12.00. See "Management-- Omnibus Executive Incentive
Compensation Plan," "--Non Qualified Stock Option Plan" and "Description of
Capital Stock--Warrants and Options to Purchase Common Stock."

21
<PAGE>

CAPITALIZATION

The following table sets forth the capitalization of the Company as of
June 30, 1997, (i) on an actual basis, and (ii) on a pro forma as adjusted
basis to give effect to the conversion of the mandatorily convertible Series A
Preferred Stock to 654,359 shares of Common Stock upon completion of this
Offering and to the termination of put rights relating to 530,010 shares of
Common Stock and to reflect the sale by the Company of 2,000,000 shares of
Common Stock offered hereby (at the offering price of $12.00 per share), and
the application of the estimated net proceeds therefrom as described under "Use
of Proceeds." This table should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the Consolidated Financial Statements included elsewhere herein.

<TABLE>
<CAPTION>
JUNE 30, 1997
----------------------------
PRO FORMA,
ACTUAL AS ADJUSTED
------------ -------------
<S> <C> <C>
Current maturities of long-term debt ................................. $ 161,807 $ 161,807
========== ===========
Long-term debt, net of current maturities ........................... 28,746 28,746
Mandatorily redeemable preferred stock, $.01 per share, 15,000
shares, authorized, issued and outstanding, actual; none authorized,
issued or outstanding, pro forma as adjusted ........................ 1,473,062 --
Put rights associated with common stock .............................. 191,237 --
Preferred stock, $.01 par value, no shares authorized, issued or
outstanding, actual; 5,000,000 shares authorized, no shares issued or
outstanding, pro forma as adjusted .................................
Common stock, $.01 par value, 50,000,000 authorized, 4,243,342 shares
issued and outstanding, actual; 6,897,700 shares issued and
outstanding, pro forma as adjusted ................................. 42,433 68,977
Additional paid-in capital .......................................... 845,006 23,702,761
Stock subscription receivable ....................................... (272,768) (272,768)
Retained earnings ................................................... 26,845 26,845
---------- -----------
Total capitalization ................................................ $2,334,561 $23,554,561
========== ===========
</TABLE>

- ----------------]
(1) Does not include (i) an aggregate of 250,000 shares of Common Stock reserved
for issuance under the Omnibus Plan, of which options for approximately
66,000 shares will be granted upon consummation of this Offering at a per
share exercise price of $12.00, (ii) an aggregate of 425,000 shares of
Common Stock reserved for issuance under the Non-Qualified Plan of which
options for approximately 135,000 shares will be granted upon consummation
of the Offering at a per share exercise price of $12.00, (iii) 53,001 shares
of Common Stock to be reserved for issuance pursuant to warrants to be
issued upon consummation of the Offering at a weighted average exercise
price equal to $1.74 per share, (iv) 49,576 shares of Common Stock reserved
for issuance pursuant to outstanding options to purchase Common Stock at a
weighted average exercise price of $1.53 per share and (v) options to
purchase 17,771 shares at a per share exercise price of $12.00. See
"Management-- Omnibus Executive Incentive Compensation Plan" "--Non
Qualified Stock Option Plan" and "Description of Capital Stock--Warrants and
Options to Purchase Common Stock."

22
<PAGE>

SELECTED CONSOLIDATED FINANCIAL DATA

The Company commenced operations in November 1993. The following selected
consolidated financial data for the year ended December 31, 1993 and at
December 31, 1993 are derived from the unaudited Consolidated Financial
Statements of the predecessors of Dental Care Alliance, Inc. The following
selected consolidated financial data for the years ended December 31, 1994,
1995 and 1996 and at December 31, 1994, 1995 and 1996 are derived from the
Consolidated Financial Statements of Dental Care Alliance, Inc. and its
predecessors which have been audited by Price Waterhouse LLP, independent
certified public accountants. The financial data presented below for the six
month periods ended June 30, 1996 and 1997 and at June 30, 1997 are unaudited
and were prepared by management of the Company on the same basis as the audited
Consolidated Financial Statements included elsewhere herein, and, in the
opinion of management of the Company, include all adjustments, consisting only
of normal recurring adjustments, necessary to present fairly the information
set forth therein. The results for the six months ended June 30, 1997 are not
necessarily indicative of the results to be expected for the year ending
December 31, 1997 or future periods. The following information should be read
in conjunction with "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the Consolidated Financial Statements
and other financial information included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------------
1993 1994 1995 1996
------------- ---------- ------------- ------------
(UNAUDITED)
<S> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Management fees .................................... $83,700 $673,304 $ 513,705 $1,289,828
Consulting and licensing fees ........................ -- 42,763 262,769 347,600
-------- --------- --------- ----------
Total revenues .................................... 83,700 716,067 776,474 1,637,428
-------- --------- --------- ----------
Managed dental center expenses(1):
Staff salaries and benefits ........................ -- -- -- 223,657
Dental supplies .................................... -- -- -- 79,448
Laboratory fees .................................... -- -- -- 98,222
Marketing .......................................... -- -- -- 38,128
Occupancy .......................................... -- -- -- 106,501
Other ............................................. -- -- -- 57,182
-------- --------- --------- ----------
Total managed dental center expenses ............... -- -- -- 603,138
-------- --------- --------- ----------
83,700 716,067 776,474 1,034,290
Salaries and benefits .............................. 8,339 408,716 400,669 521,683
General and administrative ........................... 16,064 204,901 234,577 260,558
Advisory services(2) ................................. -- -- 127,768 --
Depreciation and amortization ........................ -- 15,150 22,106 27,654
-------- --------- --------- ----------
Operating income (loss) ........................... 52,297 87,300 (8,646) 224,395
Interest income (expense), net ..................... 22,584 6,494 20,781
-------- --------- --------- ----------
Income (loss) before income taxes
and minority interest .............................. 52,297 109,884 (2,152) 245,176
Provision for income taxes ........................... -- 19,919 -- 35,500
Minority interest .................................... -- 2,440 8,654 7,674
-------- --------- --------- ----------
Net income (loss) ................................. $52,297 $ 87,525 $ (10,806) $ 202,002
======== ========= ========= ==========
Adjustment to redemption value of common
and preferred securities ........................... -- 39,951 85,709 (191,237)
Cumulative preferred stock dividend .................. -- -- -- (6,485)
-------- --------- --------- ----------
Net income (loss) applicable to common stock ......... $52,297 $127,476 $ 74,903 $ 4,280
======== ========= ========= ==========
Unaudited pro forma data:
Income (loss) before income taxes and
minority interest ................................. $52,297 $109,884 $ (2,152) $ 245,176
Pro forma provision for income taxes(3) ............... 20,000 42,000 -- 94,000
Minority interest in consolidated subsidiaries ...... -- 1,507 5,343 4,739
-------- --------- --------- ----------
Pro forma net income ................................. $32,297 $ 66,377 $ (7,495) $ 146,437
======== ========= ========= ==========
Pro forma net income per common share ............... $ .03
==========
Weighted average common shares outstanding ......... 4,773,071
==========

<CAPTION>
SIX MONTHS ENDED JUNE 30,
---------------------------
1996 1997
----------- ---------------
(UNAUDITED)
<S> <C> <C>
INCOME STATEMENT DATA:
Management fees .................................... $405,072 $2,471,759
Consulting and licensing fees ........................ 138,812 161,885
-------- ----------
Total revenues .................................... 543,884 2,633,644
-------- ----------
Managed dental center expenses(1):
Staff salaries and benefits ........................ -- 601,383
Dental supplies .................................... -- 213,334
Laboratory fees .................................... -- 373,010
Marketing .......................................... -- 176,627
Occupancy .......................................... -- 333,085
Other ............................................. -- 326,494
-------- ----------
Total managed dental center expenses ............... -- 2,023,933
-------- ----------
543,884 609,711
Salaries and benefits .............................. 261,642 373,016
General and administrative ........................... 118,476 135,970
Advisory services(2) ................................. -- --
Depreciation and amortization ........................ 10,254 41,578
-------- ----------
Operating income (loss) ........................... 153,512 59,147
Interest income (expense), net ..................... (5,058) 36,464
-------- ----------
Income (loss) before income taxes
and minority interest .............................. 148,454 95,611
Provision for income taxes ........................... -- 36,000
Minority interest .................................... 3,537 --
-------- ----------
Net income (loss) ................................. $144,917 $ 59,611
======== ==========
Adjustment to redemption value of common
and preferred securities ........................... -- (10,500)
Cumulative preferred stock dividend .................. -- (60,000)
-------- ----------
Net income (loss) applicable to common stock ......... $144,917 $ (10,889)
======== ==========
Unaudited pro forma data:
Income (loss) before income taxes and
minority interest ................................. $148,454 $ 95,611
Pro forma provision for income taxes(3) ............... 57,000 36,000
Minority interest in consolidated subsidiaries ...... 2,184 --
-------- ----------
Pro forma net income ................................. $ 89,270 $ 59,611
======== ==========
Pro forma net income per common share ............... $ .01
==========
Weighted average common shares outstanding ......... 4,773,071
==========
</TABLE>

23
<PAGE>

<TABLE>
<CAPTION>
AT DECEMBER 31,
------------------------------------------------------ AT JUNE 30,
1993 1994 1995 1996 1997
------------- ---------- ---------- ------------ -------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital ................................. $144,497 $113,385 $ 98,676 $ 965,853 $ 851,382
Total assets .................................... 187,203 466,820 524,543 3,122,939 3,370,468
Long-term debt, including current maturities ...... 22,100 209,437 163,745 214,002 190,553
Redeemable common and preferred securities ...... -- -- -- 1,593,799 1,664,299
Stockholders' equity .............................. 47,845 118,400 296,837 632,285 641,516
</TABLE>

(2) Represents non-cash charges for warrants issued in consideration for
certain financial advisory services.

(3) Pro forma adjusted to reflect a 38% income tax rate as if the Company was
taxed as a C Corporation prior to October 25, 1996 when the Company was
reorganized from Limited Liability Corporation status to C Corporation
status. See Notes 2 and 7 of Notes to Consolidated Financial Statements.

24
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

INTRODUCTION

Dental Care Alliance, Inc. is a dental practice management company
providing management and licensing services to dental practices in Florida and
Michigan. The Company provides management and licensing services to 20 Managed
Dental Centers, 15 of which are located in Florida and five of which are located
in Michigan. Additionally, the Company provides only licensing services to three
Licensed Dental Centers in Florida. Management services include financial,
accounting, billing, training, efficiency and productivity enhancement,
recruiting, team building, marketing, advertising, purchasing, collection and
other services, as well as the provision of management and administrative
personnel. Licensing services include marketing, advertising and purchasing.

With respect to management services it provides to dental practices, the
Company enters into Management Agreements with the PAs that own the practices.
The Company commenced operations in November 1993 by providing management and
licensing services to five dental practices located in Sarasota, Palmetto,
Largo, Port Charlotte and Venice, Florida. In 1994, the Company entered into its
first Management Agreement for a newly developed practice, located in Englewood,
Florida and entered into a Management Agreement to manage an additional existing
practice in Fort Myers, Florida. In 1995, the Company entered into four new
Management Agreements, two of which were with respect to newly developed
practices located in Kissimmee and Bradenton, Florida and the remaining two of
which were with respect to existing practices located in Sarasota and Port
Richey, Florida. The Company entered into four additional Management Agreements
in 1996 to manage practices located in Orlando, Tampa, Ocoee and Clearwater,
Florida. In addition, the Company terminated its Management Agreements with
respect to the Palmetto and Venice Managed Dental Centers in 1995 and with
respect to the Port Richey Managed Dental Center in 1996.

In April 1997, the Company purchased the non-dental assets of, and entered
into a Management Agreement with respect to a dental practice in Tampa, Florida.
In July 1997, the Company entered into a Management Agreement with respect to
four dental practices located in the Detroit, Michigan area. In July 1997, the
Company entered into a Management Agreement with respect to a dental practice in
Flint, Michigan. In August 1997, the Company purchased the non-dental assets of,
and entered into a Management Agreement with respect to, a dental practice
located in Tallahassee, Florida. In September 1997, the Company purchased the
non-dental assets of, and entered into a Management Agreement with respect to, a
dental practice located in St. Petersburg, Florida.

The Company believes that certain of the Management Agreements are
material to the Company as a whole. For example, it is anticipated the Managed
Dental Center in Flint, Michigan, will contribute in excess of 10% of the
Company's aggregate revenue in 1997 and may contribute in excess of 10% of the
Company's aggregate revenue in 1998. Further, the PA located in Port Charlotte,
Florida contributed approximately 18% and 14% to the Company's revenues in 1996
and for the six months ended June 30, 1997, respectively. The Flint Management
Agreement has a term of 25 years and provides for a management fee equal to 74%
of the Net Collected Revenues of the associated PA. The Port Charlotte
Management Agreement expires in 2003 and provides for a management fee of 55%
of the net profits of the associated PA. In addition, the Port Charlotte
Management Agreement provides that the PA may, during the period commencing on
October 20, 1998 and ending 90 days thereafter, terminate the agreement by
paying to the Company an amount equal to $185,460 less the amount by which the
aggregate fees paid to the Company pursuant to such Management Agreement during
either or both of the successive one year periods following October 20, 1996
exceeds $100,000, and satisfying other conditions set forth therein. See "Risk
Factors--Dependence on Management Agreements, the PAs and Affiliated Dentists."

Owners of certain PAs with which the Company has Management Agreements
have executed non-binding letters of intent to acquire ten dental practices
employing 50 dentists, many of whom are

25
<PAGE>

part-time, and 23 dental hygienists, which practices reported aggregate revenue
for their respective last full fiscal years of approximately $10.0 million. If
such transactions are consummated, the acquiring PAs are expected to enter into
net patient revenue-based Management Agreements with the Company. There can be
no assurance that the Company will enter into Management Agreements with
respect to such practices or that any such practices will be integrated
successfully into the Company's network.

Prior to October 1996, the management fee paid to the Company pursuant to
the Management Agreements had been equal to a percentage ranging from 50-90% of
the net profits of the individual Managed Dental Centers, as defined in the
Management Agreements, plus reimbursement to the Company of its non-professional
expenses. Effective October 1996, the Company revised all of its 12 then
existing Management Agreements. Ten of these agreements were revised such that
the Company earns management fees based on 74% of total net patient revenues and
is paid based on cash collected minus any patient refunds ("Net Collected
Revenue") and the Company assumes responsibility for the payment of the
non-professional expenses of the Managed Dental Centers (the "Standard
Management Agreements"). The remaining two Management Agreements continue to
have management fee structures based upon 50-55% of the net profit of the two
related Managed Dental Centers. The Company will seek to cause future Management
Agreements to be on terms substantially similar to those of the Standard
Management Agreements. The method by which the Company manages the revenue and
profitability of Managed Dental Centers is fundamentally the same, regardless of
whether the Management Agreement with any particular PA provides for a
management fee based upon net profits or net patient revenue. In the "net
profits" type of Management Agreement, both the PA owner and the Company share
proportionally in the favorable impact of any initiatives. In the "net patient
revenues" type of Management Agreement, the cost management benefits resulting
from such intitiatives accrue to the party responsible for such costs and both
parties share proportionally in revenue enhancements. See "Business--Management
Agreements." Period to period comparisons of the Company's results of operations
set forth below should be considered in light of the significant changes in the
Company's recognition of revenues and expenses resulting from the revisions to
the Management Agreements in October 1996.

All patient revenues are billed to patients and providers under the
authority and identification numbers of the individual PAs. Patient revenues and
receivables are recorded on the accounts of the PAs. Funds are disbursed
initially to pay all the professional costs of the PAs. Thereafter, funds are
disbursed to the Company under the terms of the Management Agreements. Any
remaining funds are retained by the PA. If funds are insufficient to pay the
Company under the terms of the relevant Management Agreement, a payable from the
PA to the Company is recorded on the Company's books.

The Company also enters into license agreements with each Dental Center
pursuant to which the Company provides licensing and advertising services to
the Dental Centers. In return for such services, the Company has collected fees
generally ranging from $800 to $1,000 per month from each Managed Dental Center
and from $600 to $1,200 from each Licensed Dental Center.

Historically, in connection with the execution of a Management Agreement, a
PA has typically acquired both the dental and the non-dental assets of a Managed
Dental Center. The Company has either made loans to the acquiring PA or has
assisted the PA in obtaining third-party financing to purchase such assets.
Recently, the Company has acquired the non-dental assets of three Managed Dental
Centers while the PAs acquired the dental assets of such Managed Dental Centers.
The Company intends to use the proceeds of this Offering in part to make
additional loans to PAs to purchase both the dental and non-dental assets of
additional Managed Dental Centers and in part for the Company to acquire the
non-dental assets of additional Managed Dental Centers.

26
<PAGE>

secured by the assets of the related dental practice. The PAs to which such
loans are made are newly formed and have no assets other than the assets of the
dental practices being acquired and no liabilities other than the liabilities
relating to the loans. In addition, the Company from time to time makes working
capital advances to individual PAs, although it is not obligated contractually
or otherwise to make such advances. The extension of loans and advances to PAs
by the Company is not conditioned upon entering into Management Agreements with
the Company. Extension of any such loans or advances is entirely within the
Company's discretion. These advances are due within 12 months of issuance, bear
interest at 8%, subject to adjustment based on changes in the rates at which
the Company may borrow from its lenders. All advances made to PAs are
guaranteed by the relevant PA owner, although there is no independent
collateral for these working capital advances. A repayment default under such
advances is also a default under the relevant Management Agreement which
permits the Company, among other things, to liquidate the assets of the dental
practice. At June 30, 1997, the total outstanding balance of such advances was
$287,127. There have been no revisions to the terms of any such loans or
advances. The PAs are current in the payment of their loans or advances and the
Company believes that the financial condition of the PAs to which it has made
loans or advances is satisfactory. Prior to making any loan or advance, the
Company analyzes the collectibility of the receivables resulting from such
loans or advances based on the projected cash flow of the relevant PA and the
estimated fair market value of the assets to be owned or owned by such PA. The
Company, through its obligations under the Management Agreements, is able to
assess on a periodic basis the collectibility of its receivables since it has
access to the billing and collection information relating to the PAs' patient
receivables and operational cash flow, and evaluate on a periodic basis
outstanding receivables versus accounts payable and revenue trends.
Accordingly, the Company is in a position to quickly assess the ability of each
PA to meet its obligations under the notes and advances. As a result, the
Company is able to react quickly in the event that there is a material change
in the creditworthiness of any of the PAs. The Company also analyzes any
historical trends of the PAs relating to bad debts or the inability of the PAs
to generate collectible patient receivables. The Company assesses the guaranty
of its PA owners for financial stability and creditworthiness through periodic
reviews which include analysis of credit reports, bank references, personal and
business tax returns and personal financial statements. In addition, the
reputation of each PA owner in the business community and the length and
quality of the PAs' relationship with the Company are examined by the Company
to assess the PA owners as guarantors of the loans and advances.

The Management Agreements for PAs that have acquisition loans from the
Company and for most PAs with working capital advances provide that the PAs
must meet their repayment obligations under

27
<PAGE>

any outstanding indebtedness, whether owed to the Company or any third party,
prior to paying any management fees. A default under any such obligation is by
its terms a default under the Management Agreement. In the event of such a
default the Company or its designee is entitled to purchase the assets and
liabilities or the capital stock of the relevant PA at a price equal to 60% of
the annualized gross revenues of such PA over the previous 24 months, minus any
liabilities, including outstanding indebtedness, if any, to the Company of the
PA at the date of purchase. In such event, the Company would evaluate whether,
at its option, to have another PA owner or other licensed dentist assume
control of the practice and continue to generate management fees or to
liquidate the assets of such PA.

The Company does not consolidate the balance sheets or the operating
results (including revenues and expenses) of the dental practices under the
Management Agreements since these revenues and expenses are earned and incurred
by the PAs, not the Company. Similarly, the Company does not record any goodwill
in connection with its execution of the Standard Management Agreements or the
acquisition of non-dental assets from a dental practice, since neither of such
transactions constitutes a business combination. The Company has recorded
goodwill and other intangible assets in cases where the Company has paid a PA in
consideration for a modification to an existing Management Agreement.

Prior to October 1996, the majority of the Company's operations were
performed through limited liability companies. Except for the period from
January through September, 1994 with respect to one of the Company's
predecessors in interest, the Company's statements of operations prior to
October 1996 do not include a provision for income taxes. Included in the
Company's 1996 tax provision are amounts related to the income tax expense
associated with establishing a deferred tax liability for book/tax differences
arising from its reorganization from Limited Liability Corporation to C
Corporation status.

RESULTS OF OPERATIONS

SIX MONTHS ENDED JUNE 30, 1997 COMPARED TO SIX MONTHS ENDED JUNE 30, 1996

MANAGEMENT FEES. Management fees consist of a percentage of the net
realizable patient-related revenue at the majority of the PAs and a percentage
of the net realizable profits earned by the remaining PAs. Management fees
increased 510.2% from $405,072 for the six months ended June 30, 1996 to $2.5
million for the six months ended June 30, 1997, primarily due to the change in
the Management Agreements in October 1996. Prior to 1996 the Company was not
responsible for any managed dental center expenses. See Note 3 to the
Consolidated Financial Statements.

CONSULTING AND LICENSING FEES. Consulting and licensing fees consist of
fees earned by the Company for licensing services to all of the Dental Centers
and consulting services to four Managed Dental Centers in Michigan. As a result
of the Company's execution of a new Management Agreement in July 1997, effective
July 1, 1997, with respect to these four Managed Dental Centers, income from
consulting fees will be included in management fees. Consulting and licensing
fees increased 16.6% from $138,812 for the six months ended June 30, 1996 to
$161,885 for the six months ended June 30, 1997. This increase was caused
primarily by the addition of four Managed Dental Centers in June 1996.

MANAGED DENTAL CENTER EXPENSES. Managed dental center expenses consist of
the non-professional expenses at the Managed Dental Centers. Managed dental
center expenses increased from $0 for the six months ended June 30, 1996 to $2.0
million for the six months ended June 30, 1997, primarily due to the change in
the Management Agreements in October 1996. Prior to 1996, the Company was not
responsible for any managed dental center expenses.

SALARIES AND BENEFITS. Salaries and benefits consist of costs for salaries
and benefits for employees at the Company's corporate offices. Salaries and
benefits increased 42.6% from $261,642 for the six months ended June 30, 1996 to
$373,016 for the six months ended June 30, 1997. This increase in salaries and
benefits was caused primarily by the hiring of additional personnel in the
Company's accounting and business development departments.

GENERAL AND ADMINISTRATIVE. General and administrative expense consists of
expenses related to the operation of the Company's corporate offices, such as
rent, legal, accounting and travel expenses.

28
<PAGE>

General and administrative expense increased 14.8% from $118,476 for the six
months ended June 30, 1996 to $135,970 for the six months ended June 30, 1997.
This increase was caused primarily by additional occupancy expenses associated
with the Company's expansion of its corporate headquarters and secondarily by
additional travel-related expense incurred in connection with business
development.

DEPRECIATION AND AMORTIZATION. Depreciation consists of the depreciation
expense on capital assets owned by the Company and located at either the
corporate offices or at Managed Dental Centers. Depreciation and amortization
expense increased 305.5% from $10,254 for the six months ended June 30, 1996 to
$41,578 for the six months ended June 30, 1997. This increase was caused
primarily by amortization of Management Agreements capitalized in October 1996
in connection with the revisions to the Management Agreements at that time and
secondarily by depreciation resulting from the purchase of equipment for a
Managed Dental Center.

INTEREST INCOME (EXPENSE), NET. Interest income (expense), net increased
$41,522 from $(5,058) for the six months ended June 30, 1996 to $36,464 for the
six months ended June 30, 1997. This increase was attributable primarily to
earnings on the higher cash balance as well as earnings on a new note
receivable in February 1997.

YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995

MANAGEMENT FEES. Management fees increased 151.1% from $513,705 in 1995
to $1.3 million in 1996. This increase resulted primarily from the October 1996
revision to the Management Agreements and, to a significantly lesser extent,
the execution of four new Management Agreements. See Note 3 to the Consolidated
Financial Statements.

CONSULTING AND LICENSING FEES. Consulting and licensing fees increased
32.3% from $262,769 in 1995 to $347,600 in 1996. This increase was attributable
primarily to an increase in the consulting fees earned from the Michigan
practices, additional license fees earned from four new Managed Dental Centers
and a full year of license fees from four Managed Dental Centers acquired in
1995.

MANAGED DENTAL CENTER EXPENSES. Managed dental center expenses increased
from $0 in 1995 to $603,138 in 1996. This increase was attributable to the
revisions to the Management Agreements in October 1996. Prior to 1996, the
Company was not responsible for any managed dental center expenses.

SALARIES AND BENEFITS. Salaries and benefits increased 30.2% from $400,669
in 1995 to $521,683 in 1996. This increase was attributable primarily to the
hiring of additional staff at four new Managed Dental Centers.

GENERAL AND ADMINISTRATIVE. General and administrative expense increased
11.1% from $234,577 in 1995 to $260,558 in 1996. This increase was attributable
to increased expense associated with the revised Management Agreements and the
cost of incorporating and recapitalizing the Company.

ADVISORY SERVICES. Advisory services expense relates to non-cash charges
for warrants issued in consideration of certain advisory services rendered to
the Company by a third party. Advisory services expense decreased from $127,768
in 1995 to $0 in 1996 as a result of a one time recognition in 1995 of such
expense.

DEPRECIATION AND AMORTIZATION. Depreciation and amortization expense
increased 25.1% from $22,106 in 1995 to $27,654 in 1996. This increase was
attributable to depreciation of additional equipment, amortization of
incorporation costs and amortization of Management Agreements capitalized in
October 1996 in connection with the revision of the Management Agreements.

INTEREST INCOME (EXPENSE), NET. Interest income (expense), net increased
220.0% from $6,494 in 1995 to $20,781 in 1996. This increase was attributable
primarily to earnings on increased cash balances and earnings on notes
receivable from Managed Dental Centers.

YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994

MANAGEMENT FEES. Management fees decreased 23.7% from $673,304 in 1994 to
$513,705 in 1995. This decrease was attributable to the termination of two
Management Agreements in June 1995. The

29
<PAGE>

Company added four new Management Agreements, however, management fees earned
from the new Management Agreements were insufficient to replace the lost
management fees from the two terminated agreements.

CONSULTING AND LICENSING FEES. Consulting and licensing fees increased
514.5% from $42,763 in 1994 to $262,769 in 1995. This increase was attributable
to an increase in the number of License Agreements, and the receipt of a full
year of consulting fees from four Michigan practices.

MANAGED DENTAL CENTER EXPENSES. Managed dental center expenses were $0 for
both 1994 and 1995 as the Company was not responsible for any dental center
expenses in either 1994 or 1995.

ADVISORY SERVICES. Advisory services expense increased from $0 in 1994 to
$127,768 in 1995 as a result of a one-time recognition of an expense in 1995 as
discussed above.

INTEREST INCOME (EXPENSE), NET. Interest income (expense), net decreased
71.2% from $22,584 in 1994 to $6,494 in 1995. This decrease was attributable
primarily to decreased cash balances due to repayment of long-term debt and
dividends.

SEASONALITY

The Company historically has experienced seasonal fluctuations in its
quarterly revenue. Specifically, the first and fourth quarters reflect the
highest patient volume, while the third quarter has traditionally had the lowest
patient volume. The Managed Dental Centers in Florida have traditionally
experienced increased patient visits in November through March due to an
increase in the population base during these months, while patient visits
decrease during the summer. Beginning in July 1997, the Company executed
Management Agreements with Managed Dental Centers in Michigan. The Company
expects that the seasonality in Florida will be offset to some extent by fewer
seasonal fluctuations in Michigan.

QUARTERLY FINANCIAL INFORMATION

The following table sets forth unaudited quarterly operating results for
each of the Company's last four quarters. This information has been prepared on
a basis consistent with the Company's audited financial statements and includes
all adjustments (consisting only of normal recurring adjustments) that
management considers necessary for a fair presentation of the data. These
quarterly results are not necessarily indicative of future results of
operations. This information should be read in conjunction with the Consolidated
Financial Statements and Notes thereto appearing elsewhere herein.

<TABLE>
<CAPTION>
QUARTER ENDED
--------------------------------------------------------------
SEPTEMBER 30, DECEMBER 31, MARCH 31, JUNE 30,
1996 1996(1) 1997 1997
--------------- -------------- ------------ ------------
<S> <C> <C> <C> <C>
Total revenues ........................ $ 208,794 $837,214 $1,204,681 $1,428,963
Managed dental center expenses ...... -- 603,138 921,142 1,102,791
Operating income ..................... (122,768) 71,649 28,707 30,440
Net income ........................... (125,383) 66,766 26,622 32,989
</TABLE>

LIQUIDITY AND CAPITAL RESOURCES

Since its inception, the Company has financed its operations primarily
through internal cash flow, the sale of equity securities and commercial bank
borrowings. Net cash (used in) provided by

30
<PAGE>

operations for the years ended December 31, 1994, 1995, 1996 and the six months
ended June 30, 1997 was ($82,200), $75,873, $270,121 and $83,461, respectively.
Net cash (used in) provided by operations for 1994, 1995, 1996 and the six
months ended June 30, 1997 consisted primarily of net income offset by
increases in consulting and licensing fees receivable, receivables from PAs and
accounts payable and accrued expenses.

Cash used in investing activities for the years ended December 31, 1994,
1995, 1996 and the six months ended June 30, 1997 was $294,064, $5,649, $487,858
and $186,401, respectively. Investing activities included capital expenditures
for 1994, 1995, 1996 and the six months ended June 30, 1997 of $177,778, $4,703,
$4,444 and $211,040. The Company made loans pursuant to notes to the PAs in the
amounts of $220,000, $10,000, $50,000 and $0 for 1994, 1995, 1996 and the six
months ended June 30, 1997. The Company received payments under these notes in
the amounts of $103,714, $29,054, $53,075 and $24,639 for 1994, 1995, 1996 and
the six months ended June 30, 1997.

Cash provided by (used in) financing activities for the years ending
December 31, 1994, 1995, 1996 and the six months ending June 30, 1997 was
$273,763, $(69,926), $1,428,803 and $(274,102). The financing activities
increased primarily as a result of the issuance of long-term debt of $211,584 in
1994 and the issuance of preferred stock of $1.5 million (net of issuance costs
of $105,000) in 1996, which were offset each year through the repayment of
long-term indebtedness. The Company made working capital advances to the PAs in
the amounts of $0, $0, $16,454 and $270,673 for 1994, 1995, 1996 and the six
months ended June 30, 1997.

In August 1997, the Company entered into a revolving line of credit (the
"Credit Agreement") which provides for an aggregate of $1.2 million. Under the
terms of the Credit Agreement, the Company may use up to $600,000 of the credit
line for the purchase of non-dental assets of dental centers provided that each
borrowing is repaid within 45 days of its drawdown. The remaining $600,000 may
be used for general working capital needs. The revolving line of credit bears
interest at 0.75% per annum above the lender's prime rate and is payable on
demand. Interest only is payable monthly. Amounts borrowed pursuant to the
Credit Agreement are secured by a first security interest in most of the
Company's assets, including receivables and equipment. Additionally, any
outstanding balances under the working capital line are guaranteed by Dr. Steven
R. Matzkin, the Company's Chairman of the Board, President and Chief Executive
Officer. The Company intends to use its credit line, together with its available
cash, to fund any working capital needs and to purchase non-dental assets of
dental centers.

The Company previously has made loans to various PAs in connection with the
PAs' acquisition of assets of dental practices and has made working capital
advances to various PAs for their operations. The loans, which are evidenced by
interest-bearing notes that are payable upon demand, are being repaid in
accordance with their terms. Both the loans and advances are personally
guaranteed by the PA owners.

The Company intends to enter into additional Management Agreements with
respect to, as well as purchase the non-dental assets of, additional practices.
In addition, the Company intends to lend money to PAs to fund the purchase of
the assets of additional dental practices. The Company plans to finance these
activities through a combination of the net proceeds of this Offering, cash flow
from operations, bank financing and issuances of Common Stock. See "Use of
Proceeds."

Based upon the Company's anticipated needs for loans and advances to PAs,
acquisition of non-dental assets of dental practices, capital expenditures, the
purchase of the capital stock of Profit and general corporate purposes,
management believes that the combination of existing cash, cash flow from
operations, available credit lines and the net proceeds received from this
Offering will be sufficient to meet its capital requirements through 1998.

INFLATION

Inflation has not had a significant impact on the Company in the past
three years nor is it expected to have a significant impact in the foreseeable
future.

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<PAGE>

BUSINESS

GENERAL

Dental Care Alliance, Inc. provides management and licensing services to
dental practices in Florida and Michigan. The Company currently provides
services to 23 Dental Centers, 20 of which are Managed Dental Centers, and three
of which are Licensed Dental Centers. Management services include financial,
accounting, billing, training, efficiency and productivity enhancement,
recruiting, team building, marketing, advertising, purchasing, collection and
other services, as well as the provision of management and administrative
personnel. Licensing services include marketing, advertising and purchasing. The
Company currently is expanding in Florida and Michigan and intends to
selectively expand into new markets. See "The Company" and Note 1 to the
Consolidated Financial Statements for information relating to the history of the
Company.

THE DENTAL SERVICES INDUSTRY

The dental services industry in the United States is highly fragmented.
According to the ADA, in 1994 dental services in the United States were provided
by approximately 153,000 dentists, 87.7% of whom practiced alone or with one
other dentist. These solo practitioners and small group practices have
traditionally managed all aspects of their dental practices, including the
administrative, purchasing, accounting, marketing, recruiting and business
development functions.

Several factors are contributing to the increased formation of larger group
practices. Dental practices are becoming increasingly complex to manage due, in
part, to the shift to third-party reimbursement. Other contributing factors
include the economies of scale achievable in such areas as administration,
purchasing and advertising, the need for cost-effective management of patient
care, the desire to capture revenues from higher-margin specialty procedures
which would otherwise be referred to independent specialists, and the growing
importance of capital resources to acquire and maintain state-of-the-art dental
equipment, clinical facilities and management information systems.

A major factor driving consolidation of dental providers is the increasing
prevalence of third-party payor programs. The number of individuals covered by
private dental insurance, including various managed care and indemnity plans,
has increased and is expected to increase further as health insurers attempt to
gain a competitive advantage by offering dental insurance packages to present
and prospective members, enabling employers to add dental care to benefits
packages at moderate incremental cost.

Despite the growth in private dental insurance, according to the National
Association of Dental Plans in 1995 approximately 54% of the United States
population was not covered by any type of private or government funded dental
insurance. This uninsured population includes lower income individuals who
cannot afford a basic level of dental services and individuals who typically
obtain dental services as needed on a fee-for-service basis. To address the
dental care needs of the lower income segment of the uninsured population,
Medicaid HMOs have begun offering preventive dental services as a standard
feature to plan members.

The Company anticipates that as the number of managed care plans and
government funded programs providing dental insurance grows, pressures to
contain costs will increase, as has been the case in many other sectors of the
health care industry. Such cost containment pressures will likely place solo
practitioners and small dental group practices at a significant disadvantage.
Furthermore, in order to properly negotiate and administer dental managed care
contracts, dental care providers must have management expertise and
sophisticated information systems which often exceed the capabilities of sole
practitioners and small dental practice groups.

BUSINESS STRATEGY

The Company believes it is well-positioned to respond successfully to
recent trends driving dental provider consolidation. The Company's objective is
to become a leading dental practice management

32
<PAGE>

company in each of its target markets. To achieve this objective the Company
seeks to grow rapidly through a combination of internal growth and external
expansion. The key elements of its internal growth strategy are to: (i)
increase revenues and operating income at Managed Dental Centers primarily
through the implementation of customized marketing and productivity improvement
programs and the integration of specialty service providers into its network,
(ii) facilitate long-term patient relationships by stressing professionalism
and the provision of high quality care, and (iii) recommend adjustments to the
third-party payor mix at each Managed Dental Center to maximize productivity
and respond to local market conditions. The key elements of its external
expansion strategy are to: (i) identify potential Managed Dental Centers which
have the necessary characteristics to excel in their specific local market,
(ii) increase market share in current markets by entering into Management
Agreements with additional high quality dental practices, and (iii) expand into
new markets by entering into Management Agreements with well-established
practices that can serve as platforms for further expansion into new markets.

INTERNAL GROWTH STRATEGY

/bullet/ INCREASE REVENUES AND OPERATING INCOME AT MANAGED DENTAL
CENTERS. The Company focuses on increasing revenues and operating income at
its Managed Dental Centers primarily through the implementation of
marketing programs and improvements in productivity and expansion into
specialty dental services. Dr. Steven R. Matzkin, the Company's Chairman of
the Board, President and Chief Executive Officer, has invested over 13
years developing a flexible and analytically driven management approach
which has been applied to a wide variety of dental practices, including
urban, suburban, start-up, mature, fee-for-service and managed care
practices. The Company uses this management approach to design and
implement an integrated marketing, staffing and scheduling program to
address the specific needs of each of its Managed Dental Centers. These
programs are designed to: (i) focus the Affiliated Dentists and dental
hygienists on the provision of high quality dental care; (ii) maximize
revenue per Managed Dental Center through the implementation of marketing,
case presentation, public relations and patient-calling programs; (iii)
increase market share by recruiting local dental specialists (such as
orthodontists, periodontists and oral surgeons) to be employed at the
Managed Dental Centers, thereby increasing total revenue per Managed Dental
Center and precluding the need to refer certain types of dental procedures
to third parties outside of the Company's network and (iv) increase the
capacity for patient flow through incremental efficiencies, training and,
if necessary, facility expansion. The Company closely monitors and analyzes
the financial and operational performance of each Managed Dental Center and
regularly makes refinements to each action plan. The Company believes that
its broad practice management experience and flexible management approach
favorably position the Company to capitalize on emerging trends in the
dental services industry and adapt to future industry changes.

/bullet/ FACILITATE LONG-TERM PATIENT RELATIONSHIPS. The Company believes
that its Managed Dental Centers can increase patient satisfaction and
retention by providing patients with high quality dental care at reasonable
fees. Accordingly, the Company stresses professionalism and quality care
from the entire staff at the Managed Dental Centers. The Company encourages
frequent training of its staff and Affiliated Dentists and other dental
professionals. The Company systematically tracks patient visits and
provides the Managed Dental Centers with detailed patient information to
assist them in their efforts to deliver consistently high quality care.

/bullet/ RECOMMEND ADJUSTMENTS TO THE THIRD-PARTY PAYOR MIX. The Company
recommends adjustments to a Managed Dental Center's patient mix among
individuals, public and private payors. The Company generally targets
fee-for-service revenues, which include fees paid by indemnity insurers and
direct patient billings, and supplements that with managed care contract
revenue. The Company closely monitors its Managed Dental Centers' payor
mixes in an effort to maximize the productivity of the Affiliated Dentists
and other dental professionals and the utilization of the facilities.

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<PAGE>

EXTERNAL EXPANSION STRATEGY

/bullet/ IDENTIFY POTENTIAL MANAGED DENTAL CENTERS. The Company targets
dental practices that have the characteristics necessary to excel in their
specific local markets. The Company initially reviews basic information on
each candidate practice, including location, revenue, payor mix, and number
of operatories and active patients. If the initial review indicates that
the practice merits additional consideration, the Company performs an
in-depth financial and operational analysis of the practice. As part of
this review, the Company uses analytical models that it has developed for
each practice type to evaluate the performance potential of the practice.
The Company examines the results of its analysis and considers other
qualitative factors to determine whether an affiliation would be mutually
beneficial.

/bullet/ INCREASE MARKET SHARE IN CURRENT MARKETS. The Company generally
seeks to expand in its current markets by adding high quality practices and
retaining the dentists who are currently employed in such practices. The
establishment of a concentrated network of affiliated dental care providers
in each of its markets enables the Company to leverage its marketing
efforts and infrastructure. The Company seeks to utilize its brand name
recognition and reputation to attract dental professionals to its network.
The Company also seeks to increase its market share by recruiting local
specialists (such as orthodontists, periodontists and oral surgeons) to
work with the Managed Dental Centers, thereby increasing total revenue per
Managed Dental Center and precluding the need to refer certain types of
dental procedures to third parties outside of the Company's network.

/bullet/ EXPAND INTO NEW MARKETS. The Company intends to utilize its
extensive experience in entering into Management Agreements with Managed
Dental Centers to selectively expand into new markets. The Company expects
to focus initially on contiguous areas in the Southeast and Midwest
regions. The Company has developed specific criteria consistent with its
approach to practice management for evaluating new markets. The Company
seeks to enter into Management Agreements with well-established practices
employing highly respected dental practitioners to achieve significant
market presence within a relatively short time frame, quickly understand
the new market and achieve the critical mass necessary to expand profitably
into the new market.

SERVICES AND OPERATIONS

The Company provides management and administrative services to the Managed
Dental Centers but does not provide dental care services. The Company provides,
supervises or facilitates financial, accounting, billing, training, efficiency
and productivity enhancement, recruiting, team building, marketing, advertising,
purchasing, collection and other services for the PAs and employs the Managed
Dental Centers' management and administrative personnel. The PAs employ and
maintain full control over the Affiliated Dentists, hygienists and other dental
professionals and set standards of care in order to promote the provision of
high quality dental care. The individual PAs are responsible for compliance with
state and local regulations of the practice of dentistry and with licensing and
certification requirements, and each PA is responsible for acquiring and
maintaining professional liability insurance. The Company's services can be
grouped into three broad categories: personnel services, operational services
and financial services.

PERSONNEL SERVICES

TRAINING AND EDUCATION. The individual PAs employ, supervise and train all
dentists, dental hygienists and other dental professionals at each Managed
Dental Center. The Company, while not engaged in the practice of dentistry,
assists the individual PAs in training and educating professional personnel by
providing analyses that allow the PAs to determine training needs. All
personnel, other than dentists, dental hygienists and other dental
professionals, are supervised and trained by the Company or its subcontractor.
The Company also helps to coordinate group meetings and seminars at which the
PAs provide continuing education to their professionals. In addition, the
Company

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encourages and facilitates team building of the staffs through regularly
scheduled staff meetings and social events. Each individual PA maintains full
control over the practice of dentistry by the dental professionals it employs
and sets standards of practice in order to promote quality dental care.

RECRUITING. The Company continually assists the PAs in recruiting dentists
to add to its network as Affiliated Dentists. Such recruiting takes place at
dental schools through the Company's contacts at such schools, at regional
dental conventions and through advertising in regional and national dental
publications. Recruitment of general dentists, specialists and other
professionals is the primary responsibility of the Company's Director of
Development.

HUMAN RESOURCE MANAGEMENT. The Company is responsible for the hiring,
retention, salary and bonus determination, job performance-related training and
other similar matters affecting Company employees, which include non-dental
professionals providing services to the PAs. Services provided by the Company
include (i) payroll administration, including recordkeeping, payroll processing,
making payroll tax deposits, reporting payroll, taxes and related matters; (ii)
risk management, including on-site safety inspections and monitoring, training,
and workers' compensation claim management and administration; (iii)
administering benefit plans; and (iv) the provision of human resource materials,
consulting and expertise on other human resource issues. In Florida, a
professional employer organization (the "Co-Employer") assists the Company in
providing these services. The Co-Employer arrangements allow the Company to
improve productivity and profitability by relieving it of certain burdens
associated with employee administration, helping it to manage better certain
employment-related risks, improving cash management with respect to
payroll-related expenses and enabling it to provide certain benefits on a
cost-effective basis. The Company intends to assume the responsibilities of the
Co-Employer when it becomes operationally efficient for it to do so. See
"Business--Employees."

OPERATIONAL SERVICES

MANAGEMENT INFORMATION SYSTEMS. The Company utilizes its information
systems to track data related to each Managed Dental Center's operations and
financial performance. Billing and collection information is compiled on a daily
basis, enabling the Company to monitor financial performance and operational
efficiency. The Company generates reports for each Managed Dental Center
containing information as to every visit, charge and procedure. These reports
are reviewed first by the Company's Chief Financial Officer and then by the
Operations Department which analyzes performance and efficiencies, particularly
the ratio of dollars per patient. These reports are also given to the Dental
Director who reviews them for inefficiencies and evaluates how performance may
be improved. The Company provides an analysis of these results to the PAs and
recommends specific measures to improve the financial performance of the Managed
Dental Centers. The analysis enables a Managed Dental Center to improve its
financial performance by making periodic adjustments in marketing and
operations. See "Risk Factors--Risks Associated with Implementation of New
Management Information Systems" for a discussion of certain risks associated
with the Company's implementation of new management information systems.

QUALITY ASSURANCE. Prior to the execution of a Management Agreement with a
new PA, the Company evaluates the dental practice to determine in which areas,
if any, the proficiency level of the dental professionals employed by the PA
can be enhanced. The Company also works closely with the Dental Directors to
assure that quality dental services are being provided. While supervision of
dental services is the responsibility of the Dental Directors, the Company
provides Dental Directors with reports that help them evaluate performance. For
example, certain dental laboratories monitor the case quality of the Affiliated
Dentists in performing particular tasks. Such monitoring allows the Company and
the PAs to notify the appropriate Dental Director if any procedure is being
done inefficiently at a particular Managed Dental Center or by a particular
Affiliated Dentist or other dental professional. The Dental Director then works
directly with the dental professionals at the Managed Dental Center to identify
the reason for the inefficiency and to implement solutions, such as additional
training, to improve performance in that area. The Company also performs
patient surveys to monitor patient satisfaction, and the Dental Directors
periodically audit patient charts and provide advice to the general

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dentists and dental specialists employed by the PAs. See "Business--Services
and Operations-- Management Information Systems" and "--Dental Directors."

SCHEDULING. The Company implements patient scheduling systems at each of
the Managed Dental Centers. These systems enable the Company to devise daily
patient schedules that maximize the efficiency of the dental professionals.
Patient visits are scheduled in small time increments based upon the Company's
knowledge of the time required for each type of dental procedure. In addition,
the office hours of each Managed Dental Center are tailored to meet the needs
of its patient population. The Company believes that its scheduling systems
result in more efficient patient flow, thereby increasing productivity and
patient volume.

ADVERTISING AND MARKETING. The Company assists in developing and
implementing customized marketing plans tailored to the specific characteristics
of each Dental Center's market. Such marketing may include the use of local
radio, TV and print advertising, and other marketing promotions. In some
instances the Company seeks to promote brand name recognition of its Managed
Dental Centers through use of regional brand names owned by the PAs. For
example, in Florida, several of the Company's Managed Dental Centers use the
name "Advanced Dental Care." In some cases, Dental Centers are marketed under
the names used by the practices prior to their affiliation with the Company to
take advantage of the practices' existing market position. Most states,
including Florida and Michigan, place certain restrictions on the ability of
corporations such as the Company to provide advertising and marketing services
to the professional associations or corporations organized in such states. See
"Risk Factors--Governmental Regulation--Advertising Restrictions."

PURCHASING AND DISTRIBUTION. The size of the Company's network enables the
Company to purchase dental supplies, laboratory services, equipment, insurance,
management information systems, advertising and office furniture at reduced
costs. Dental equipment supplies are obtained by the Company as directed by the
PAs and administrative supplies are purchased by the Company pursuant to
high-volume supply contracts with favorable price terms. The Company monitors
inventory levels and adjusts distribution to reduce carrying costs on inventory.

FINANCIAL SERVICES

THIRD-PARTY PAYOR MANAGEMENT. The Company examines various factors to
determine which third-party payors' assignments it will recommend at each
Managed Dental Center. Factors considered by the Company in making this
recommendation include the types of procedures that are generally performed at
the Managed Dental Center, the geographic area served by the particular plan
and the demographic characteristics of the typical plan participants. Some
element of managed care is present at most Managed Dental Centers, although
generally not as the primary source of revenues. The Company assists the
Managed Dental Centers in the negotiation of contracts with third-party payors.
As a result of its size, the Company is often able to negotiate better terms
for its Managed Dental Centers with third party payors than would be available
to solo practitioners or small group dental practices.

ACCOUNTING SERVICES. The Company provides Managed Dental Centers with a
full range of accounting services, including preparation of financial
statements, management of accounts payable, oversight of accounts receivable,
verification of purchase orders, payroll administration and tax services. In
addition, the Company assists each Managed Dental Center in the preparation of
operating and financial budgets.

THIRD-PARTY FINANCING. The Company has contracts with multiple
non-recourse third-party financing companies that enable the Managed Dental
Centers to offer various third-party financing options to their patients. At
the time a patient receives dental treatment and upon credit approval of the
patient by the third-party financing company, the PA is paid at varying
discounts to the full price of its services, based upon financing terms. The
financing company is subsequently responsible for all billing and collection
and has no recourse for payment against the Managed Dental Center.

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DENTAL CENTER LOCATIONS

The following table lists the locations of the Company's Managed Dental
Centers and the dates on which Management Agreements between the PAs that own
each Managed Dental Center and the Company were first entered into.

DATE OF
LOCATION MANAGEMENT AGREEMENT
-------- --------------------
Sarasota, Florida .................. November 1993
Largo, Florida ..................... November 1993
Port Charlotte, Florida ............ November 1993
Englewood, Florida ............... March 1994
Fort Myers, Florida ............... October 1994
Sarasota, Florida .................. March 1995
Kissimmee, Florida ............... April 1995
Bradenton, Florida ............... July 1995
Orlando, Florida .................. June 1996
Tampa, Florida ..................... June 1996
Ocoee, Florida ..................... June 1996
Clearwater, Florida ............... June 1996
Tampa, Florida (North) ............ April 1997
Flint, Michigan .................. July 1997
Detroit, Michigan (Downtown) ...... July 1997
Detroit, Michigan (East) ......... July 1997
Detroit, Michigan (North) ......... July 1997
Westland, Michigan ............... July 1997
Tallahassee, Florida ............... August 1997
St. Petersburg, Florida ............ September 1997

The following table lists the locations of the Company's Licensed Dental
Centers and the dates on which License Agreements between the PAs that own each
Licensed Dental Center and the Company were first entered into.

DATE OF
LOCATION LICENSE AGREEMENT
-------- -----------------
Orlando, Florida ............ September 1994
Deltona, Florida ............ September 1994
Winter Springs, Florida ...... October 1996

MANAGEMENT AGREEMENTS

The Company has entered into Standard Management Agreements with 14 PAs
pursuant to which the Company or its assigns are the exclusive business
managers, to the extent allowable by law, of the associated Managed Dental
Centers. The Company plans to continue to use the Standard Management Agreement
to the extent possible as it enters into arrangements with additional dental
practices. However, the terms of future agreements may differ according to
market conditions and the statutory and regulatory requirements of the
particular state in which the dental practice is located. The Company has
entered into management agreements with respect to six additional dental
practices on terms different from those of the Standard Management Agreements.
Descriptions of these Management Agreements are set forth below.

Under the Standard Management Agreements, the Company provides
comprehensive administrative and business services and support to the PAs. The
Company, among other things, (i) assists in the identification of areas in
which the performance of the Managed Dental Centers and their dental
professionals can be improved to increase revenues and operating income, (ii)
provides,

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maintains and repairs all offices, equipment and furnishings, (iii) employs all
non-professional personnel necessary for the operation of the Managed Dental
Centers, (iv) provides payroll services, (v) implements standard business
systems and procedures and provides or facilitates systems and efficiencies
training, (vi) orders all general business inventory and supplies required by
the Managed Dental Centers and handles accounts payable, (vii) establishes and
maintains information systems and provides accounting and bookkeeping services,
(viii) monitors compliance with rules and regulations applicable to the Managed
Dental Center business, (ix) provides marketing assistance and (x) provides
assistance in billing and collections, all to the extent permitted by law.

The Standard Management Agreements provide that the PAs are responsible
for, among other things, (i) employing and supervising all Affiliated Dentists
and dental hygienists, (ii) complying with all laws, rules and regulations
relating to Affiliated Dentists and dental hygienists, (iii) participating in
quality assurance/utilization review programs, (iv) maintaining proper dental
patient records, (v) obtaining and maintaining professional liability insurance
with limits of not less than $300,000 per claim and aggregate policy limits of
not less than $1.0 million and (vi) any other requirements to carry out the
practice of dentistry.

Under the terms of the Standard Management Agreements, the PAs are
required to indemnify, hold harmless and defend the Company from and against
any and all claims from negligent or intentional acts or omissions, including
the performance of dental services, by the PAs and their employees. The Company
is required to indemnify, hold harmless and defend the PAs from and against any
and all claims resulting from negligent or intentional acts or omissions by the
Company.

As compensation for its management services under the Standard Management
Agreements, the PAs pay the Company a management fee equal to 74% of the Net
Collected Revenues of the PA. The Company pays all of the operating and
nonoperating expenses incurred by the PAs except for (i) salaries and benefits
to the Affiliated Dentists and dental hygienists, (ii) licensing fees paid to
the Company, (iii) debt and asset carrying costs related to the acquisition of
the dental practice, and (iv) any other direct cost to the PA not covered under
the Standard Management Agreement.

The Standard Management Agreements have 25 year terms, with automatic
annual one year renewals thereof, and are terminable by either party for cause
or upon the insolvency of the other party. In the event of a material default
by the PA or the PA owner, the Company has the option to cause the sale of all
of the stock or all of the assets of the PA to a licensed dentist designated by
the Company. The PA or the PA owner may terminate the agreement without cause
provided the practice is sold to a dentist acceptable to the Company. The
Standard Management Agreements provide that they shall be amended by the
parties in the event of any regulatory matters affecting the validity of the
Standard Management Agreement in a manner necessary to bring the Standard
Management Agreements into compliance.

During the terms of the Standard Management Agreements, the Company and
the PAs agree not to disclose certain confidential and proprietary information
regarding the other. The PAs are required under the Standard Management
Agreements to use their best efforts to enter into and enforce written
employment agreements with each of their professional employees containing
covenants not to compete with the PA in a specified geographic area for a
specified period of time, generally from one to three years after termination
of the employment agreement. The employment agreements generally provide for
injunctive relief in the event of a breach of the covenant not to compete.
However, the Company's ability to enforce such covenants is uncertain. See
"Risk Factors--Non-Competition Covenants."

One PA in Florida is party to a Management Agreement substantially in the
same form as the Standard Management Agreement, except that (i) the PA pays the
Company a monthly management fee of 55% of its net profits (defined as total
collected revenues on a cash basis less any patient refunds and less practice
expenses, including nonprofessional staff expenses), and (ii) this agreement
expires in 2003. In addition, the agreement provides that the PA may, during
the period commencing on October 20, 1998 and ending 90 days thereafter,
terminate the agreement by paying to the Company an

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<PAGE>

amount equal to $185,460 less the amount by which the aggregate fees paid to
the Company pursuant to such Management Agreement during either or both of the
successive one year periods following October 20, 1996 exceeds $100,000, and
satisfying other conditions set forth therein. At June 30, 1997, the aggregate
amount of such fees paid was approximately $87,000.

Another PA in Florida is party to a Management Agreement substantially in
the same form as the Standard Management Agreement, except that (i) the PA pays
to the Company a monthly management fee of 50% of its net profits (defined as
total collected revenues on a cash basis less any patient refunds and less
practice expenses, including non-professional staff expenses) and (ii) this
agreement expires in 2003.

In addition, in July 1997, the Company entered into a global Management
Agreement to manage four Managed Dental Centers in Michigan substantially in
the same form as the Standard Management Agreement, except that it expires in
July 2005. The Company subcontracts the day-to-day management functions of the
four Michigan Dental Centers subject to this agreement to an affiliate of the
owner of the applicable PAs. As a result, the Company pays a fee to such
subcontractor equal to 80% of the net profits of these Managed Dental Centers
(as defined in the Administrative Service Subcontract Agreement with such
subcontractor), after certain adjustments.

LICENSE AGREEMENTS

Thirteen of the Managed Dental Centers have entered into short form
license agreements and seven Managed Dental Centers and each of the
professional associations which own the three Licensed Dental Centers have
entered into long form license agreements with the Company (collectively, the
"License Agreements"). The long form license agreements generally have terms of
five years, with automatic five year renewal terms, while the short form
license agreements have terms that are coterminous with the related Management
Agreements. In consideration for the payment of a monthly license fee, which
has generally ranged from $600 to $1,200, the licensee is entitled to identify
its Dental Center as a member of the Company's network, participate in
marketing programs, utilize the Company's discounted purchasing capabilities,
and use one or more of the Company's service marks, logo types and commercial
symbols (collectively, the "Licensed Symbols"). The long form license
agreements also provide for a monthly advertising fee of $1,000 which, if
collected would be used for general marketing, advertising and promotion of the
Company's network and the Licensed Symbols. The Company has not collected any
such monthly advertising fees and does not intend to do so in the future. The
manner in which the licensee intends to use the Licensed Symbols must be
approved in advance by the Company.

The short form license agreements terminate immediately upon the
termination of the related Management Agreement, and termination is governed by
the provisions thereof. The Company may terminate the long form license
agreements upon cancellation of, or failure to renew, the lease for the
premises of the related Dental Center, the bankruptcy of the associated
licensee or upon the occurrence of certain other events set forth in the
License Agreement. The long form licensees may terminate their license
agreements for cause at any time or without cause during the 30-day period
commencing on the first anniversary of the execution of the agreement. Any
other termination by the long form licensee constitutes a breach of the
agreement.

DENTAL DIRECTORS

The Company divides the markets in which it operates into regions, each of
which is under the supervision of an Affiliated Dentist (each, a "Dental
Director"). Currently, there are four regions and four Dental Directors, each
employed by PAs within their region. The Company expects that additional
regions and Dental Directors will be added by the PAs as the Company enters
into Management Agreements with additional PAs in new markets.

The primary purpose of the Dental Directors is to promote the provision of
high quality dental care and to refine operating efficiencies at the Managed
Dental Centers. Dental Directors continually

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<PAGE>

monitor and evaluate the performance of the Affiliated Dentists and the Managed
Dental Centers within their region by identifying operational inefficiencies
and implementing solutions to address these inefficiencies. Each Dental
Director performs periodic spot checks in which the performance of each Managed
Dental Center is scrutinized in detail. The Dental Directors also assist the
PAs in their region with the hiring, training and supervision of dental
professionals. The Company believes that close relationships among the Dental
Directors, the PAs they supervise, and the Company allows for the
identification of specific inefficiencies, the quick remediation of such
inefficiencies and the realization of the benefits produced by the Company's
management approach.

GOVERNMENTAL REGULATION

GENERAL OVERVIEW. The Company's operations and relationships are subject
to a variety of governmental and regulatory requirements relating to the
conduct of its business. The Company is also subject to laws and regulations
which relate to business corporations in general. The Company believes that it
exercises care in an effort to structure its practices and arrangements with
Dental Centers to comply with relevant federal and state law and believes that
such arrangements and practices comply in all material respects with all
applicable statutes and regulations. The health care industry and dental
practices are highly regulated, and there can be no assurance that the
regulatory environment in which the Company operates will not change
significantly and adversely in the future. In general, regulation of health
care providers and companies is increasing. See "Risk Factors--Governmental
Regulation."

There can be no assurance that the laws and regulations of the states in
which the Company operates or may desire to operate in the future will not
change or be interpreted in the future to restrict or adversely affect the
Company's relationships with Affiliated Dentists or the operation of Managed
Dental Centers. Proposals that may be introduced, could, if adopted, have a
material adverse effect on the Company's financial condition and results of
operations. It is uncertain what legislative programs, if any, will be adopted
in the future, or what actions Congress or state legislatures may take
regarding health care reform proposals or legislation.

Every state imposes licensing requirements on dentists and on their
facilities and services. In addition, many states require regulatory approval,
including certificates of need, before establishing certain types of health
care facilities, offering certain services or making expenditures in excess of
statutory thresholds for health care equipment, facilities or programs. The
execution of a management agreement with a dental practice does not in most
states require any health care regulatory approval on the part of the
management company or the dental practice. However, in connection with the
expansion of existing operations and the entry into new markets, the Company
and the Dental Centers may become subject to additional and more restrictive
regulation. See "Risk Factors--Governmental Regulation."

HEALTH CARE REGULATIONS AFFECTING THE COMPANY. Business arrangements
between dentists and business corporations that provide dental practice
management services are regulated extensively at the state and federal levels,
including regulation in the following areas:

CORPORATE PRACTICE OF DENTISTRY. The laws of many states prohibit
corporations that are not owned entirely by dentists from employing
dentists (and in some states, dental hygienists and dental assistants),
having control over clinical decision-making, or engaging in other
activities that are deemed to constitute the practice of dentistry. Florida
law specifically prohibits non-professional for profit corporations from
employing dentists and dental hygienists, exercising control over patient
records, and making decisions relating to clinical matters, office
personnel, hours of practice, pricing, credit, refunds, warranties and
advertising. Michigan law imposes similar restrictions on the practice of
dentistry by non-professional for profit corporations.

Most states, including Florida and Michigan, also prohibit
non-professional corporations from owning, maintaining or operating an
office for the practice of dentistry. These laws have generally been
construed to permit arrangements under which the dentists are not employed
by or otherwise

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<PAGE>

controlled as to clinical matters by the party supplying facilities and
non-professional services. Both Florida and Michigan law require that
dentists or their professional corporations maintain complete care, custody
and control of all equipment and materials used in the practice of
dentistry. The Management Agreements provide that the Company shall not
exercise control over any matters that would violate the requirements of
Florida or Michigan law, as applicable. However, if the Company is deemed
to interfere with the practice of dentistry at the PAs or the care, control
and custody of the materials and equipment used in such practice, the
Company could be materially adversely affected.

FEE-SPLITTING AND ANTI-KICKBACK LAWS. Many states also prohibit
"fee-splitting" by dentists with any party except other dentists in the
same professional corporation or practice entity. In most cases, these laws
have been construed as applying to the practice of paying a portion of a
fee to another person for referring a patient or otherwise generating
business, and not to prohibit payment of reasonable compensation for
facilities and services (other than the generation of referrals), even if
the payment is based on a percentage of the practice's revenues. The
Florida and Michigan fee-splitting laws prohibit paying or receiving any
commission, bonus, kickback, or rebate, or engaging in any split-fee
arrangement in any form with a dentist for patient referrals to dentists or
other providers of health care goods and services. In addition, Florida
regulations specifically require that fees paid to entities providing
management services to dental practices be at fair market value rates. The
Florida and Michigan courts have not considered whether the Florida and
Michigan fee-splitting statutes prohibit the payment by a dental practice
of a management fee that is based on a percentage of net income or whether
such a fee arrangement represents the fair market value of services
rendered. However, in considering a fee-splitting statute applicable to
chiropractors, a Florida court of appeals held that such statute does not
prohibit the payment of a management fee that is based on a percentage of
the gross income of the professional practice if the managing entity does
not make referrals to the chiropractic practice.

The Florida Board of Medicine recently considered the issue of whether a
physician practice is permitted to enter into a management agreement
pursuant to which the managing entity earns a management fee which includes
a percentage of the practice's net income as consideration for providing
certain management and operational services, including developing
relationships with other physicians, hospitals and third party payors. The
Florida Board of Medicine issued an opinion indicating that such a
management agreement is prohibited by applicable fee-splitting statutes.
However, such order has been stayed pending its appeal to the Florida
courts. Although the Florida Board of Medicine's decision, if upheld, will
not apply to dental practices, a person may be more likely to petition the
Board of Dentistry seeking a determination as to the application of fee-
splitting restrictions to dentists in the event that the Board of
Medicine's order is upheld. In addition, the court considering the appeal
of the Board of Medicine's order could reach conclusions or make statements
that affect the application of fee-splitting provisions applicable to
dental management agreements. Pursuant to the terms of the Management
Agreements, in the event such a Management Agreement were determined to be
in violation of applicable law, the agreement would have to be amended in a
manner that complies with applicable law and preserves, to the greatest
extent possible, the economic interests of the parties thereto.

In addition, most states have laws prohibiting paying or receiving any
remuneration, direct or indirect, that is intended to induce referrals for
health care items or services, including dental items and services. Federal law
also prohibits the offer, payment, solicitation or receipt of any form of
remuneration in return for the referral of patients covered by federally funded
health care programs such as Medicaid, or in return for purchasing, leasing,
ordering or arranging for the purchase, lease or order of any item or service
that is covered by a federal program. Percentage-based management agreements
are not within regulatory fraud and abuse safe harbors relating to items and
services furnished under governmental health care programs. The fact that an
arrangement is not within a safe harbor does not mean that it violates the
anti-kickback provisions applicable to services provided under governmental
health care programs. Rather, such arrangements are subject to scrutiny based
on the totality of circumstances relating to such arrangements. As a result, it
is possible that the arrangements

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between the Company and PAs would be challenged by governmental enforcement
authorities. Because the Management Agreements provide that the Company will
not engage in direct marketing to potential sources of business, but will only
assist the individual PAs in these endeavors by providing training, marketing
materials and technical assistance, the Company believes that its services
under the Management Agreements comply with applicable anti-kickback laws. Such
laws would be violated and the Company could be materially adversely affected
if it were determined that the Affiliated Dentists make referrals to entities
that are related or affiliated to the Company or its owners for the purpose of
securing, directly or indirectly, payments or other remuneration.

ADVERTISING RESTRICTIONS. Many states, including Florida and Michigan,
prohibit dentists from using advertising which includes any name other than
their own, or from advertising in any manner that is likely to lead a person to
believe that a non-dentist is engaged in the practice of dentistry. Florida law
also requires all advertising to identify the dentist who assumes total
responsibility for the advertisement and may not include the name of a person
who is neither actually involved in the practice of dentistry at the advertised
location nor an owner of the practice being advertised. In addition, Michigan
and Florida law impose additional restrictions on advertisements by
specialists.

LIMITATIONS ON DELEGATION. Most states, including Florida and Michigan,
regulate the manner in which dentists delegate certain tasks to non-dentists.

ANTI-FRAUD LAWS. State and federal laws prohibit any person from
knowingly and willfully making any false statement or misrepresentation of
a material fact in seeking payment for items or services. In addition,
federal laws impose civil monetary penalties for filing claims that the
filing party "should know" are not appropriate under rules applicable to
governmentally funded health care programs.

SELF-REFERRAL LAWS. Many states, subject to certain exceptions, prohibit
referrals for certain health services if the referring dentist has an
ownership interest in, and/or a compensation arrangement with, the entity
receiving the referral. Many states require the dentist to disclose such
interests to patients.

Federal law, subject to certain exceptions, prohibits certain Medicare
and Medicaid referrals to entities in which a dentist has an ownership
interest or with which the dentist has a compensation arrangement.
Significant prohibitions against dentist self-referrals for services
covered by the Medicaid program was enacted, subject to certain exceptions,
by Congress in the Omnibus Budget Reconciliation Act of 1993. These
prohibitions, commonly known as Stark II, amended prior physician and
dentist self-referral legislation known as Stark I (which applied only to
clinical laboratory referrals) by dramatically enlarging the list of
services and investment interests to which the self-referral prohibitions
apply. Effective January 1, 1995, Stark II prohibits a physician or
dentist, or a member of his or her immediate family, from making referrals
for certain "designated health services" to entities in which the physician
or dentist has an ownership or investment interest, or with which the
physician or dentist has a compensation arrangement. "Designated health
services" include, among other things, clinical laboratory services,
radiology and other diagnostic services, radiation therapy services,
durable medical equipment, prosthetics, outpatient prescription drugs, home
health services and inpatient and outpatient hospital services. Stark II
prohibitions include referrals within the physician's or dentist's own
group practice (unless such practice satisfied the "group practice"
exception) and referrals in connection with the physician's or dentist's
employment arrangements with the PA (unless the arrangement satisfies the
employment exception). Stark II also prohibits billing the Medicaid program
for services rendered following prohibited referrals. Noncompliance with,
or violation of, Stark II can result in exclusion from the Medicaid program
and civil and criminal penalties. The Company believes that its and the PAs
operations as presently conducted do not pose a material risk under Stark
II, primarily because the Company and the PAs do not provide "designated
health services." Even if the Company or the PAs were determined to provide
"designated health services," the Company believes its and/or the PAs
activities would be protected under the employment and group practice
exceptions to Stark II.

42
<PAGE>

Nevertheless, there can be no assurance that Stark II will not be
interpreted or hereafter amended in a manner that has a material adverse
effect on the Company's operations as presently conducted.

Stark II and most state self-referral laws have exceptions for in-office
services provided under the direct supervision of the dentist. In addition,
third party payor contracts may require dentists to provide an even greater
degree of supervision over certain in-office ancillary services in order to
permit the applicable PA to bill for such services. The Company believes
that its arrangements with Affiliated Dentists comply with these laws and
third party payor agreements. There is no assurance that changes in these
laws or their interpretation will not affect the Company's current or
future activities.

Michigan's self-referral law is not limited to certain designated health
services and it recognizes no statutory safe harbors or exceptions.
Michigan prohibits directing or requiring an individual to purchase or
secure a drug, device, treatment, procedure or service from another person,
place, facility or business in which the referring party has a financial
interest. Although such law does not provide for criminal sanctions,
failure to comply with such law by a dentist could result in revocation of
the dentist's license. The Michigan self-referral law has been subject to
little interpretation. Currently, several different amendments to this law
have been proposed, which if adopted, may in the future provide additional
interpretative guidelines as to the application of Michigan's self-referral
prohibition. To date, however, the term "financial interest" has only been
interpreted to mean a direct "ownership interest" and has not been
interpreted to mean a "compensation interest," such as an employment or
personal services agreement. The legality of the Company's operations under
Michigan's self-referral law is dependent upon whether the
interrelationships among the entities are such that they are considered to
have "financial interests" in each other, and whether the services
performed by the entities for each other are considered to have been
directed or required by the referrer. Should Michigan law in the future be
interpreted and applied in such a way, it would have a material adverse
effect on the Company.

REGULATORY COMPLIANCE. The Company believes that health care regulations
will continue to change, and as a result, regularly monitors developments
in health care law. The Company expects to modify its agreements and
operations from time to time as the business and regulatory environment
change. However, there can be no assurance that any such change will not
adversely affect the ability of the Company to operate as it does currently
or to remain profitable in doing so.

The laws described above provide for civil and criminal penalties for
their violation. These laws have been subject to limited judicial and
regulatory interpretation. They are enforced by regulatory agencies that are
vested with broad discretion in interpreting their meaning. The Company's
agreements and activities have not been examined by federal or state
authorities under these laws and regulations. For these reasons, there can be
no assurance that a review of the Company's business arrangements or the
operation of the Managed Dental Centers will not result in determinations that
adversely affect the Company's operations or that the long-term Management
Agreements or certain of their provisions will be held valid and enforceable.
Further, the Company does not maintain a compliance plan. Compliance plans,
which have been adopted by many health care entities, help such entities
prevent, discover and correct violations or potential violations of law. In
addition, the penalties assessed against an entity that violates applicable
laws are likely to be reduced if such entity maintains and adheres to a
compliance plan.

In addition, these laws and their interpretation vary from state to state.
The laws and regulations of certain states into which the Company seeks to
expand may require the Company to change the form of relationships entered into
with dental professional associations or corporations in a manner that
restricts the Company's operations in those states.

43
<PAGE>

INSURANCE

The Company's business entails inherent risk of liability. The Affiliated
Dentists and dental hygienists employed by the PAs are involved in the delivery
of health care services to the public and accordingly, such individuals, the
PAs and the Company are exposed to the risk of professional liability claims.
Claims of this nature, if successful, could result in substantial damage awards
to the claimants that may exceed the limits of any applicable insurance
coverage. Insurance against losses related to claims of this type can be
expensive and varies widely from state to state. The Company is indemnified
under the Management Agreements for claims against the Company arising from the
performance of medical and dental services provided by the PAs. Successful
malpractice claims, however, could have an adverse effect on the Company's
profitability. The PAs and the Affiliated Dentists and other dental
professionals they employ maintain professional liability insurance with limits
of not less than $300,000 per claim and with aggregate policy limits of not
less than $1 million per dentist. The Company is a named insured in most cases.
The Company does not maintain separate liability insurance. While the Company
believes that the foregoing provides adequate liability insurance coverage,
there can be no assurance that a future claim or claims will not be successful
or, if successful, will not exceed the limits of available insurance coverage
or that such coverage will continue to be available at acceptable costs and on
favorable terms. See "Risk Factors--Risks of Providing Dental Services."

COMPETITION

The dental practice management segment of the dental services industry is
highly competitive and is expected to become increasingly competitive. The
primary bases of competition between dental practice management companies are
management expertise and experience, the elements of its operating strategy, the
opportunity for career enhancement of potential associated dentists and other
dental professionals, the size of the dental care network, the sophistication of
management information systems, liquidity, the terms of the management
agreements and name recognition. The Company currently competes with other
dental practice management companies in its existing markets, including Coast
Dental Services, Inc. in Florida. There are also a number of dental practice
management companies currently operating in other parts of the country which may
enter the Company's existing markets in the future. Many of such competitors and
potential competitors have substantially greater financial resources than the
Company, have established large dental practice networks, or otherwise enjoy
competitive advantages which may make it difficult for the Company to compete
against them or enter into additional Management Agreements on terms acceptable
to the Company. In addition, as the Company seeks to expand its operations into
new markets, it is likely to face competition from dental practice management
companies which already have established a strong presence in such markets.

The business of providing dental services is highly competitive in each of
the markets in which the Managed Dental Centers operate or in which operations
are contemplated. The primary bases of such competition are quality of care and
reputation, marketing exposure, convenience and traffic flow of location,
relationships with managed care entities, appearance and usefulness of
facilities and equipment, price of services and hours of operation. The
Affiliated Dentists compete with other dentists who maintain single or satellite
offices, as well as with dentists who maintain group practices, operate in
multiple offices or are members of competing dental practice management
networks. Many of those dentists have established practices and reputations in
their markets. In addition to competing against established practices for
patients, the Dental Centers compete with such practices in the retention and
recruitment of general dentists, specialists and hygienists to staff the Dental
Centers. If the availability of dentists begins to decline in the Company's
existing or targeted markets, it may become increasingly difficult to attract
and retain the dental professionals to staff the Dental Centers. There can be no
assurance that the Dental Centers will be able to compete effectively with such
other practices.

SERVICE MARKS

The Company has no registered service marks, trademarks, service names,
tradenames or logo.

44
<PAGE>

EMPLOYEES

The Company has entered into an agreement with an unrelated third party
Co-Employer pursuant to which all of the Company's administrative and support
staff located in each Florida Managed Dental Center as well as the Company's
corporate office management and staff are co-employed. At September 30, 1997,
the Company co-employed 79 persons, consisting of 34 dental assistants, 37
dental office staff, and eight executive and administrative staff. In addition,
each of the Florida PAs has entered into an agreement with the Co-Employer
pursuant to which such PA and the Co-Employer co-employ all professional staff
(all co-employees of the Company and the PAs are referred to hereinafter as the
"Co-Employees"). At September 30, 1997, such PAs, in the aggregate, co-employed
32 dental professionals, consisting of 19 dentists and 13 dental hygienists.
The Company or the PAs, as the case may be, are responsible for the hiring,
retention, salary and bonus determination, job performance-related training and
other similar matters affecting Co-Employees while the Co-Employer is
responsible for (i) payroll administration, including recordkeeping, payroll
processing, making payroll tax deposits, reporting payroll, taxes and related
matters, (ii) risk management, including on-site safety inspections,
monitoring, training and workers' compensation claim management and
administration, (iii) administering benefit plans and (iv) human resource
consulting and expertise on other human resource issues. The agreements with
the Co-Employer are terminable by either party without cause on 30 days written
notice, or for cause on 24 hours written notice. At September 30, 1997, the
Company employed 29 non-professional staff in Michigan and the Company's
subcontractor employed 34 non-professional staff in the Detroit area Managed
Dental Centers. At September 30, 1997, the Michigan PAs employed 29 dental
professionals, consisting of 13 dentists and 16 dental hygienists. See
"Business--Services and Operations--Human Resource Management."

LITIGATION

There are no material pending legal proceedings involving the Company.
Affiliated Dentists and PAs are from time to time subject to malpractice
claims. To the Company's knowledge, there are no material malpractice claims
pending against any Affiliated Dentist or PA. Any such proceedings or claims,
if successful, could result in damage awards exceeding, perhaps substantially,
applicable insurance coverage. See "Risk Factors--Risks of Providing Dental
Services."

PROPERTIES

The PAs, or in some cases the Company, presently lease between 1,200 and
10,000 square feet of office space for each of the Managed Dental Centers.
Rental payments for a leased Managed Dental Center range from approximately
$18,000 per annum to $144,000 per annum. The Company plans to continue to lease
rather than purchase space for the Managed Dental Centers to preserve the
Company's available capital. The Company intends to add Managed Dental Centers
to its network, which will result in additional office space under lease. See
"Certain Transactions."

The Company leases approximately 4,625 square feet of office space in
Sarasota, Florida for its corporate headquarters at an annual rental of
approximately $67,000. This lease expires in April 2002 and the Company
believes the facility is adequate for its current needs.

45
<PAGE>

MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The Company's executive officers and directors, their ages and positions
with the Company are as follows:

<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- ----- --------
<S> <C> <C>
Dr. Steven R. Matzkin, DDS ...... 39 Chairman of the Board, Chief Executive Officer,
President and Director
Mr. Mitchell B. Olan ............ 38 Vice President, Chief Operating Officer and Director
Mr. David P. Nichols ............ 39 Chief Financial Officer
Dr. Oscar L. Hausdorff, DDS ...... 62 Director of Development
Mr. Curtis Lee Smith, Jr. ......... 70 Director
Mr. Robert F. Raucci ............ 42 Director
</TABLE>

The Company expects to add two additional non-employee directors to the
Board of Directors shortly after the consummation of this Offering.

DR. STEVEN R. MATZKIN founded the Company's predecessors in 1992 and 1993
and serves full-time as the Company's Chairman of the Board, Chief Executive
Officer and President. Dr. Matzkin has over 13 years of experience in the
administration and management of dental practices. He practiced dentistry in
Michigan for six years, during which time he owned five dental practices and
managed over 25 dental practices through an affiliate management company. Dr.
Matzkin has also been featured as a guest speaker at regional Practice
Management conferences, including the national meeting for the National
Association of Dental Plans. Dr. Matzkin earned his BA degree in 1980 from the
Indiana School of Biology and his DDS degree in 1984 from Northwestern
University.

MITCHELL B. OLAN has served as the Company's Vice President, Chief
Operating Officer, and as a director since 1994. From 1991 to 1994, Mr. Olan
served in various capacities, including area Vice President and Regional Vice
President at Optioncare Incorporated, a publicly traded national franchiser of
home infusion therapy businesses. From 1980 to 1990, Mr. Olan served in various
capacities including sales, sales management, general management and
administration with the ORMCO Division of Sybron Corporation. ORMCO is the
leading manufacturer and marketer of dental orthodontic appliances, equipment
and supplies. Mr. Olan earned a BS degree in Business Administration in 1980
from Indiana University School of Business.

DAVID P. NICHOLS has served as the Company's Chief Financial Officer since
February 1997. From October 1994 until February 1997, Mr. Nichols served as
Chief Financial Officer at BioDynamics International, a publicly traded company
in the business of processing bioimplants for tissue repairs. From May 1993
until October 1994, Mr. Nichols served as Vice President--Finance of
BioDynamics. He was also Managing Director, United States Operations, of
Biodynamics from March 1996 until February 1997. From June 1992 until May 1993,
Mr. Nichols served as Chief Financial Officer of KiMed Corporation, a medical
device company. Prior to joining the Company, Mr. Nichols had over sixteen years
experience in the health care field. He served as Chief Financial Officer of the
long term care division of Trizec Corporation, Ltd., and was in public
accounting with the audit divisions of Price Waterhouse LLP and Deloitte &
Touche LLP. Mr. Nichols earned his BS Degree from the University of Florida in
1979 and a masters degree in Accounting from the University of Florida in 1980.
He is a Certified Public Accountant and a Certified Management Accountant.

DR. OSCAR L. HAUSDORFF has served as the Company's Director of Development
since 1996. From 1988 to 1995, he served as President, Chief Operating Officer
and as a director of Princeton Dental Management Corporation, a publicly traded
dental practice management company. From 1977 to 1988,

46
<PAGE>

Dr. Hausdorff held positions in sales, sales management, training, development
and recruiting for various firms in the stock brokerage business. From 1960 to
1977, Dr. Hausdorff practiced General Dentistry and Orthodontics in New York.
In addition, he was an instructor in Post-Graduate orthodontics at New York
University from 1960 to 1965. Dr. Hausdorff earned a DDS degree from New York
University in 1958, and a post graduate degree in Orthodontics from New York
University in 1964.

CURTIS LEE SMITH, JR. has been a director of the Company since 1996.
Beginning in 1986, Mr. Smith served as Chairman of the Board and Chief Executive
Officer of Handex Corporation ("Handex"), an environmental consulting and
remediation company which became a public company in 1989. Handex acquired New
Horizons Computer Learning Centers, a software training company, in 1994. Handex
sold its environmental division in 1996 and now operates as New Horizons
Worldwide, of which Mr. Smith serves as Chairman of the Board and Chief
Executive Officer.

ROBERT F. RAUCCI has been a director of the Company since 1996. Mr. Raucci
has been a managing member of Newlight Management, LLC, a technology oriented
venture capital fund, since July 1997. Mr. Raucci also has served as president
of RAM Investment Corporation, a venture capital investment and advisory
company, since 1994. Between 1985 and 1994 Mr. Raucci served as a private
equity investment manager for Alliance Capital Management Corporation, a global
investment management company.

DIRECTORS' COMPENSATION

The Company pays all directors who are not employees of the Company $350
for each Board meeting and each Board Committee meeting attended. The Company
also reimburses directors for all travel-related expenses incurred in
connection with their activities as directors.

COMMITTEES OF THE BOARD OF DIRECTORS

The Company currently has two committees of the Board, the Audit Committee
and the Compensation Committee. Messrs. Smith and Raucci will initially serve
on the Company's Audit Committee. The Audit Committee's functions include
recommending to the Board of Directors the engagement of the Company's
independent certified public accountants, reviewing with such accountants the
plan and results of their audit of the financial statements and determining the
independence of such accountants. In addition, Messrs. Smith and Raucci will
initially serve on the Company's Compensation Committee, which reviews and
makes recommendations with respect to compensation of officers and key
employees, including the grant of options or other benefits under the Omnibus
Plan.

47
<PAGE>

EXECUTIVE COMPENSATION

The following table sets forth the compensation paid by the Company during
the past fiscal year to the Chief Executive Officer and the other most highly
paid executive officer who was serving as an executive officer at the end of
1996 and whose compensation exceeded $100,000 (collectively, the "Named
Executive Officers").

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------------------------- -----------------
NUMBER OF
OTHER ANNUAL SECURITIES
SALARY BONUS COMPENSATION(1) UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) OPTIONS COMPENSATION(2)
- ---------------------------------- ------ ---------- ------- ----------------- ------------ -----------------
<S> <C> <C> <C> <C> <C> <C>
Dr. Steven R. Matzkin, DDS 1996 $200,000 -- -- -- --
Chairman of the Board,
Chief Executive Officer and
President(2)

Mitchell B. Olan 1996 $126,000 -- -- -- --
Vice President, Chief Operating
Officer and Director(2)
</TABLE>

- ----------------
(1) The aggregate amount of perquisites and other personal benefits provided to
such Named Executive Officer is less than 10% of the total annual salary
and bonus of such officer.
(2) See "Management--Employment Agreements" for information regarding current
and future compensation arrangements.

EMPLOYMENT AGREEMENTS

The Company has entered into Employment Agreements with Dr. Steven R.
Matzkin, Chairman of the Board, Chief Executive Officer and President of the
Company, Mitchell B. Olan, Vice President and Chief Operating Officer of the
Company, and David P. Nichols, Chief Financial Officer of the Company. The
Employment Agreements of Messrs. Matzkin and Olan were entered into as of
October 25, 1996, and are for terms of five years and four years, respectively.
The Employment Agreement of Mr. Nichols was entered into as of January 1997 and
is for a term of four years. These agreements provide for annual base salaries
to Messrs. Matzkin, Olan and Nichols of $200,000, $120,000 and $120,000,
respectively, subject to increase at the Company's discretion. It is
anticipated that the Board will approve an amendment to the respective
employment agreements of Dr. Matzkin, Mr. Olan and Mr. Nichols pursuant to
which they will be entitled to receive 60%, 25% and 15%, respectively, of an
annual bonus pool which is equal to 50% of the Company's net income in excess
of the Company's budgeted net income for each year. Bonuses paid to Dr.
Matzkin, Mr. Olan and Mr. Nichols in any year may not exceed $200,000,
$100,000, and $50,000, respectively. Dr. Matzkin's, Mr. Olan's and Mr. Nichols'
employment agreements entitle them to participate in any Company stock option
plan at a level commensurate with their positions. Mr. Olan's employment
agreement entitled him to warrants to purchase 163,080 shares of common stock
for an aggregate exercise price of $272,768. These warrants were exercised in
February 1997. Upon the Company's constructive discharge of Dr. Matzkin or
termination of the employment of Dr. Matzkin without cause, as specified in his
employment agreement, Dr. Matzkin shall be entitled to receive his base salary
for the period commencing on the effective date of the termination and ending
on the later to occur of (x) the second anniversary of the date of termination
or (y) the end of the five-year term of the employment agreement. Upon the
Company's termination of Mr. Olan without cause, as specified in his employment
agreement, Mr. Olan shall be entitled to receive his base salary for the period
commencing on the date of termination and ending on the date nine months
thereafter. Upon the Company's termination of Mr. Nichols without cause as
specified in his employment agreement, Mr. Nichols shall be entitled to receive
his base salary for the period commencing on the date of termination and ending
on the date six months thereafter. Upon termination with cause or voluntary
termination of either Dr. Matzkin, Mr. Olan or Mr. Nichols, such executive
shall be entitled to receive his base salary through the effective date of such
termination.

48
<PAGE>

Dr. Matzkin's employment agreement also provides that upon termination of
his employment for any reason, if the Company's securities are then publicly
traded, Dr. Matzkin has the right to request that the Company register, as
expeditiously as possible, any or all of the Common Stock then owned by Dr.
Matzkin, including all shares of Common Stock issuable pursuant to any
derivative securities of the Company then held by Dr. Matzkin.

OMNIBUS EXECUTIVE INCENTIVE COMPENSATION PLAN

The Company has adopted, effective upon consummation of this Offering, the
Omnibus Plan, which is designed to assist the Company in attracting,
motivating, retaining and rewarding key officers, directors and independent
contractors (collectively, the "Participants") by enabling the Participants to
acquire or increase an ownership interest in the Company, as well as providing
the Participants with annual and long term performance incentives to expend
their maximum efforts in the creation of stockholder value. Pursuant to the
terms of the Omnibus Plan the Company may grant Participants stock options,
stock appreciation rights, restricted stock, deferred stock, other
stock-related awards and performance or annual incentive awards that may be
settled in cash, stock or other property (collectively, the "Awards"). The
Company's compensation committee, or in the absence thereof the Board of
Directors (the "Committee"), will administer and interpret the Omnibus Plan and
is authorized to grant Awards thereunder to all eligible Participants.

Under the Omnibus Plan, the total number of shares of Common Stock that
may be subject to the granting of Awards during the term of the Omnibus Plan
shall be equal to 250,000 shares, plus the number of shares with respect to
Awards previously granted under the Omnibus Plan that terminate without being
exercised, and the number of shares of Common Stock that are surrendered in
payment of any Awards or any tax withholding requirements. The following is a
description of the Awards that may be granted under the Omnibus Plan:

STOCK OPTIONS AND STOCK APPRECIATION RIGHTS. The Committee is authorized
to grant stock options, including both incentive and non-qualified stock
options, and stock appreciation rights ("SAR") entitling the Participant to
receive the amount by which the fair market value of a share of Common Stock on
the date of exercise exceeds the grant price of the SAR. The exercise price per
share subject to an option and the grant price of an SAR are determined by the
Committee, but, in the case of incentive stock options, must not be less than
the fair market value of a share of Common Stock on the date of grant. Each
option is exercisable after the period or periods specified in the related
option agreement, but no option may be exercisable after the expiration of ten
years from the date of grant. Incentive stock options granted to an individual
who owns (or is deemed to own) at least 10% of the total combined voting power
of all classes of stock of the Company must have an exercise price of at least
110% of the fair market value of the Common Stock on the date of grant and a
term of no more than five years. Options may be exercised by payment of the
exercise price in cash, shares of Common Stock, outstanding Awards or other
property having a fair market value equal to the exercise price, as the
Committee may determine from time to time. Immediately prior to consummation of
the Offering, options to purchase 66,000 shares will be granted under the
Omnibus Plan at a per share exercise price of $12.00.

RESTRICTED AND DEFERRED STOCK. The Committee is authorized to grant
restricted stock and deferred stock. Restricted stock is a grant of shares of
Common Stock which may not be sold or disposed of, and which may be forfeited
in the event of termination of employment, prior to the end of a restricted
period specified by the Committee. A Participant granted restricted stock
generally has all the rights of a shareholder of the Company, unless otherwise
determined by the Committee. An Award of deferred stock confers upon the
Participant the right to receive shares of Common Stock at the end of a
specified deferral period, subject to possible forfeiture of the Award in the
event of termination of employment prior to the end of a specified restricted
period. Prior to the issuance of shares of Common Stock, an Award of deferred
stock carries no voting or dividend rights.

BONUS STOCK AND AWARD IN LIEU OF CASH OBLIGATIONS. The Committee is
authorized to grant shares of Common Stock as a bonus, free of restrictions, or
to grant shares of Common Stock or other Awards in lieu of cash under the
Omnibus Plan, subject to such terms as the Committee may specify.

49
<PAGE>

OTHER STOCK-BASED AWARDS. The Committee is authorized to grant Awards
that are denominated or payable in, valued by reference to, or otherwise based
on or related to, shares of Common Stock. Such Awards might include convertible
or exchangeable debt securities, other rights convertible or exchangeable into
shares of Common Stock, purchase rights for shares of Common Stock, Awards with
value and payment contingent upon performance by the Company or any other
factors designated by the Committee, and Awards valued by reference to the book
value of shares of Common Stock or the value of securities of or the
performance of specified subsidiaries or business units. The Committee
determines the terms and conditions of such Awards.

The right of a Participant to exercise or receive a grant or settlement of
an Award, and the timing thereof, may be subject to such performance conditions
(including subjective individual goals) as may be specified by the Committee.
In addition, the Omnibus Plan authorizes specific annual incentive Awards,
which represent a conditional right to receive cash, shares of Common Stock or
other Awards upon achievement of certain preestablished performance goals and
subjective individual goals during a specified fiscal year.

Awards may be settled in the form of cash, shares of Common Stock, other
Awards or other property in the discretion of the Committee. The Committee may
condition any payment relating to an Award on the withholding of taxes and may
provide that a portion of any shares of Common Stock or other property to be
distributed will be withheld (or previously acquired shares of Common Stock or
other property surrendered by the Participant) to satisfy withholding and other
tax obligations. Awards granted under the Omnibus Plan generally may not be
pledged or otherwise encumbered and are not transferable except by will or by
the laws of descent and distribution, or to a designated beneficiary upon the
Participant's death, except that the Committee may, in its discretion, permit
transfers for estate planning or other purposes subject to any applicable
restrictions.

NON-QUALIFIED STOCK OPTION PLAN

The Company is adopting, effective upon consummation of this Offering, the
1997 Non-Qualified Plan pursuant to which shares of Common Stock are currently
reserved for issuance upon exercise of options. The Non-Qualified Plan is
designed as a means to help PAs with which the Company has entered into
Management Agreements attract (i) dentists who practice at Dental Centers owned
by such PAs, (ii) owners of PAs and (iii) dental health care specialists
employed by one or more of the PAs. The Company's Board of Directors,
administers and interprets the Non-Qualified Plan and is authorized to grant
options thereunder to the foregoing persons. Options granted under the Non-
Qualified Plan are on such terms and at such prices as determined by the Board.
Each option is exercisable after the period specified in the option agreement,
but no option may be exercisable after the expiration of ten years from the
date of grant. The Non-Qualified Plan will terminate in ten years unless sooner
terminated by the Board. The Non-Qualified Plan also authorizes the Company to
make or guarantee loans to optionees to enable them to exercise all or a
portion of their options. If the exercise price is paid in whole or part with a
promissory note, such note shall (i) provide for full recourse to the optionee,
(ii) be collateralized by the pledge of the shares that the optionee purchases
upon exercise of such option, (iii) bear interest at the prime rate of the
Company's principal lender and (iv) contain such other terms as the Board of
Directors, in its sole discretion, shall reasonably require. The Board of
Directors has the authority to amend or terminate the Non-Qualified Plan,
provided that no such amendment may impair the rights of the holder of any
outstanding option without the written consent of such holder, and provided
further that certain amendments of the Non-Qualified Plan are subject to
shareholder approval. Options to purchase 425,000 shares of Common Stock will
be authorized for issuance under the Plan. At the date of consummation of the
Offering, options to purchase an aggregate of 135,000 shares of Common Stock
will be outstanding under the Non-Qualified Plan at a per share exercise price
of $12.00. The exercise price of the shares of Common Stock available for
future grants under the Non-Qualified Plan shall be determined by the Board of
Directors.

50
<PAGE>

PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth certain information concerning the
beneficial ownership of the Common Stock as of September 30, 1997 after giving
effect to the Stock Split, and the conversion of the Series A Preferred Stock,
and as adjusted to reflect the sale of 2,000,000 shares of Common Stock by the
Company, and the sale of 300,000 shares of Common Stock by the Selling
Stockholders if the over-allotment option is exercised in full, by (i) each
person known by the Company to be the beneficial owner of more than 5% of the
outstanding Common Stock, (ii) each of the Selling Stockholders, (iii) each
director of the Company, (iv) each of the Named Executive Officers and (v) all
executive officers and directors of the Company as a group.

<TABLE>
<CAPTION>
PERCENT SHARES BENEFICIALLY
BENEFICIALLY NUMBER OF OWNED AFTER OFFERING
OWNED AFTER SHARES BEING IF OVER-ALLOTMENT
SHARES BENEFICIALLY OWNED OFFERING IF OFFERED OPTION IS EXERCISED
PRIOR TO THE OFFERING OVER-ALLOTMENT SUBJECT TO IN FULL
NAME OF --------------------------- OPTION IS NOT OVER-ALLOTMENT -----------------------
BENEFICIAL OWNER(1) NUMBER PERCENT EXERCISED OPTION NUMBER PERCENT
- -------------------------------- --------------- --------- ---------------- --------------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Dr. Steven R. Matzkin(2) ...... 1,630,800 33.3% 23.6% 101,652 1,529,148 22.2%
SRM '93 Children's Trust ...... 1,630,800 33.3% 23.6% 101,652 1,529,148 22.2%
Curtis Lee Smith, Jr. ......... 530,010 10.8% 7.7% 33,037 496,973 7.2%
Robert F. Raucci ............... 21,812(3) * * 1,360 20,452 *
Mitchell B. Olan ............... 163,080 3.3% 2.4% 10,165 152,915 2.2%
Crescent International
Holdings Limited ............ 632,547 12.9% 9.2% 39,428 593,119 8.6%
Dr. Dennis Corona(4) ......... 99,311 2.0% 1.4% 5,083 94,228 1.4%
Dr. Richard Golden ............ 81,540 1.7% 1.2% 5,083 76,457 1.1%
Frank Wolicki .................. 40,770 * * 2,540 38,230 *
All Executive Officers and
Directors as a group
(five persons)(2)(3)(5) ...... 2,395,278 48.4% 34.5% 146,214 2,249,064 32.4%
</TABLE>

- ----------------
* Less than 1%.

(1) Unless otherwise indicated, the address of each of the beneficial owners
identified is 1343 Main Street, 7th Floor, Sarasota, Florida 34236.
(2) Excludes 1,630,800 shares held by the SRM '93 Children's Trust, which has
been established for the benefit of Dr. Matzkin's children. Dr. Matzkin
exercises no control over such trust and disclaims any beneficial interest
in such shares.
(3) Excludes 632,547 shares held by Crescent International Holdings Limited
("CIHL"). Mr. Raucci's father-in-law is an officer of the parent company
of CIHL and Mr. Raucci's spouse is the President and a director of certain
companies under common control with CIHL. Mr. Raucci's spouse disclaims
beneficial ownership of such shares. Mr. Raucci therefore also disclaims
beneficial ownership of such shares.
(4) Includes 17,771 shares of Common Stock which may be issued upon exercise of
currently exercisable options.
(5) Includes 49,576 shares of Common Stock which may be issued upon exercise of
currently exercisable options held by David Nichols.

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<PAGE>

CERTAIN TRANSACTIONS

In 1993, Dr. Matzkin sold four dental practices in Michigan to Dr. David
Ross Johnson, a Dental Director, for a $237,000 note under which payments
commenced in May 1997. In connection with that sale Profit, a corporation
controlled by Dr. Matzkin, agreed to provide consulting services to these
practices for $18,000 per month until May 1997 and $15,000 per month thereafter
through May 2005. In July 1997, the Company purchased the right to manage these
practices for $846,000 and entered into a global management agreement pursuant
to which it will provide management services to these practices until 2005. The
Company subcontracted the day-to-day management services to an affiliate of Dr.
Johnson, but retains most other management functions for which it retains 20%
of net profits of these practices, after certain adjustments, and Dr. Johnson's
affiliate is paid 80% of such net profits. The Company also receives $800 per
month from each practice as a licensing fee. The Company is currently
considering the acquisition of the capital stock of Profit, a corporation
controlled by Dr. Matzkin. It is anticipated that such acquisition will not
happen prior to 1998 and will be consummated only upon approval of the outside
members of the Board of Directors.

In July 1997, the Company entered into a Management Agreement with a PA in
Michigan which was controlled by Dr. Steven Matzkin, the Company's President,
Chief Executive Officer and Chairman of the Board. As of September 30, 1997,
Dr. Matzkin assigned the ownership of the capital stock and all rights relating
thereto to Dr. David Ross Johnson in consideration for Dr. David Ross Johnson's
assumption of all obligations to pay for such capital stock and all obligations
relating to such capital stock.

Certain of the Managed Dental Centers lease their office facilities from
entities controlled by Dr. Matzkin. Such leases terminate at various times
between 2000 and 2004. Managed Dental Centers and the Company paid rent
pursuant to the leases in the aggregate amounts of $77,671, $87,756 and
$108,110, in 1994, 1995 and 1996, respectively. Dr. Matzkin also owns certain
dental laboratories that perform laboratory services for the Managed Dental
Centers, primarily relating to the making of prostheses. In 1996 the amount
paid by the Managed Dental Centers to such laboratories was $145,000 of which
$60,000 was advanced by the Company and remains outstanding at December 31,
1996. Dr. Matzkin owns 33.3% of the capital stock of Equipment Management
Services, an equipment leasing company ("EMS"). Three Managed Dental Centers
have entered into capitalized equipment leases with EMS, with the aggregate
original principal amount of such leases being $122,000. Amounts paid by such
Managed Dental Centers to EMS pursuant to such leases aggregated approximately
$20,000 and $27,000 in 1995 and 1996, respectively. The Company believes that
such arrangements are no less favorable to such Managed Dental Centers than
could have been obtained in arms-length transactions with unrelated third
parties. In addition, Dr. Matzkin has personally guaranteed an aggregate of
approximately $3.3 million of indebtedness of certain of the Managed Dental
Centers and an aggregate of approximately $100,000 of indebtedness of the
Company. The Company is currently negotiating with the lenders to whom Dr.
Matzkin has given such guarantees to release Dr. Matzkin from his obligations
thereunder and to cause the Company to guaranty such obligations.

Pursuant to a Stockholders' Agreement (the "Stockholders' Agreement")
among the Company and Dr. Matzkin, Mr. Smith, Mr. Raucci, the SRM 1993
Children's Trust and CIHL (collectively, the "Stockholders") initially entered
into in connection with the sale of the Company's Series A Preferred Stock in
October 1996, each Stockholder received (i) "piggyback" registration rights,
(ii) a right of first refusal with respect to a greater than 50% share transfer
by a Stockholder prior to a Qualified Initial Public Offering (as defined in
the Stockholders' Agreement), (iii) co-sale rights to participate on a pro rata
basis in certain resales of Common Stock by other Stockholders (other than in
connection with a Qualified Initial Public Offering) and (iv) participation
rights with respect to certain issuances of securities by the Company made
prior to a Qualified Initial Public Offering. This Offering constitutes a
"Qualified Initial Public Offering" as defined in the Stockholders' Agreement.
In addition, stockholders who are also directors of the Company, other than Dr.
Matzkin, also were granted demand registration rights under the Stockholders'
Agreement. Mitchell B. Olan has been granted certain "piggyback" registration
rights with respect to an aggregate of 163,080 shares of Common Stock pursuant
to an

52
<PAGE>

agreement with the Company. Pursuant to Dr. Matzkin's employment agreement,
upon termination of his employment for any reason, if the Company's securities
are then publicly traded, Dr. Matzkin has the right to request that the Company
register any or all of the Common Stock then owned by Dr. Matzkin. See
"Description of Capital Stock--Registration Rights."

For information regarding employment agreements with certain executive
officers and directors, see "Management--Employment Agreements."

The Company has adopted a policy whereby all transactions between the
Company and one or more of its affiliates must be approved in advance by a
majority of the Company's disinterested directors.

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<PAGE>

DESCRIPTION OF CAPITAL STOCK

AUTHORIZED AND OUTSTANDING CAPITAL STOCK

Upon consummation of the Offering, the authorized capital stock of the
Company will consist of fifty million shares of common stock, par value $0.01
per share (the "Common Stock"), and five million shares of preferred stock, par
value $0.01 per share (the "Preferred Stock"). After giving effect to the Stock
Split, and the mandatory conversion of all outstanding shares of the Company's
Series A Preferred Stock into 654,359 shares of Common Stock (post-Stock Split)
to be effected prior to or simultaneously with the effective date of this
Offering, an aggregate of 6,897,700 shares of Common Stock will be outstanding.
See "Principal and Selling Stockholders." No shares of Preferred Stock will be
outstanding. The following description of the Company's capital stock does not
purport to be complete and is qualified in its entirety by reference to the
General Corporation Law of the State of Delaware as amended from time to time
("Delaware Law") and the Certificate and Bylaws, which are filed as exhibits to
the Registration Statement of which this Prospectus forms a part.

COMMON STOCK

The holders of the Common Stock are entitled to one vote per share of
record on all matters to be voted upon by stockholders and to vote together as
a single class for the election of directors and in respect of other corporate
matters. At a meeting of stockholders at which a quorum is present, for all
matters other than the election of directors, a majority of the votes cast
decides all questions, unless the matter is one upon which a different vote is
required by express provision of law or the Certificate or Bylaws. Directors
will be elected by a plurality of the votes of the shares present at a meeting.
There is no cumulative voting with respect to the election of directors (or any
other matter).

The holders of Common Stock have no preemptive rights and have no rights
to convert their Common Stock into any other securities. Subject to the rights
of holders of Preferred Stock, if any, in the event of a liquidation,
dissolution or winding up of the Company, holders of Common Stock are entitled
to participate equally and ratably in all assets remaining after payment of
liabilities and distribution of any preferential amount.

The holders of Common Stock are entitled to receive ratably such dividends
as the Board of Directors may declare out of funds legally available therefor,
when and if so declared, subject to any preference in favor of outstanding
shares of preferred stock, if any. The payment by the Company of dividends, if
any, rests within the discretion of its Board of Directors and will depend upon
the Company's results of operations, financial condition and capital
expenditure plans, as well as other factors considered relevant by the Board of
Directors.

PREFERRED STOCK

Upon completion of the Offering, no shares of Preferred Stock will be
outstanding. The Board of Directors of the Company, without further action by
the stockholders, will be authorized to issue up to 5 million shares of
Preferred Stock in one or more series and to fix and determine as to any series
all the relative rights and preferences of shares in such series, including,
without limitation, relative voting, dividend, redemption, liquidation,
conversion and other powers, preferences, rights, qualifications and
limitations. The issuance of shares of Preferred Stock, or the issuance of
rights to purchase such shares, could be used to discourage an unsolicited
acquisition proposal that some, or a majority, of the stockholders might
believe to be in the best interests of the Company or in which stockholders
might receive a premium for their stock over the then market price of such
stock. In addition, under certain circumstances, the issuance of Preferred
Stock could adversely affect the voting power of the holders of the Common
Stock.

In October and December 1996, the Company issued an aggregate of 15,000
shares of Series A Preferred Stock. Holders of Series A Preferred Stock are
entitled to an annual dividend of $8.00 per

54
<PAGE>

share of Series A Preferred Stock. In addition, the Certificate of Designation
provides for the mandatory conversion of the Series A Preferred Stock upon the
Company's entering into a public offering of securities. Accordingly, upon
consummation of the Offering, the outstanding Series A Preferred Stock will be
converted into 654,359 shares of Common Stock and no Series A Preferred Stock
will be outstanding.

WARRANTS AND OPTIONS TO PURCHASE COMMON STOCK

Upon consummation of the Offering, the Company is to issue to Mr. Lavelle,
the sole stockholder of Nassau, a five-year warrant to purchase 29,167 shares
of Common Stock at a per share exercise price of $12.00 and a one-year warrant
to purchase 53,001 shares of Common Stock at an aggregate exercise price of
$92,355. Also, David P. Nichols, the Company's Chief Financial Officer, has a
free-standing option to purchase 49,576 shares of Common Stock at a purchase
price of $1.53 per share. Upon consummation of the Offering, options to
purchase 66,000 shares will be outstanding under the Omnibus Plan and options
to purchase 135,000 shares will be outstanding under the Non-Qualified Plan.
Finally, the Company granted two options to Dr. Corona, effective April 1, 1997
and August 21, 1997, to purchase an aggregate of 17,771 shares of Common Stock
at $12.00 per share. The options granted to Dr. Corona expire six months after
consummation of the Offering. See "Management-- Omnibus Executive Incentive
Compensation Plan."

REGISTRATION RIGHTS

At any time after nine months following the consummation of the Offering,
any of Messrs. Smith or Raucci or CIHL may demand, on any one occasion, that the
Company register, as expeditiously as possible, any or all of the Common Stock
then owned by such stockholder, including all shares of Common Stock issuable
pursuant to any derivative securities then held by such stockholder. In
addition, Mr. Raucci and CIHL may demand, on any one occasion, that the Company
register their Common Stock on Form S-2 or Form S-3, if available. In the event
that the Company intends to register any of its Common Stock, including pursuant
to any such request, the Company must notify the foregoing stockholders of such
registration and offer to include therein the shares held by such stockholders.
The Company has agreed to indemnify the foregoing stockholders against
liabilities under the Securities Act in certain circumstances in connection with
any such registration statement.

Mitchell B. Olan, Nassau and Mr. Lavelle have been granted certain
"piggyback" registration rights with respect to an aggregate of 247,882 shares
of Common Stock purchased or purchasable pursuant to equity holders agreements
between the Company and such persons. Such rights, subject to certain
limitations, may be exercised at any time following the Offering in the event
that the Company proposes to register any shares of Common Stock under the
Securities Act on Form S-1, S-2 or S-3 or any similar successor forms, whether
or not for its own account. The Company has agreed to indemnify the stockholders
against liabilities under the Securities Act in certain circumstances in
connection with any such registration statement.

Dr. Matzkin's employment agreement provides that upon termination of his
employment for any reason, if the Company's securities are then publicly traded,
Dr. Matzkin has the right to request that the Company register, as expeditiously
as possible, any or all of the Common Stock then owned by Dr. Matzkin, including
all shares of Common Stock issuable pursuant to any derivative securities then
held by Dr. Matzkin. The Company has agreed to indemnify Dr. Matzkin against
liabilities under the Securities Act in certain circumstances in connection with
any such registration statement.

INDEMNIFICATION

Under the Certificate, the Company may indemnify, to the full extent
permitted by Delaware law, its directors, officers, employees and agents who are
a party, or are threatened to be made a party, to an action or proceeding, by
reason of the fact that the person serves or served the Company as a director,
officer, employee or agent. The Company also is authorized to purchase insurance
and enter into

55
<PAGE>

indemnification agreements. The Company is entering into indemnification
agreements with its executive officers and directors and may purchase
directors' and officers' liability insurance coverage on their behalf. The
Certificate also eliminates the liability of directors and officers to the
Company or its stockholders for monetary damages for breach of fiduciary duty
except to the extent such exemption from liability or limitation thereof is not
permitted under applicable law. The Company believes that these provisions of
the Certificate and the Bylaws are necessary to attract and retain qualified
persons as directors and officers. These provisions do not eliminate the duty
of care or loyalty and, in appropriate circumstances, equitable remedies such
as injunctive or other forms of non-monetary relief will remain available under
Delaware law. In addition, each director continues to be subject to liability
for monetary damages for acts or omissions involving breach of the duty of
loyalty, acts or omissions not in good faith, intentional misconduct, knowing
violations of law, unlawful distributions and any transaction from which the
director derived an improper personal benefit.

PROVISIONS WITH POSSIBLE ANTITAKEOVER EFFECT

Certain provisions of Delaware Law and of the Certificate and the Bylaws,
summarized in the following paragraphs, may be considered to have an
anti-takeover effect and may delay, deter or prevent a tender offer, proxy
contest or other takeover attempt that a stockholder might consider to be in
such stockholder's best interest, including such an attempt as might result in
payment of a premium over the market price for shares held by stockholders.
These provisions may also have the effect of rendering changes in the Board of
Directors and management of the Company more difficult. Any discouraging effect
upon takeover attempts could potentially depress the market price of the Common
Stock or inhibit temporary fluctuations in the market price of the Common Stock
that otherwise could result from actual or rumored takeover attempts.

DELAWARE ANTI-TAKEOVER LAW. The Company is a Delaware corporation and is
subject to Section 203 of Delaware Law. In general, Section 203 prevents an
"interested stockholder" (defined generally as a person owning 15% more of a
corporation's outstanding voting stock) from engaging in a "business
combination" with certain Delaware corporations for three years following the
date that person became an interested stockholder unless (i) the corporation has
elected in its certificate of incorporation not to be governed by Section 203
(the Company has not made such an election); (ii) before that person became an
interested stockholder, the board of directors of the corporation approved the
transaction in which the interested stockholder became an interested stockholder
or approved the business combination: (iii) upon consummation of the transaction
that resulted in the interested stockholder becoming an interested stockholder,
the interested stockholder owns at least 85% of the voting stock of the
corporation outstanding at the time the transaction commenced (excluding stock
held by directors who are also officers of the corporation and by employee stock
plans that do not provide employees with the right to determine confidentially
whether shares held subject to the plan will be voted or tendered in a tender or
exchange offer); or (iv) following the transaction in which that person became
an interested stockholder, the business combination is approved by the board of
directors of the corporation and authorized at a meeting of stockholders by the
affirmative vote of the holders of two-thirds of the outstanding voting stock of
the corporation not owned by the interested stockholder. The restrictions in
Section 203 also do not apply to certain business combinations proposed by an
interested stockholder following the announcement or notification of an
extraordinary transaction involving the corporation and a person who had not
been an interested stockholder during the previous three years or a person who
became an interested stockholder with the approval of a majority of the
corporation's directors. The term "business combination" is defined generally to
include mergers or consolidations between a Delaware corporation and an
"interested stockholder," transactions with an "interested stockholder"
involving the assets or stock of the corporation or its majority-owned
subsidiaries and transactions which increase an interested stockholder's
percentage ownership of stock.

CLASSIFIED BOARD OF DIRECTORS. The Certificate provides for the Board of
Directors to be divided into three classes of directors denominated Class I,
Class II and Class III, with members of each class holding office for staggered
three-year terms. Mitchell B. Olan and Curtis Lee Smith are Class I Directors
whose terms expire at the 1998 annual meeting of stockholders, Robert Raucci is
a Class II

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<PAGE>

Director whose term expires at the 1999 annual meeting of stockholders and
Steven R. Matzkin is a Class III Director whose term expires at the 2000 annual
meeting of stockholders (in all cases subject to election and qualification of
their successors or their earlier death, resignation or removal.) As a result,
approximately one-third of the Board of Directors will be elected each year.
Moreover, under Delaware Law, in the case of a corporation having a classified
board, stockholders may remove a director only for cause. This provision, when
coupled with the provisions of the Certificate and the Bylaws authorizing only
the Board of Directors to fill vacant directorships, will preclude a
stockholder from removing incumbent directors without cause and simultaneously
gaining control of the Board of Directors by filling the vacancies created by
such removal with its own nominees.

STOCKHOLDER ACTION; SPECIAL MEETING OF STOCKHOLDERS. The Certificate
provides that stockholders may not take action by written consent, but may only
take action at duly called annual or special meetings of stockholders. The
Certificate further provides that special meetings of stockholders of the
Company may be called only by a majority of the Board of Directors or the
Company's Chief Executive Officer. This provision may make it more difficult
for stockholders to take actions opposed by the Board of Directors.

ADVANCE NOTICE REQUIREMENTS FOR STOCKHOLDER PROPOSALS AND DIRECTOR
NOMINATIONS. The Bylaws provide that stockholders seeking to bring business
before an annual meeting of stockholders, or to nominate candidates for
election as directors at an annual or special meeting of stockholders, must
provide timely notice thereof in writing. To be timely, a stockholder's notice
must be delivered to or mailed and received at the principal executive offices
of the Company not less than 90 days nor more than 120 days prior to the first
anniversary of the date of the Company's notice of annual meeting provided in
connection with the previous year's annual meeting; provided, however, that if
no annual meeting was held in the previous year or the date of the annual
meeting has been changed to be more than 30 calendar days after such
anniversary, such notice to the stockholder to be timely must be so received
not more than 90 days prior to nor later than the later of (i) 60 days prior to
the annual meeting or (ii) the close of business on the 10th day following the
day on which notice of the date of the annual meeting is given to stockholders
or made public. The Bylaws also specify certain requirements for a
stockholder's notice to be in proper written form. These provisions may
preclude some stockholders from bringing matters before the stockholders at an
annual or special meeting or from making nominations for directors at an annual
or special meeting.

VACANCIES. The Certificate and Bylaws provide that a vacancy on the Board
of Directors occurring from an increase in the number of directors or otherwise
may be filled by the vote of a majority of directors then in office, though
less than a quorum, or by a sole remaining director.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the Common Stock is American Stock
Transfer & Trust Company, New York, New York.

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<PAGE>

SHARES ELIGIBLE FOR FUTURE SALE

Upon the completion of this Offering, the Company will have 6,897,700
shares of Common Stock outstanding, assuming no outstanding stock options or
warrants are exercised. Of these shares, the 2,000,000 shares of Common Stock
sold in this Offering (2,300,000 shares if the Underwriters' over-allotment
option is exercised in full) will be freely tradeable by persons other than
affiliates of the Company, without restriction under the Securities Act. The
remaining 4,897,700 shares of Common Stock will be "restricted securities"
within the meaning of Rule 144 under the Securities Act, and may not be sold in
the absence of registration under the Securities Act unless an exemption from
registration is available, including the exemptions contained in Rule 144.
Commencing January 1998, these shares of Common Stock will become eligible for
sale in the open market, subject to volume and other limitations imposed by
Rule 144. In addition, the Company has granted certain registration rights with
respect to 4,693,857 shares of Common Stock, including shares held by Dr.
Matzkin and the SRM '93 Children's Trust. Dr. Matzkin's employment agreement
also provides that upon termination of his employment for any reason, Dr.
Matzkin has the right to request that the Company register any or all of the
Common Stock then owned by Dr. Matzkin. Sales of all or a portion of such
shares could have a material adverse effect upon the price of the Common Stock.
However, the directors, executive officers and stockholders of the Company have
agreed not to sell, contract to sell or otherwise dispose of any of these
shares of Common Stock for a period of 180 days after the date of this
Prospectus without the prior written consent of Raymond James except for (i)
bona fide gifts or transfers effected by such stockholders other than on any
securities exchange or in the over-the-counter market to donees or transferees
that agree to be bound by similar agreements (the "Lock-up Agreements"), (ii)
sales made by Selling Stockholders to the Underwriters of up to 300,000 shares
to cover over-allotments, if any, and (iii) pledges of shares held by Dr.
Matzkin. Raymond James, in its sole discretion, without notice, may release
some or all of the shares subject to Lock-up Agreements from time to time.

In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated), including an affiliate of the Company, who has
beneficially owned his or her shares for at least one year (including the prior
holding period of any prior owner other than an affiliate) is entitled to sell
within any three-month period that number of shares which does not exceed the
greater of 1% of the outstanding shares of the Common Stock, or the average
weekly trading volume during the four calendar weeks preceding each such sale.
Sales under Rule 144 also are subject to certain manner of sale provisions,
notice requirements, and the availability of current public information about
the Company. A person (or persons whose shares are aggregated) who is not or
has not been deemed an "affiliate" of the Company for at least three months,
and who has beneficially owned shares for at least 2 years (including the
holding period of any prior owner other than an affiliate) would be entitled to
sell such shares under Rule 144 without regard to the limitations discussed
above.

Additionally, the Company intends to file registration statements under
the Securities Act to register all shares of Common Stock subject to then
outstanding stock options and Common Stock issuable pursuant to the Omnibus
Plan. The Company expects to file these registration statements following the
closing of the Offering, and such registration statements are expected to
become effective upon filing. Shares covered by these registration statements
will thereupon be eligible for sale in the public markets, subject to the
Lock-up Agreements. Following the Offering, the Company may issue its Common
Stock from time to time in connection with the acquisition of the non-dental
assets of dental practices. Such securities may be issued in registered
transactions or in transactions exempt from registration under the Securities
Act.

Prior to this offering there has been no market for the Common Stock, and
no accurate prediction can be made of the effect, if any, that market sales of
restricted securities or of shares subject to stock options or the availability
of these shares for sale will have on the market price of the Common Stock
prevailing from time to time. Sales of substantial amounts of any of these
shares in the public market could adversely affect prevailing market prices for
the Common Stock. See "Risk Factors--Shares Eligible for Future Sale."

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<PAGE>

UNDERWRITING

The Underwriters named below, acting through their representatives,
Raymond James & Associates, Inc. and William Blair & Company, L.L.C. (the
"Representatives"), have severally agreed, subject to the terms and conditions
of the underwriting agreement (the "Underwriting Agreement") by and among the
Company, the Selling Stockholders and the Underwriters, to purchase from the
Company the number of shares of Common Stock set forth below opposite their
respective names, at the public offering price less the underwriting discounts
and commissions set forth on the cover page of this Prospectus:

NUMBER OF
NAME SHARES
- ---- -----------
Raymond James & Associates, Inc. ........................ 735,000
William Blair & Company, L.L.C. ........................... 735,000
Allen & Company Incorporated .............................. 40,000
BT Alex. Brown Incorporated .............................. 40,000
Cowen & Company .......................................... 40,000
Donaldson, Lufkin & Jenrette Securities Corporation ...... 40,000
Hambrecht & Quist LLC .................................... 40,000
Lehman Brothers Inc. .................................... 40,000
NationsBanc Montgomery Securities, Inc. .................. 40,000
Prudential Securities Incorporated ........................ 40,000
Salomon Brothers Inc .................................... 40,000
Robert W. Baird & Co. Incorporated ........................ 20,000
Interstate/Johnson Lane Corporation ..................... 20,000
Legg Mason Wood Walker, Incorporated ..................... 20,000
Rauscher Pierce Refsnes, Inc. ........................... 20,000
The Robinson-Humphrey Company, LLC ........................ 20,000
Wedbush Morgan Securities Inc. ........................... 20,000
Wheat, First Securities, Inc. ........................... 20,000
Allen C. Ewing & Co. .................................... 10,000
GS2 Securities, Inc. .................................... 10,000
Mesirow Financial, Inc. ................................. 10,000
----------
Total ................................................... 2,000,000
==========

The Underwriting Agreement provides that the obligations of the several
Underwriters to pay for and accept delivery of the shares of Common Stock
offered hereby are subject to approval of certain legal matters by their
counsel and to certain other conditions. The Underwriters are obligated to take
and pay for all shares of Common Stock offered hereby (other than those covered
by the over-allotment option described below) if any such shares are purchased.

The Company and the Selling Stockholders have been advised by the
Representatives that the Underwriters propose to offer the shares of Common
Stock directly to the public at the public offering price set forth on the
cover page of this Prospectus and to certain dealers, including the
Underwriters, at such price less a concession not in excess of $0.48 per share.
The Underwriters may allow, and such dealers may reallow, a concession not in
excess of $0.10 per share to certain other dealers. The Representatives have
informed the Company and the Selling Stockholders that the Underwriters do not
intend to confirm sales to any accounts over which they exercise discretionary
authority.

The Selling Stockholders have granted to the Underwriters an option,
exercisable not later than 30 days after the date of this Prospectus, to
purchase up to an aggregate of 300,000 additional shares of Common Stock, at
the public offering price, less the underwriting discounts and commissions, set
forth on the cover page of this Prospectus. To the extent that the Underwriters
exercise such option, each of the Underwriters will have a firm commitment to
purchase approximately the same percentage thereof which the number of shares
of Common Stock to be purchased by it shown in the above table bears to

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<PAGE>

the total shown, and the Selling Stockholders will be obligated, pursuant to
the option, to sell such shares to the Underwriters. The Underwriters may
exercise this option only to cover such over-allotments, if any, made in
connection with the sale of the shares of Common Stock offered hereby. If
purchased, the Underwriters will sell such additional shares on the same terms
as those on which the shares are being offered.

The Company and the Selling Stockholders have agreed to indemnify the
Underwriters against, and to contribute to losses arising out of, certain civil
liabilities in connection with this offering, including liabilities under the
Securities Act.

The Company and its executive officers, directors and current stockholders
have agreed that they will not, directly or indirectly, offer, sell, offer to
sell, contract to sell, pledge, grant any option to purchase or otherwise sell
or dispose (or announce any offer, sale, offer of sale, contract of sale,
pledge, grant of any option to purchase or other sale or disposition) of any
shares of Common Stock or any securities convertible into, or exercisable or
exchangeable for, Common Stock or other capital stock of the Company, or any
right to purchase or acquire Common Stock or other capital stock of the
Company, for a period of 180 days after the date of this Prospectus, without
the prior written consent of Raymond James, except for (i) bona fide gifts or
transfers effected by such stockholders other than on any securities exchange
or in the over-the-counter market to donees or transferees that agree to be
bound by the Lock-up Agreements, (ii) sales made by Selling Stockholders to the
Underwriters of up to 300,000 shares to cover over-allotments, if any, and
(iii) pledges of shares held by Dr. Matzkin. Sales of substantial amounts of
Common Stock in the public market, or the availability of such shares for
future sale, could adversely affect the market price of the Common Stock and
could impair the Company's future ability to raise additional capital through
an offering of its equity securities. See "Risk Factors-- Shares Eligible for
Future Sale."

In connection with the offering, certain Underwriters and selling group
members and their respective affiliates may engage in transactions that
stabilize, maintain or otherwise affect the market price of the Common Stock.
Such transactions may include stabilization transactions effected in accordance
with Rule 104 of Regulation M, pursuant to which such persons may bid for or
purchase Common Stock for the purpose of stabilizing its market price. The
Underwriters also may create a short position for the account of the
Underwriters by selling more Common Stock in connection with the offering than
they are committed to purchase from the Company and in such case may purchase
Common Stock in the open market following completion of the Offering to cover
all or a portion of such short position. The Underwriters may also cover all or
a portion of such short position, up to 300,000 shares, by exercising the
Underwriters' over-allotment option referred to above. In addition, Raymond
James, on behalf of the Underwriters, may impose "penalty bids" under
contractual arrangements with the Underwriters whereby it may reclaim from an
Underwriter (or dealer participating in the offering), for the account of the
other Underwriters, the selling concession with respect to Common Stock that is
distributed in the offering but subsequently purchased for the account of the
Underwriters in the open market. Any of the transactions described in this
paragraph may result in the maintenance of the price of the Common Stock at a
level above that which might otherwise prevail in the open market. None of the
transactions described in this paragraph is required, and, if undertaken, may
be discontinued at any time.

The foregoing includes a summary of the principal terms of the
Underwriting Agreement and does not purport to be complete. Reference is made
to the copy of the Underwriting Agreement that is on file as an exhibit to the
Registration Statement of which this Prospectus forms a part.

Pursuant to a financial advisory agreement between the Company and Nassau
(as amended and clarified, the "Nassau Agreement"), Nassau, a financial advisor
to the Company, is entitled to a fee of $100,000 upon consummation of this
Offering. At such time, Nassau will also receive a warrant to purchase 29,167
shares of Common Stock at a per share exercise price of $12.00 and a warrant to
purchase 53,001 Shares of Common Stock at an aggregate exercise of $92,355. In
addition, the Company has paid to Nassau fees in the aggregate amount of
$79,587 and owes Nassau an additional $61,621. The

60
<PAGE>

Company also has issued an aggregate of 84,802 shares of Common Stock to Nassau
and its related persons at a weighted average price of $0.24 per share.

Prior to the Offering, there has been no public market for the Common
Stock of the Company. Consequently, the initial public offering price for the
Common Stock has been determined through negotiations among the Company and the
Representatives. Among the factors considered in making such determination were
prevailing market conditions, the Company's financial and operating history and
condition, its prospects and the prospects of the industry in general, the
management of the Company, and the market prices of securities for companies in
businesses similar to that of the Company.

61
<PAGE>

LEGAL MATTERS

Certain legal matters with respect to the Common Stock offered hereby will
be passed upon for the Company and for the Selling Stockholders by Greenberg
Traurig Hoffman Lipoff Rosen & Quentel, P.A., Miami, Florida, and for the
Underwriters by Testa, Hurwitz & Thibeault, LLP, Boston, Massachusetts.

EXPERTS

The consolidated financial statements of Dental Care Alliance, Inc. as of
December 31, 1996 and 1995 and for each of the three years in the period ended
December 31, 1996 included in this Prospectus have been so included in reliance
on the report of Price Waterhouse LLP, independent certified public
accountants, given on the authority of said firm as experts in auditing and
accounting.

In February 1997 the Company's Board of Directors approved a change in
accountants and the Company's predecessor subsidiaries' former accountants were
dismissed. The independent accounting firm of Price Waterhouse LLP was
subsequently engaged by the Company. The former accountants had not previously
rendered a report on the Company, however, their report on the financial
statements of the Company's predecessor subsidiaries for the years ended
December 31, 1995 and 1994 did not contain an adverse opinion or disclaimer
opinion, and was not qualified or modified as to uncertainty, audit scope or
accounting principles. In addition, there were no disagreements between the
Company and its former accountants on any matter of accounting principles or
practices, financial statement disclosure or auditing scope or procedure during
the two most recent fiscal years ended December 31, 1996 and subsequent interim
periods.

AVAILABLE INFORMATION

The Company has filed a Registration Statement on Form S-1 (the
"Registration Statement") with the Commission under the Securities Act in
respect of the Common Stock offered hereby. For purposes of this Prospectus,
the term "Registration Statement" means the initial Registration Statement and
any and all amendments thereto. This Prospectus omits certain information
contained in the Registration Statement as permitted by the rules and
regulations of the Commission. For further information with respect to the
Company and the Common Stock offered hereby, reference is made to the
Registration Statement, including the exhibits thereto. Statements herein
concerning the contents of any contract or other document are not necessarily
complete, and in each instance reference is made to such contract or other
document filed with the Commission as an exhibit to the Registration Statement,
or otherwise, each such statement, being qualified by and subject to such
reference in all respects.

As a result of this offering, the Company will become subject to the
informational requirements of the Exchange Act, and in accordance therewith
will file reports, proxy and information statements, and other information with
the Commission. Reports, registration statements, proxy and information
statements, and other information filed by the Company with the Commission can
be inspected and copied at the public reference facilities maintained by the
Commission at Judiciary Plaza, 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549, and at its regional offices located at 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661; and Seven World Trade Center, Suite 1300,
New York, New York 10048. Copies of these material may be obtained at
prescribed rates from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Room 1024, Washington, D.C. 20549. The Commission maintains
a site on the World Wide Web (http://www.sec.gov) that contains reports,
registration statements, proxy and information statements, and other
information.

62
<PAGE>

INDEX TO FINANCIAL STATEMENTS

PAGE
------

Report of Independent Certified Public Accountants ...... F-2

Consolidated Balance Sheets .............................. F-3

Consolidated Statements of Operations .................. F-4

Consolidated Statements of Stockholders' Equity ......... F-5

Consolidated Statements of Cash Flows .................. F-6

Notes to Consolidated Financial Statements ............... F-7

F-1
<PAGE>

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Board of Directors and
Stockholders' of Dental Care Alliance, Inc.

"In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of operations, of stockholders' equity and of
cash flows present fairly, in all material respects, the financial position of
Dental Care Alliance, Inc. (the "Company") successor to Golden Care Holdings,
Inc. and its subsidiaries' at December 31, 1996 and 1995, and the results of
their operations and their cash flows for each of the three years in the period
ended December 31, 1996, in conformity with generally accepted accounting
principles. These financial statements are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these statements in
accordance with generally accepted auditing standards which require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for the opinion expressed above."

Price Waterhouse LLP
Tampa, Florida
August 26, 1997, except for the stock split
described in Note 2 and Note 14 as to
which the date is October 24, 1997.

F-2
<PAGE>

DENTAL CARE ALLIANCE, INC.
(SUCCESSOR TO GOLDEN CARE HOLDINGS L.C.)

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31, PRO FORMA
-------------------------- JUNE 30, JUNE 30,
1995 1996 1997 1997
----------- ------------ ------------- -------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents .............................. $ 42,193 $1,253,259 $ 876,217 $ 876,217
Consulting and license fees receivable .................. 64,842 59,000 58,352 58,352
Management fee receivable from P.A.s .................. 43,651 397,441 576,456 576,456
Advances to P.A.s ....................................... -- 16,454 287,127 287,127
Other current assets .................................... 620 27,644 15,871 15,871
Current portion of long-term notes receivable
from P.A.s .......................................... 56,375 68,460 73,266 73,266
---------- ----------- ---------- ----------
Total current assets ................................. 207,681 1,822,258 1,887,289 1,887,289
Property and equipment, net .............................. 51,294 40,230 219,910 219,910
Intangible assets, net ................................. 15,833 803,753 793,535 793,535
Long-term notes receivable from P.A.s,
less current portion .................................... 145,095 129,935 100,490 100,490
Consulting and license fees receivable, non current ...... 98,925 251,925 300,000 300,000
Other assets ............................................. 5,715 74,838 69,244 69,244
---------- ----------- ---------- ----------
Total assets .......................................... $ 524,543 $3,122,939 $3,370,468 $3,370,468
========== =========== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ....................................... $ 34,471 $ 491,509 $ 574,283 $ 574,283
Accrued payroll and payroll related costs ............... 16,391 124,236 212,572 212,572
Other accrued liabilities .............................. 2,005 67,008 87,245 87,245
Current portion of long-term debt ..................... 56,138 173,652 161,807 161,807
---------- ----------- ---------- ----------
Total current liabilities .............................. 109,005 856,405 1,035,907 1,035,907
Long-term debt, less current portion ..................... 107,607 40,350 28,746 28,746
---------- ----------- ---------- ----------
Total liabilities .................................... 216,612 896,755 1,064,653 1,064,653
---------- ----------- ---------- ----------
Commitments and contingencies
Minority interest in consolidated subsidiaries ......... 11,094 -- -- --
Mandatorily redeemable preferred stock, $.01 par value,
15,000 shares authorized, issued and outstanding ...... -- 1,402,562 1,473,062 --
Put rights associated with common stock .................. -- 191,237 191,237 --
---------- ----------- ---------- ----------
11,094 1,593,799 1,664,299 --
---------- ----------- ---------- ----------
Stockholders' equity:
Common stock, $.01 par value, 50,000,000 shares
authorized, 3,791,610, 3,995,460 and 4,243,342 issued
and outstanding at December 31, 1995, 1996, and
June 30, 1997 (unaudited), respectively, 4,897,700
issued and outstanding--pro forma (unaudited) ......... 37,916 39,955 42,433 48,977
Additional paid-in capital .............................. 242,202 554,696 845,006 2,502,761
Stock subscription receivable ........................... -- -- (272,768) (272,768)
Retained earnings ....................................... 16,719 37,734 26,845 26,845
---------- ----------- ---------- ----------
Total stockholders' equity ........................... 296,837 632,385 641,516 2,305,815
---------- ----------- ---------- ----------
Total liabilities and stockholders' equity ............ $ 524,543 $3,122,939 $3,370,468 $3,370,468
========== =========== ========== ==========
</TABLE>

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

F-3
<PAGE>

DENTAL CARE ALLIANCE, INC.
(SUCCESSOR TO GOLDEN CARE HOLDINGS L.C.)

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31, SIX MONTHS ENDED JUNE 30,
------------------------------------ -------------------------
1994 1995 1996 1996 1997
---------- ------------ ------------ ------------- -------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Management fees ....................................... $673,304 $ 513,705 $1,289,828 $405,072 $2,471,759
Consulting and licensing fees ........................ 42,763 262,769 347,600 138,812 161,885
--------- --------- ---------- -------- ----------
Total revenues .................................... 716,067 776,474 1,637,428 543,884 2,633,644
--------- --------- ---------- -------- ----------
Managed dental center expenses:
Staff salaries and benefits ........................ -- -- 223,657 -- 601,383
Dental supplies .................................... -- -- 79,448 -- 213,334
Laboratory fees .................................... -- -- 98,222 -- 373,010
Marketing .......................................... -- -- 38,128 -- 176,627
Occupancy .......................................... -- -- 106,501 -- 333,085
Other ................................................ -- -- 57,182 -- 326,494
--------- --------- ---------- -------- ----------
Total managed dental center expenses ............... -- -- 603,138 -- 2,023,933
--------- --------- ---------- -------- ----------
716,067 776,474 1,034,290 543,884 609,711
Salaries and benefits .............................. 408,716 400,669 521,683 261,642 373,016
General and administrative ........................ 204,901 234,577 260,558 118,476 135,970
Advisory services .................................... -- 127,768 -- -- --
Depreciation and amortization ........................ 15,150 22,106 27,654 10,254 41,578
--------- --------- ---------- -------- ----------
Operating income (loss) ........................... 87,300 (8,646) 224,395 153,512 59,147
Interest income (expense), net ..................... 22,584 6,494 20,781 (5,058) 36,464
--------- --------- ---------- -------- ----------
Income (loss) before income taxes
and minority interest .............................. 109,884 (2,152) 245,176 148,454 95,611
Provision for income taxes ........................... 19,919 -- 35,500 -- 36,000
Minority interest .................................... 2,440 8,654 7,674 3,537 --
--------- --------- ---------- -------- ----------
Net income (loss) .................................... 87,525 (10,806) 202,002 144,917 59,611
Adjustment to redemption value of common and
preferred securities .............................. 39,951 85,709 (191,237) -- (10,500)
Cumulative preferred stock dividend .................. -- -- (6,485) -- (60,000)
--------- --------- ---------- -------- ----------
Net income (loss) applicable to common stock ......... $127,476 $ 74,903 $ 4,280 $144,917 $ (10,889)
========= ========= ========== ======== ==========
Unaudited pro forma data:
Income (loss) before income taxes and
minority interest ................................. $109,884 $ (2,152) $ 245,176 $148,454 $ 95,611
Pro forma provision for income taxes ............... 42,000 -- 94,000 57,000 36,000
Minority interest in consolidated subsidiaries ...... 1,507 5,343 4,739 2,184 --
--------- --------- ---------- -------- ----------
Pro forma net income (loss) ........................ $ 66,377 $ (7,495) $ 146,437 $ 89,270 $ 59,611
========= ========= ========== ======== ==========
Primary pro forma net income per
common share ....................................... $ .03 $ .01
========== ==========
Primary weighted average common
shares outstanding ................................. 4,773,071 4,773,071
========== ==========
</TABLE>

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

F-4
<PAGE>

DENTAL CARE ALLIANCE, INC.
(SUCCESSOR TO GOLDEN CARE HOLDINGS L.C.)

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
COMMON ADDITIONAL
COMMON STOCK PAID-IN RETAINED
STOCK ($.01 PAR) CAPITAL EARNINGS TOTAL
----------- ------------ ------------ ------------- --------------
<S> <C> <C> <C> <C> <C>
Balance, January 1, 1994 ..................... 3,791,610 $37,916 $ 9,929 $ -- $ 47,845
Contribution from stockholder ............... 88,750 88,750
Preferred Stock--accretion to put value ...... (125,671) (125,671)
Common Stock--accretion to put value ......... 39,951 39,951
Net income ................................. 87,525 87,525
Dividends .................................... (20,000) (20,000)
---------- ----------
Balance, December 31, 1994 .................. 3,791,610 37,916 12,959 67,525 118,400
Net loss .................................... (10,806) (10,806)
Cash contribution from stockholder ......... 15,766 15,766
Common stock--accretion to put value ......... 85,709 85,709
Issuance of warrants ........................ 127,768 127,768
Dividends .................................... (40,000) (40,000)
---------- ----------
Balance, December 31, 1995 .................. 3,791,610 37,916 242,202 16,719 296,837
Net Income--January 1 to
October 25, 1996 .............................. 157,783 157,783
Purchase of minority interest ............... 18,768 18,768
Reclassification of members capital upon
C-Corporation election (see Note 1) ......... 174,502 (174,502) --
Issuance of common stock ..................... 203,850 2,039 310,461 312,500
Common stock--accretion to put value ......... (191,237) (191,237)
Accrued dividends on mandatorily
redeemable preferred stock .................. (6,485) (6,485)
Net income--October 26 to
December 31, 1996 ........................... 44,219 44,219
---------- ----------
Balance, December 31, 1996 .................. 3,995,460 39,955 554,696 37,734 632,385
Adjustment to redemption value of
preferred stock ........................... (10,500) (10,500)
Accrued dividends on mandatorily
redeemable preferred stock .................. (60,000) (60,000)
Issuance of common stock ..................... 247,882 2,478 290,310 292,788
Stock subscription receivable ............... (272,768) (272,768)
Net Income .................................... 59,611 59,611
---------- ----------
Balance, June 30, 1997--unaudited ............ 4,243,342 $42,433 $ 572,238 $ 26,845 $ 641,516
========== ======== ========== ========== ==========
</TABLE>

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

F-5
<PAGE>

DENTAL CARE ALLIANCE, INC.
(SUCCESSOR TO GOLDEN CARE HOLDINGS L.C.)

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
------------------------------------------
1994 1995 1996
------------- -------------- -------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) .......................................... $ 87,525 $ (10,806) $ 202,002
Adjustments to reconcile net income (loss) to net cash
(used in) provided by operating activities:
Depreciation and amortization .............................. 15,150 22,106 27,654
Gain on sale of equipment ................................. (16,804) -- --
Issuance of warrants for advisory services ............... -- 127,768 --
Minority interest .......................................... 2,440 8,654 7,674
(Increase) decrease in:
Consulting and license fees receivable ..................... (65,602) (72,765) (147,158)
Management fee receivable from P.A.s ........................ (16,760) 2,463 (353,790)
Other assets ................................................ (1,980) (3,580) (96,147)
Increase (decrease) in:
Accounts payable .......................................... (86,169) 13,324 457,038
Other accrued liabilities ................................. -- 1,868 65,003
Accrued payroll and payroll related costs .................. -- (13,159) 107,845
----------- ---------- ----------
Net cash (used in) provided by operating activities ...... (82,200) 75,873 270,121
----------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment, net ..................... (177,778) (4,703) (4,444)
Advances made on notes receivable to P.A.s .................. (220,000) (10,000) (50,000)
Payments received on notes receivables to P.A.s ............ 103,714 29,054 53,075
Investment in servicing agreements ........................... -- (20,000) (486,489)
----------- ---------- ----------
Net cash used in investing activities ..................... (294,064) (5,649) (487,858)
----------- ---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of mandatorily redeemable
preferred stock, net ....................................... -- -- 1,395,000
Proceeds from issuance of common stock ..................... -- -- --
Contribution from stockholder .............................. 88,739 15,766 --
Proceeds on sales of equipment .............................. 4,227 -- --
Payments of long-term debt ................................. (10,787) (45,692) (67,257)
Proceeds from issuance of long-term debt ..................... 211,584 -- 117,514
Advances to P.A.s .......................................... -- -- (16,454)
Dividends ................................................... (20,000) (40,000) --
----------- ---------- ----------
Net cash provided by (used in) financing activities ...... 273,763 (69,926) 1,428,803
----------- ---------- ----------
Net (decrease) increase in cash and cash equivalents ...... (102,501) 298 1,211,066
Cash and cash equivalents at beginning of period ............ 144,396 41,895 42,193
----------- ---------- ----------
Cash and cash equivalents at end of period .................. $ 41,895 $ 42,193 $1,253,259
=========== ========== ==========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for income taxes .................. $ -- $ 23,903 $ --
Cash paid during the year for interest ..................... $ 5,775 $ 19,282 $ 13,955
Issuance of common stock for non cash consideration ......... $ -- $ -- $ 312,500
Assumption of accounts payable and accrued liabilities
related to revision of management service agreements ...... $ -- $ -- $ 438,300
Increase to redemption value of preferred stock ............ $ -- $ -- $ --
Increase in cumulative preferred stock dividend ............
Elimination of minority interest ........................... $ 18,768

<CAPTION>
SIX MONTHS ENDED JUNE 30,
-------------------------
1996 1997
------------- -------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) .......................................... $ 144,917 $ 59,611
Adjustments to reconcile net income (loss) to net cash
(used in) provided by operating activities:
Depreciation and amortization .............................. 10,254 41,578
Gain on sale of equipment ................................. -- --
Issuance of warrants for advisory services ............... -- --
Minority interest .......................................... 3,537 --
(Increase) decrease in:
Consulting and license fees receivable ..................... (60,226) (47,427)
Management fee receivable from P.A.s ........................ (94,421) (179,015)
Other assets ................................................ (41,097) 17,367
Increase (decrease) in:
Accounts payable .......................................... 4,129 82,774
Other accrued liabilities ................................. -- 20,237
Accrued payroll and payroll related costs .................. 7,132 88,336
---------- -----------
Net cash (used in) provided by operating activities ...... (25,775) 83,461
---------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment, net ..................... (4,444) (211,040)
Advances made on notes receivable to P.A.s .................. (50,000) --
Payments received on notes receivables to P.A.s ............ 34,966 24,639
Investment in servicing agreements ........................... (1,167) --
---------- -----------
Net cash used in investing activities ..................... (20,645) (186,401)
---------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of mandatorily redeemable
preferred stock, net ....................................... -- --
Proceeds from issuance of common stock ..................... -- 20,020
Contribution from stockholder .............................. -- --
Proceeds on sales of equipment .............................. -- --
Payments of long-term debt ................................. -- (23,449)
Proceeds from issuance of long-term debt ..................... 50,459 --
Advances to P.A.s .......................................... -- (270,673)
Dividends ................................................... -- --
---------- -----------
Net cash provided by (used in) financing activities ...... 50,459 (274,102)
---------- -----------
Net (decrease) increase in cash and cash equivalents ...... 4,039 (377,042)
Cash and cash equivalents at beginning of period ............ 42,193 1,253,259
---------- -----------
Cash and cash equivalents at end of period .................. $ 46,232 $ 876,217
========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for income taxes .................. $ -- $ --
Cash paid during the year for interest ..................... $ 8,659 $ 6,809
Issuance of common stock for non cash consideration ......... $ -- $ --
Assumption of accounts payable and accrued liabilities
related to revision of management service agreements ...... $ -- $ --
Increase to redemption value of preferred stock ............ $ -- $ 10,500
Increase in cumulative preferred stock dividend ............ $ 60,000
Elimination of minority interest ...........................
</TABLE>

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

F-6
<PAGE>

DENTAL CARE ALLIANCE, INC.
(SUCCESSOR TO GOLDEN CARE HOLDINGS L.C.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. OPERATIONS AND ORGANIZATION

Dental Care Alliance, Inc. ("DCA" or the "Company") was formed on October
23, 1996 with a nominal capital contribution, to effect a reorganization (the
"Reorganization") among DCA, Golden Care Holdings L.C. ("GCH"), the predecessor
entity, and its majority owned subsidiaries Golden Care Network, L.C.("GCN"),
and Prophet Management L.C. ("PM"). DCA and GCH completed the Reorganization on
October 25, 1996 by transferring substantially all of the assets, liabilities
and operations of GCH, GCN and PM to DCA. Concurrently, shares of DCA were
issued in exactly the same proportion as the shareholders of GCH.

As the shareholders of DCA and GCH, and their related ownership
percentages, were identical at the time of the Reorganization, the
Reorganization has been accounted for in a manner similar to a pooling of
interests. The effects of the Reorganization, resulting in the recording of a
charge to recognize deferred income taxes upon conversion to C corporation
status have been reflected in these financial statements.

GCH was incorporated in 1993 as a Florida Limited Liability Corporation
which held 99% of GCN and 90% of PM. Concurrent with the Reorganization, the
10% minority shareholder of PM transferred his ownership interest in the assets
of PM in exchange for 81,540 shares of the stock of DCA. These shares were
issued to the minority shareholder at fair market value of $1.53 per share as
determined by an independent third party appraisal of the common stock of the
Company as of this date. As a result of this transaction, $125,000 was
capitalized by DCA and is reflected as a component of intangible assets in the
underlying financial statements and is being amortized over 15 years. No step
up in basis for the 1% minority share of GCN has been reflected, as the
shareholders and shareholders' percentages of DCA and GCH were exactly the same
on the date of the Reorganization, and the fair value of the 1% ownership
interest is not material.

The Company and its predecessor provide management, consulting and
licensing services to dental practices in Florida and Michigan. The dental
practices are owned by separate Professional Associations (the "P.A.s"), and
the Company has entered into long-term Administrative Services Agreements
("Management Agreements") with the P.A.s to provide administrative, financial
and technical support and expertise to the P.A.s in exchange for management,
consulting and licensing fees, as described in Note 3.

Each P.A. employs and directs the professional dental staff, including the
dentists and hygienists, and provides all of the clinical services to the
patients. The Company employs and directs the administrative staff and manages
in collaboration with the P.A. owner, all of the remaining administrative,
financial, marketing and professional services of the practice. As of December
31, 1996, the Company provided these management services to 12 Managed Dental
Centers, all located in Florida. For the years ended December 1996, 1995 and
1994, of the 12, 9 and 7 Managed Dental Centers, 10, 6 and 1 centers were owned
and controlled by the same individual and resulted in $1,022,000, $288,000 and
$4,000 of the Company's management fees, respectively. As further described in
Note 3, these 10 Management Agreements were modified concurrent with the
Reorganization, in exchange for 81,540 shares of the Company and assumption of
the existing working capital liabilities of the P.A.s of $438,300. The fair
value of these shares ($125,000) and the working capital liabilities assumed
have been recorded as an intangible asset and are being amortized over the 25
year life of the agreements.

F-7
<PAGE>

DENTAL CARE ALLIANCE, INC.
(SUCCESSOR TO GOLDEN CARE HOLDINGS L.C.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

1. OPERATIONS AND ORGANIZATION--(CONTINUED)

The Company also provides consulting services to other P.A.s, under
contracts in which the P.A. employs the administrative staff. Under such
agreements, the Company reviews and consults on the financial and operational
efficiencies of the practices. These consulting agreements were originally held
by an entity which is approximately 80% controlled by the Company's President
and controlling shareholder (see Note 14 Subsequent Events). The 20% minority
shareholder assigned his interest in these agreements to the Company on October
25, 1996 in exchange for 40,770 shares of the Company's common stock which was
valued at $1.53 per share, as determined by an independent third party
appraisal. As a result of this transaction, $62,500 was capitalized and is
reflected as a component of intangible assets in the underlying financial
statements and is being amortized over the 8 year remaining life of these
agreements. As of December 31, 1996, the Company provided these consulting
services to 4 Managed Dental Centers, all located in Michigan (see Note 14,
Subsequent Events).

2. SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation/basis of consolidation. The accompanying
consolidated financial statements have been prepared on the accrual basis of
accounting and include only those operations which are under the ownership and
financial control of the Company. All intercompany accounts and transactions
have been eliminated in consolidation. The Company's predecessor subsidiaries
were consolidated for the years ended 1995 and 1994. Where the Company does not
have any ownership in or exercise control over the dentistry activities of the
P.A.s, the accompanying financial statements do not consolidate the results of
the P.A.s. Each P.A. transaction and relationship entered into is evaluated
based on its relevant facts and circumstances.

BASIS OF PRESENTATION--INTERIM FINANCIAL STATEMENTS (UNAUDITED). The
financial statements for the six months ended June 30, 1997 and 1996 are
unaudited and have been prepared by the Company. In the opinion of management,
all adjustments, consisting only of normal recurring adjustments, necessary to
present fairly the results of its operations for the six months ended June 30,
1997 and 1996 have been included herein. The results of operations for the six
month period are not necessarily indicative of the results for the full year.

STOCK SPLIT. On October 6, 1997, the Company's Board of Directors
authorized a 81.54 for 1 stock split. The increase in authorized shares and the
stock split have been retroactively reflected in these financial statements.
The Company also authorized an increase of its authorized common shares to 50
million.

UNAUDITED PRO FORMA NET INCOME PER SHARE. The Company's historical capital
structure is not indicative of its prospective structure due to the conversion
of preferred stock into common stock and the termination of the common stock
put rights that will occur concurrent with the closing of the Offering.
Accordingly, historical net income per share is not considered meaningful and
has not been presented herein.

Pro forma net income per share is based on the weighted average number of
common shares and dilutive common equivalent shares outstanding during the
periods. Pro forma net income per share also assumes the conversion of
preferred stock into common stock on the date of issuance and assumes the
issuance of all contingently issuable options. Common stock and common
equivalent shares issued

F-8
<PAGE>

DENTAL CARE ALLIANCE, INC.
(SUCCESSOR TO GOLDEN CARE HOLDINGS L.C.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

2. SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
within one year prior to the filing of the Company's registration statement at
prices less than the initial public offering price have been included for all
periods presented using the treasury stock method.

EARNINGS PER SHARE. Had the effects of conversion of preferred stock into
common stock and elimination of put rights not been assumed, historical
earnings per share on a primary and fully diluted basis would have been as
follows. Fully diluted are consistent with primary earnings per share:

FOR THE YEARS ENDED
-----------------------------------------
1994 1995 1996
------------ ----------- ------------
Primary Earnings Per Share ...... $ .02 -- $ .04
Weighted Average Shares ......... 4,773,071 4,773,071 4,773,071

REVENUE RECOGNITION. The Company records its revenue in accordance with
Management Agreements and other consulting and licensing agreements further
described in Note 3.

ADVERTISING. The costs of advertising, promotion and marketing,
aggregating $18,902, $14,437, and $42,272 for the years ended December 31,
1994, 1995, and 1996, respectively, are expensed when incurred and are included
in general and administrative expenses.

FAIR VALUE OF FINANCIAL INSTRUMENTS. The estimated fair value of amounts
reported in the financial statements have been determined by using available
market information and appropriate valuation methodologies. The carrying value
of all current assets and current liabilities approximates fair value because
of their short-term nature. The carrying value of all non-current financial
instruments are considered to approximate fair value based on current market
rates and instruments with similar risks and maturities.

CASH AND CASH EQUIVALENTS. The Company considers all highly liquid
investments purchased with an original maturity of three months or less to be
cash equivalents.

CONSULTING AND LICENSING FEES RECEIVABLE. Consulting and licensing fees
receivable represents amounts owed to the Company from various P.A.s for
consulting and licensing fees provided under contracts. The Company reviews the
collectibility of its receivables related to consulting and license fees. This
review is based upon the cash flow of the P.A.s and the adequacy of the
collateral of the assets of the P.A.s.

MANAGEMENT FEE RECEIVABLE FROM P.A. Management fee receivable from P.A.
consists of amounts owed to the Company related to revenue recorded in
accordance with Management Agreements and is recorded based upon the net
realizable value of patient accounts receivables of the P.A.s. The Company
reviews the collectibility of the patient accounts receivables of the P.A.s and
adjusts its management fee receivable accordingly.

ADVANCES TO P.A.S. Advances to P.A.s consist of receivables from P.A.s in
connection with working capital advances made to affiliated practices. The
Company reviews the collectibility of its receivables related to advances to
P.A.s. This review is based upon the cash flow of the P.A.s, and the fair
market value of the collateral of the assets of the P.A.s. Commencing August
1997, under terms of a note agreement such advances are repayable under terms
calling for interest at 8%, maturing on

F-9
<PAGE>

DENTAL CARE ALLIANCE, INC.
(SUCCESSOR TO GOLDEN CARE HOLDINGS L.C.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

2. SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)

June 30, 1998. Any future advances will be due within 12 months of issuance at
8%, adjusted for any changes in the Company's borrowing rate. All advances and
payables between P.A.'s under common ownership have a right of offset included
in the agreement.

NOTES RECEIVABLE FROM P.A.S. Notes receivable from P.A.s relate to
financing of capital improvements made by P.A.s covering certain medical and
non-medical assets. Notes receivables from P.A.s generally have terms of 2 to 5
years, are interest bearing with rates between 10% and 18.5% percent, and are
secured by the assets of the Managed Dental Center and personally guaranteed by
the P.A. owner.

PROPERTY AND EQUIPMENT. Property and equipment are stated at cost.
Expenditures for maintenance and repairs are charged to expenses as incurred
and expenditures for additions and betterments are capitalized. The cost of
assets sold or otherwise disposed of and the related accumulated depreciation
are eliminated from the accounts and any resulting gain or loss is reflected in
the statement of operations.

Depreciation is computed by using the straight-line method over the
estimated useful life of the asset, ranging from 3 to 10 years. Leasehold
improvements are amortized over their estimated useful life or the remaining
lease period, whichever is less.

INTANGIBLE ASSETS. Intangible assets includes certain organizational costs
associated with the incorporation of the Company and costs related to
consideration given to entities in exchange for (i) waiver by a minority
shareholder of any rights to receive management fees under certain management
agreements, (ii) revised terms to existing management service agreements and
(iii) the purchase of minority shareholder rights in PM. Intangible assets are
being amortized over periods of 8-25 years. Accumulated amortization related to
intangible assets was $4,167 and $7,146 at December 31, 1995 and 1996,
respectively.

CONTRIBUTION FROM SHAREHOLDER. Contribution from shareholder, net of
accretion to put value, in 1994 of $(36,921) relates to a cash contribution of
$88,750 reduced by $125,671 related to the value of the put option as an
increase in temporary equity and a reduction of additional paid-in capital.

STOCK BASED COMPENSATION. In October 1995 the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards No. 123,
ACCOUNTING FOR STOCK-BASED COMPENSATION ("SFAS No. 123"), which is effective
for fiscal years beginning after December 15, 1995. Under SFAS No. 123, the
Company may elect to recognize stock-based compensation expense based on the
fair value of the awards or continue to account for stock-based compensation
under Accounting Principles Board Opinion No. 25 ACCOUNTING FOR STOCK ISSUED TO
EMPLOYEES ("APB No. 25") and disclose in the financial statements the effects
of SFAS No. 123 as if the recognition provisions were adopted. The Company has
elected to continue to account for its existing stock based compensation under
APB No. 25 and adopt the disclosure only requirements of SFAS No. 123. In the
event that the Company adopts a stock-based compensation plan for
non-employees, the Company will recognize such stock based compensation
expense, as well as shares contingently issuable to P.A.s in the event of an
initial public offering by the Company, under SFAS No. 123.

USE OF ESTIMATES. The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported

F-10
<PAGE>

DENTAL CARE ALLIANCE, INC.
(SUCCESSOR TO GOLDEN CARE HOLDINGS L.C.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

2. SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)

amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.

DEPENDENCE ON THE P.A.S. The Company receives fees for services provided
to the P.A.s under Management Agreements, and consulting and licensing
agreements, but does not employ dentists or control the practices of the
dentists employed by the P.A.s. The Company's revenue is dependent on revenue
generated by the P.A.s and in some cases the net profits, therefore, effective
and continued performance of the Managed Dental Centers during the term of the
Agreements is essential to the Company's long-term success.

The Management Agreements are generally for a term of 25 years beginning
on the effective date of each individual agreement and renewing each and every
year on the anniversary date of the subsequent year for a period of generally
25 years and may be terminated by the P.A., or the Company, under certain
events of default "with cause" as defined including a material default by or
bankruptcy of the Company. In the event of a material default by the P.A., or
its owner, the P.A. can sell the practice to a third party mutually agreed to
or sell its assets to the Company for a preset formula price and assign
ownership interest to a P.A. agreeable to all parties. In the event that the
proper notification is given to the Company, the P.A. can terminate the
agreement at any time without cause if it sells the practice and assigns the
agreement to another party to be approved by the Company. The sales price in
such event will be determined through negotiations among the selling P.A. and
the buyer. In no event can the Company replace the P.A. at will or for a
nominal fee, except in the event of default. Any material loss of revenue by
the P.A.s would have a material adverse effect on the Company, including the
P.A.s' ability to repay their indebtedness to the Company.

AFFILIATIONS WITH PRACTICES. During the three years ended December 31,
1994, 1995 and 1996 the Company affiliated with dental practices by executing
Management Agreements. In addition to the affiliation with the five existing
Managed Dental Centers, the Company executed two, four and four new Management
Agreements for the years ended December 31, 1994, 1995 and 1996, respectively.
Net practice revenues for these practices were approximately $210,000, $491,000
and $664,000, respectively, during these periods. During this same period, the
number of affiliations with dental practices that were terminated were 0, 2 and
1, respectively. Net practice revenues for these practices were approximately
$757,000 and $102,000, for the years ended December 31, 1994 and 1995,
respectively.

INTANGIBLES AND LONG LIVED ASSETS. The Company evaluates whether events
and circumstances have occurred that indicate the carrying amount of long-lived
assets may be impaired, by comparison of undiscounted cash flows from
operations with related carrying value of the assets. At December 31, 1996, the
unamortized balance of these assets are not considered to be impaired.

ADOPTION OF NEW ACCOUNTING STANDARDS. In February, 1997, the Financial
Accounting Standards Board issued Statement No. 128 "Earnings Per Share" ("SFAS
No. 128"), which replaces the presentation of primary EPS with basic EPS and
requires diluted EPS be presented for entities with complex capital structures.
This Statement is effective for fiscal periods ending after December 15, 1997
and early application is not permitted. Under SFAS No. 128 reporting
requirements, basic and fully diluted EPS on a pro forma basis would have been
$.04 and $.03 per share, respectively, for the year ended December 31, 1996 and
$.01 and $.01 per share, respectively, for the six month period ended June 30,
1997.

F-11
<PAGE>

DENTAL CARE ALLIANCE, INC.
(SUCCESSOR TO GOLDEN CARE HOLDINGS L.C.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

2. SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)

INCOME TAXES AND PRO FORMA INCOME TAXES. Upon its incorporation on October
23, 1996, as described in Note 1, the Company terminated its predecessor status
as a Limited Liability Corporation and is now subject to federal income taxes.
As such, the financial statements in 1996, 1995 and 1994 include a pro forma
adjustment for income taxes as if the Company had been treated as a C
Corporation. The effective rate utilized approximates the combined statutory
federal and state income tax rate, net of the tax effects of minority interest
in current earnings. Effective October 25, 1996, the Company accounted for
income taxes under the liability method in accordance with Statement of
Financial Accounting Standards, NO. 109, ACCOUNTING FOR INCOME TAXES ("SFAS No.
109").

Due to the conversion of the preferred stock into common stock and the
termination of the common stock put rights that will occur concurrent with the
closing of the Offering, pro forma net income per share is computed using the
pro forma net income of the Company before deductions for the adjustment in
redemption value of the common and preferred securities and preferred stock
dividends.

PRO FORMA BALANCE SHEET--UNAUDITED. The pro forma balance sheet as of June
30, 1997 is presented to give effect for the anticipated initial public
offering of the Company's securities at which time the amount ascribed to
common stock put rights will be returned to permanent net equity upon
consummation of the initial public offering and mandatorily redeemable
preferred stock will be converted to common stock of the Company. The pro forma
balance sheet does not contain the proceeds estimated to be received by the
Company upon consummation of the Offering.

3. REVENUE RECOGNITION

Management Fees. Management fees represents revenue earned from managed
dental practices less amounts retained by the practices for those P.A.s where
the Company provides management services.

The Company earns management fees from the P.A.s under two types of
contracts: net revenue and net profits. Under the net revenue contracts,
management fees are equal to 74% of the patient revenues earned by the P.A.
Such contracts also stipulate that the Company must pay certain expenses, as
defined by the Management Agreement. Under the net profits contracts,
management fees are equal to between 50% and 90% of the practice's net profits,
as defined. Net profit is calculated by subtracting practice expenses (which
constitutes both dental and non-dental expenses, capital expenditures and debt
principal), excluding depreciation and amortization, from net practice revenue.
Contractual revenues and related expenses have, for purposes of the
accompanying financial statements, been reflected on an accrual basis.

The amounts contractually retained by the practices under net revenue
contracts are intended to cover amounts incurred for (1) salary and benefits to
employ the dentists, hygienists and contracted specialists; (2) licensing fees
to be paid to the Company; (3) debt and asset carrying costs on the acquisition
of the practices; and (4) any other direct costs to the P.A. not covered under
the Management Agreement.

The revised structure of the P.A. contracts is designed to provide the PA
with the opportunity to achieve profits over the term of the contract, as well
as to allow for incentives for the P.A. owners and

F-12
<PAGE>

DENTAL CARE ALLIANCE, INC.
(SUCCESSOR TO GOLDEN CARE HOLDINGS L.C.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

3. REVENUE RECOGNITION--(CONTINUED)

dental professionals to increase productivity and the number of patient
encounters, to improve the documentation of their services so that appropriate
billings can be rendered and to increase the opportunity for dental
professionals other than dentists to provide services.

Effective October 1996, the Company revised the term of all of its 12 then
existing Management Agreements such that the Company is responsible for the
payment of all non-professional expenses of the Managed Dental Centers. Ten
Management Agreements were also revised to base the Company's management fee
from a percentage of net profits at each PA to a percentage of net patient
revenue from each PA and two Management Agreements were modified to assign
additional responsibilities to the Company. Accordingly, prior to these
revisions to such 12 Management Agreements, all non-professional expenses of
the Managed Dental Centers and related revenues were reflected in each PA's
financial statements. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations." The Company expects to primarily utilize
net revenue contracts in the future. Management fees for the remaining two
Managed Dental Centers under the net profits contracts aggregating $474,092 for
the six months ended June 30, 1997 are equal to the Company's reimburseable
costs of $394,605 plus 50-55% of the net profits, as defined, of $79,487 (54.7%
of the PAs net profits of $145,210) for the two Managed Dental Centers, for the
six month period.

The PA located in Port Charlotte, Florida has the right to terminate its
Management Agreement during a 90-day period beginning in October 1998. The two
Management Agreements on a net profits basis expire in 2003.

F-13
<PAGE>

DENTAL CARE ALLIANCE, INC.
(SUCCESSOR TO GOLDEN CARE HOLDINGS L.C.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

3. REVENUE RECOGNITION--(CONTINUED)

The following table sets forth the gross practice revenue earned and
amounts retained by the P.A.s, and the management fees earned by the Company
for the periods ended:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------------- JUNE 30,
1994 1995 1996 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
COMMONLY CONTROLLED P.A.S--NET REVENUE CONTRACTS
(10/26/96-12/31/96) (NON-TERMINATED):
Net practice revenue .............................. $ -- $ -- $ 725,215 $2,699,551
Amounts contractually retained by the P.A.s ......... -- -- 188,554 701,884
----------- ----------- ----------- -----------
Management fees .................................... $ -- $ -- $ 536,661 $1,997,667
=========== =========== =========== ===========
COMMONLY CONTROLLED P.A.S--NET PROFIT CONTRACTS
(1/1/94-10/25/96) (NON-TERMINATED):
Net practice revenue .............................. $ 75,292 $1,115,011 $3,290,171 $ --
Amounts contractually retained by the P.A.s ......... 71,825 983,864 2,820,871 --
----------- ----------- ----------- -----------
Management fees .................................... $ 3,467 $ 131,147 $ 469,300 $ --
=========== =========== =========== ===========
ALL OTHER P.A.S (ALL UNDER NET PROFIT CONTRACTS)
(NON-TERMINATED):
Net practice revenue .............................. $2,268,875 $2,454,859 $1,459,121 $ 829,691
Amounts contractually retained by the P.A.s ......... 1,838,013 2,169,545 1,178,370 355,599
----------- ----------- ----------- -----------
Management fees .................................... $ 430,862 $ 285,314 $ 280,751 $ 474,092
=========== =========== =========== ===========
TERMINATED CONTRACTS (ALL UNDER NET PROFIT CONTRACTS):
Net practice revenue .............................. $1,359,263 $ 945,149 $ 101,552 $ --
Amounts contractually retained by the P.A.s ......... 1,120,288 847,905 98,436 --
----------- ----------- ----------- -----------
Management fees .................................... $ 238,975 $ 97,244 $ 3,116 $ --
=========== =========== =========== ===========
ALL P.A.S COMBINED:
Net practice revenue .............................. $3,703,430 $4,515,019 $5,576,059 $3,529,242
Amounts contractually retained by the P.A.s ......... 3,030,126 4,001,314 4,286,231 1,057,483
----------- ----------- ----------- -----------
Management fees .................................... 673,304 513,705 1,289,828 2,471,759
=========== =========== =========== ===========
Managed dental center expenses ..................... -- -- 603,138 2,023,933
----------- ----------- ----------- -----------
Net management fees .............................. $ 673,304 $ 513,705 $ 686,690 $ 447,826
=========== =========== =========== ===========
</TABLE>

Had the net profits method been in effect for all of fiscal 1996,
management fees would have been $708,336. Had the contracts and methods in
effect at the end of the year been in effect for all of fiscal 1996, management
fees would have been as follows:

Management fees .......................................... $4,270,410
Managed dental center expenses ........................... 3,303,710
-----------
Net management fees ..................... ............... $ 966,700
===========

For 1994 and 1995, net management fees for practices under contract at
December 31, 1996 would have been approximately $1,500 higher and $30,200
lower, respectively, had the contracts and methods in effect at the end of the
year been in effect for all of such periods.

F-14
<PAGE>

DENTAL CARE ALLIANCE, INC.
(SUCCESSOR TO GOLDEN CARE HOLDINGS L.C.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

3. REVENUE RECOGNITION--(CONTINUED)

CONSULTING AND LICENSING FEES. Consulting fees related to training of
personnel and other administrative services are performed by the Company for
four Managed Dental Centers which are not serviced under the Management
Agreements (see Note 14, Subsequent Events).

The Company also provides separate licensing services to the 16 Managed
Dental Centers. The licensing agreements typically have terms of 8-25 years, in
exchange for an annual fee from each practice of approximately $9,600-$12,000
per year. As part of the licensing agreements, the Company will solicit and
negotiate managed care contracts for the practices and provide opportunities
for the licensed practices to participate in group purchasing and marketing
plans.

4. PROPERTY AND EQUIPMENT

Property and equipment consists of the following:

1995 1996
------------ -------------
Leasehold improvements ............ $ 45,027 $ 45,027
Office equipment .................. 20,455 24,900
Vehicles ........................... 13,901 13,901
--------- ---------
79,383 83,828
Less accumulated depreciation ...... (28,089) (43,598)
--------- ---------
$ 51,294 $ 40,230
========= =========

Depreciation expense for the periods ended December 31, 1994, 1995, and
1996 was $15,150, $17,939, and $15,508, respectively.

5. OPERATING LEASES

The Company leases office space for its corporate offices and, under the
terms of certain Management Agreements, certain non-dental assets on behalf of
its Managed Dental Centers.

Future minimum lease payments under these agreements as of December 31,
1996 are:

1997 ....................................................... $ 81,134
1998 ....................................................... 76,921
1999 ....................................................... 75,918
2000 ....................................................... 71,611
2001 ....................................................... 73,904
---------
$379,488
=========

Operating lease expense for the periods ended December 31, 1994, 1995, and
1996 was $28,104, $48,079, and $47,725, respectively.

F-15
<PAGE>

DENTAL CARE ALLIANCE, INC.
(SUCCESSOR TO GOLDEN CARE HOLDINGS L.C.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

6. DEBT

Long-term debt consists of the following:

<TABLE>
<CAPTION>
1995 1996
---------- ----------
<S> <C> <C>
Note payable to financial institution, interest at prime plus 1% (9.5%
and 9.25% at December 31, 1995 and 1996, respectively), principal
and interest payable monthly, maturing in October 1999, secured by
dental equipment and the other business assets of the Company ............ $ 78,834 $ 57,805

Note payable to financial institution, interest at prime plus 1% (9.5%
and 9.25% at December 31, 1995 and 1996, respectively), principal
and interest payable monthly, maturing in August 1999, unsecured ......... 76,667 53,017

$60,000 line of credit to financial institution, secured principal payable
due on demand, interest paid quarterly at 9.25% per year until first
change date then rate will be prime plus 1%, guaranteed by the
Company's President and Chief Executive Officer ........................ -- 57,260

$40,000 line of credit to financial institution maturing March 26, 1997,
secured by a money market account of the Company's President and
Chief Executive Officer, principal due on demand, interest paid
quarterly at 7.25% per year until first change date than rate will be
prime plus 1% ............................................................ -- 39,899

Other ..................................................................... 8,244 6,021
--------- ---------
163,745 214,002
Less current portion ...................................................... 56,138 173,652
--------- ---------
$107,607 $ 40,350
========= =========
</TABLE>

Both lines matured in March 1997, continue to be funded and are due on
demand under substantially the same terms and conditions.

Future debt payments as of December 31, 1996 are:

1997 ...................................................... $173,652
1998 ...................................................... 21,262
1999 ...................................................... 19,088
---------
$214,002
=========

7. INCOME TAXES

As described in Note 1, during fiscal 1994, 1995 and through October 23,
1996, the Company consisted of a group of Limited Liability Corporations
("LLCs") with one subsidiary operating as a C Corporation in 1994. As such, the
consolidated accounts reflect a tax provision in 1994 only for the operations
of the C Corporation. Because the operations of the C Corporation were assigned
to one of the LLCs in late 1994 no tax provision is reflected in 1995. As a
result of the Reorganization on October 23, 1996, a deferred tax liability of
$17,500, included in other current liabilities, was established

F-16
<PAGE>

DENTAL CARE ALLIANCE, INC.
(SUCCESSOR TO GOLDEN CARE HOLDINGS L.C.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

7. INCOME TAXES--(CONTINUED)

to account for the differences between the book and tax basis of assets,
primarily property and equipment, at the time of conversion from a limited
liability corporation to a C Corporation. This deferred tax liability at
December 31, 1996 was adjusted to $15,600 as a result of changes in the book
and tax basis during the two months ended December 31, 1996.

The provision for income tax related to the C Corporation for the period
October 23, 1996 through December 31, 1996 consists of the following:

Current:
Federal .................................................... $17,000
State .................................................... 2,900
Deferred--Federal ........................................... 15,600
--------
Total ....................................................... $35,500
========

The Company's effective tax rate of 38% (for the two month period ended
December 31, 1996) is greater than the federal statutory rate of 34% primarily
due to the impact of state income taxes, net of federal tax benefit.

A pro forma provision for income taxes for the periods ended December 31,
1994, 1995 and through October 23, 1996 has been included in the financial
statements to reflect net income had it been calculated on a basis of a C
Corporation, based on the combined statutory federal and state income tax rates
for those periods, adjusted for minority interest.

8. MANDATORILY REDEEMABLE PREFERRED STOCK AND COMMON STOCK

Mandatorily redeemable preferred stock. On October 25, 1996, the Company
executed a subscription agreement which provided for the issuance of $1.5
million (15,000 shares at $100/share) in mandatorily redeemable preferred
stock. Under the terms of that agreement, $500,000 of preferred stock was
issued on October 25, 1996 and $1,000,000 was issued on December 31, 1996.
Proceeds of this issuance are reflected net of $105,000 of related offering
costs paid under the advisory agreement described in Note 10.

The Company had authorized 15,000 shares of Series A Convertible Preferred
Stock with a par value of $0.01 per share. The preferred stock accrues
cumulative dividends at $8/share, has voting and preemptive rights, adjustments
for dilutive effects and liquidation preferences equal to $100/share plus
accrued unpaid dividends. Dividends are payable in cash or, at holders' option,
one-half in cash and one-half in common stock. Prior to the earlier of (i) a
qualified initial public offering ("IPO") or (ii) April 25, 1998 (collectively
the "Reset Period"), each share of the preferred stock is convertible into
43.6239 shares of common stock, unless the Company's annual revenue (based upon
the two most recent quarters prior to an IPO) equals or exceeds $15 million
("Revenue Factor"). Subsequent to the Reset Period, or in the event the revenue
factor exceeds $15 million, the conversion ratio is reduced to 29.1098 shares
of common stock. All of the outstanding preferred stock converts into common
stock ("mandatory conversion") upon either an IPO or, at the Company's option,
upon a default as further defined in the agreement, in accordance with the
ratios described above. Also in connection with the Preferred Stock Sale, the
Company agreed to indemnify the Stockholders against certain claims and
liabilities, including claims and liabilities arising under the securities
laws.

F-17
<PAGE>

DENTAL CARE ALLIANCE, INC.
(SUCCESSOR TO GOLDEN CARE HOLDINGS L.C.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

8. MANDATORILY REDEEMABLE PREFERRED STOCK AND COMMON STOCK--(CONTINUED)

Anytime after October 25, 2001, the preferred stockholder, or anytime
after October 25, 2002, the Company may compel the redemption, for cash, of all
or any of the outstanding preferred stock. The preferred stock shall be
redeemed at $100/share plus accrued unpaid dividend. The redemption price is
payable over a two year period from the date of redemption, with payment in
four equal semi-annual installments without interest. The terms of the
preferred stock also provide for mandatory redemption by the holders in the
event the Corporation has undertaken certain defined actions or transactions
deemed unfavorable to the holders. The Company is accreting from the issuance
price less related offering costs to the stated redemption value of $1.5
million over the five year holding period to October 2001.

COMMON STOCK WITH PUT RIGHTS. In January 1994, GCH sold to a third party
an owners interest equivalent to 13%. In connection with the sale of this
owners interest, the owner became a director of the Company and the Company
attached certain put rights which are exercisable after January 1, 2001 if the
Company has not completed a public offering of its common stock by that date.
The per share price applicable to the "put rights" is 6 times pre-tax net
income for the calendar year immediately preceding the exercise of the put
times the ownership percentage that will be put back to the Company.

Concurrent with the Reorganization, this ownership interest was converted
to 530,010 shares of common stock of the Company with put rights which are
equivalent to those described above. As of December 31, 1995 and 1996 the
redemption value of these put rights has been reclassified to temporary equity,
from permanent equity on the Company's balance sheet.

9. EMPLOYEE BENEFITS

On January 26, 1994 and October 25, 1996, the Company issued to one of its
officers warrants to purchase 81,540 shares of stock (at each grant date), with
an exercise price at the then fair market value (aggregate value of $147,768
and $125,000 respectively) of the stock, as determined by an independent third
party appraisal. The options granted in January 1994 vest ratably over a period
of three years from the grant date. Of the October 1996 warrants, 61,155 shares
vested upon grant date and the remaining 20,385 shares vested in January 1997.
All such warrants were exercised in February 1997, and the exercise price was
funded by an interest bearing note from the Company. This interest bearing note
has been offset against additional paid-in capital in shareholders' equity at
June 30, 1997.

On January 21, 1997, the Company issued a stock option for 49,576 shares
of stock to another officer of the Company which are exercisable, in whole or
in part, immediately. The exercise price is fair market value on the grant date
($1.53 per share). In no event shall this option be exercisable after January
21, 2002.

F-18
<PAGE>

DENTAL CARE ALLIANCE, INC.
(SUCCESSOR TO GOLDEN CARE HOLDINGS L.C.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

9. EMPLOYEE BENEFITS--(CONTINUED)

The following table summarizes the Company's stock option activity:

<TABLE>
<CAPTION>
NUMBER OF WEIGHTED AVERAGE FAIR VALUE OF
SHARES EXERCISE PRICE OPTIONS GRANTED
----------- ------------------ -----------------
<S> <C> <C> <C>
Outstanding at December 31, 1993 ...... -- --
Exercisable at December 31, 1993 ...... -- --

Granted during 1994 .................. 81,540 $1.81 $1.61
Exercised during 1994 .................. -- --
Outstanding at December 31, 1994 ...... 81,540 $1.81
Exercisable at December 31, 1994 ...... 20,385 $1.81

Granted during 1995 .................. 137,803 $1.74 $1.55
Exercised during 1995 .................. -- $ --
Outstanding at December 31, 1995 ...... 219,343 $1.77
Exercisable at December 31, 1995 ...... 125,572 $1.77

Granted during 1996 .................. 81,540 $1.53 $1.36
Exercised during 1996 .................. -- $ --
Outstanding at December 31, 1996 ...... 300,883 $1.70
Exercisable at December 31, 1996 ...... 207,112 $1.70

Granted during 1997 .................. 49,576 $1.53 $1.37
Exercised during 1997 .................. 247,882 $1.70
Outstanding at June 30, 1997 ......... 102,577 $1.64
Exercisable at June 30, 1997 ......... 49,576 $1.53
</TABLE>

The following table summarizes the stock options outstanding and
exercisable at December 31, 1996 and June 30, 1997:

<TABLE>
<CAPTION>
OUTSTANDING EXERCISABLE
-------------------------------------- ----------------------
WEIGHTED
AVERAGE WEIGHTED WEIGHTED
RANGE OF NUMBER REMAINING AVERAGE NUMBER AVERAGE
EXERCISE OF CONTRACTUAL EXERCISE OF EXERCISE
PRICE OPTIONS LIFE PRICE OPTIONS PRICE
------------- --------- ------------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
December 31, 1996 ...... $1.53-$1.81 300,883 4 months $1.70 207,112 $1.70
June 30, 1997 ......... $1.53-$1.74 102,577 5 months $1.64 49,576
$1.53
</TABLE>

F-19
<PAGE>

DENTAL CARE ALLIANCE, INC.
(SUCCESSOR TO GOLDEN CARE HOLDINGS L.C.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

9. EMPLOYEE BENEFITS--(CONTINUED)

The Company has adopted the disclosure only provisions of SFAS No. 123 for
employee options. Accordingly, no compensation expense has been recognized for
its stock option plan(s). In the event that options contingent upon an initial
public offering are issued to certain P.A.s (see Note 14), such options will be
accounted for under SFAS No. 123. Had compensation cost for the stock option
plan(s) been determined based on the fair value at the date of grant for awards
in 1994, 1995 and 1996 and the six month period ending June 30, 1997 consistent
with the provisions of SFAS 123, the Company's net income and earnings per
share would approximate the following pro forma amounts:

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
-------------------------------------- ------------------
1994 1995 1996 1997
--------- ------------- ---------- ------------------
<S> <C> <C> <C> <C>
Pro forma net income (loss) ......... $66,621 $(16,593) $141,304 $51,426
======== ========= ========= ========
Pro forma net income per share ...... $ .03 $ .01
========= ========
</TABLE>

The fair value of each option grant is estimated on the date of grant
using the minimum value method with the following weighted average assumptions:
no dividend yield, no expected volatility, risk-free interest rates ranging
from 5.53%--6.23%, and average expected lives of two years.

10. ADVISORY SERVICES

The Company entered into an exclusive corporate development advisory
agreement (the Agreement) in September 1995 under which the Company is
committed to the following:

A retainer each quarter equal to the greater of $4,000 or 6 percent of the
Company's quarterly income before income tax expenses in excess of $75,000
beginning February 1, 1996 which is recorded as a component of general and
administrative expenses.

In addition, the Company granted the corporate development advisors (the
"Advisors") warrants to purchase an (84,802 shares) ownership interest at a
exercise price of $20,000 for services rendered in connection with business
development and other financial management advisory services. The warrants were
granted below fair market value and accordingly, the Company has recognized a
charge of $127,768 and has recorded the warrants as a component of
shareholders' equity. These warrants were exercised in June 1997. Furthermore,
upon the occurrence of an M&A Transaction, as defined in the Agreement, the
Advisor is entitled to a fee of $100,000 and five year warrants to purchase a
number of shares of common stock equal to $250,000 divided by the lesser of 80
percent of the price per share of the transaction, as defined, or $20 million
divided by the number of fully diluted shares outstanding just prior to the M&A
Transaction.

The Agreement was amended on April 25, 1996 to provide for payment of fees
in relation to Capital Raising Transactions, as defined, of between 4% and 7%
of the proceeds. As a result of the issuance of the mandatorily redeemable
preferred stock described in Note 8 a fee of $105,000 was paid to the advisor.
Upon consummation of an Offering, the Company has committed to pay the Advisors
a fee of $100,000 and to issue a 5 year warrant to purchase a number of shares
of common stock equal to $350,000 divided by the offering price of the common
stock, at an exercise price equal to the offering price, if and when an
Offering is completed. In August 1997, the Company agreed to issue warrants to

F-20
<PAGE>

DENTAL CARE ALLIANCE, INC.
(SUCCESSOR TO GOLDEN CARE HOLDINGS L.C.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

10. ADVISORY SERVICES--(CONTINUED)

the Advisors to purchase 53,001 shares of common stock at an exercise price of
$92,355, which will vest only upon the completion of an Initial Public Offering
(Offering) for services rendered in connection with the Offering. The agreement
for these warrants also provides that the Advisor will receive the earlier of
the M&A fees and warrants or the Offering fees and warrants, not both. The fair
value of these warrants which is anticipated to be significantly in excess of
$100,000, less the related exercise price, are anticipated to be offset against
the proceeds of the related Offering.

11. RELATED PARTY TRANSACTIONS

The Company's President, Chief Executive Officer and majority shareholder
owns or controls entities which do business with the Company or its Managed
Dental Centers. The Managed Dental Centers incurred rent totaling $77,671 and
$87,756 for the years ended December 31, 1994 and 1995, respectively, and
$90,092 for the ten months ended October 31, 1996, payable to such entities.
The Company incurred rent of $18,018 for the two months ended December 31, 1996
payable to such entities. During 1996, the Company paid for, in the form of
advances to the Company's President, certain laboratory costs of a related
party. This amount of $60,000, which is personally guaranteed by the Company's
President, has been reflected in other assets at December 31, 1996 as such
amounts have been structured as a demand note. The Managed Dental Centers have
also incurred capital lease obligations payable to a related entity owned 33%
by the Company's President totaling approximately $119,000 and $108,000 as of
December 31, 1995 and 1996, respectively. Such leases are obligations of the
Managed Dental Centers and not of the Company. Interest expense on such
obligations was approximately $0, $16,000, and $21,000 for the years ending
December 31, 1994, 1995, and 1996, respectively.

12. CONCENTRATIONS OF CREDIT RISK

As described in Note 1, a majority of the Managed Dental Centers are owned
by PAs commonly controlled by the same individual. All P.A.s and the commonly
controlled P.A.s are indebted to the Company as follows:

<TABLE>
<CAPTION>
DECEMBER 31, 1996 JUNE 30, 1997
------------------- ---------------
FINANCIAL FINANCIAL
STATEMENT STATEMENT
BALANCE BALANCE
------------------- ---------------
<S> <C> <C>
TOTAL ALL P.A.S:
Consulting and license fees receivable .................. $ 59,000 $ 58,352
Management fee receivable from P.A.s ..................... 397,441 576,456
Advances to P.A.s ....................................... 16,454 287,127
Current portion of long-term notes receivable ............ 68,460 73,266
Long-term notes receivable from P.A.s,
less current portion .................................... 129,935 100,490
Consulting and license fees receivable, non current ...... 251,925 300,000
--------- -----------
$923,215 $1,395,691
========= ===========
AMOUNT OWED BY THE COMMONLY CONTROLLED P.A.S: ............ $647,251 $1,035,061
========= ===========
</TABLE>

This individual has personally guaranteed this indebtedness in the event
the receivable cannot be paid by the P.A.s and pledged the ownership interest
rights of P.A.s subordinate to acquisition debt.

F-21
<PAGE>

DENTAL CARE ALLIANCE, INC.
(SUCCESSOR TO GOLDEN CARE HOLDINGS L.C.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

12. CONCENTRATIONS OF CREDIT RISK--(CONTINUED)

This represents a concentration of credit risk and exposes the Company to risk
of loss for these amounts should the P.A.s and the individual be unable to pay
its debts. Relevant financial data on this P.A.'s practices and the Company's
commitments on behalf of other P.A.s for each period end are as follows:

<TABLE>
<CAPTION>
SIX MONTHS ENDED
FOR THE YEAR ENDED DECEMBER 31, JUNE 30,
--------------------------------------- ------------------
1994 1995 1996 1997
--------- ------------ ------------ ------------------
<S> <C> <C> <C> <C>
Net practice revenue ......... $75,292 $1,115,011 $4,116,938 $2,699,551
Amounts contractually retained
by the P.A. ............... 71,825 983,864 3,107,861 701,884
-------- ----------- ----------- -----------
Management fees ............ $ 3,467 $ 131,147 $1,009,077 $1,997,667
======== =========== =========== ===========
</TABLE>

Additionally, the Company's President, Chief Executive Officer and
majority shareholder has guaranteed (subordinate to the pledge of assets of the
practice and the guarantee of the P.A. and its owner) a portion of the
financing related to the Managed Dental Centers which are owned and controlled
by one of the P.A.s. As of December 31, 1996, this amount was approximately
$1,259,000. During the period ended June 30, 1997, the Company guaranteed
(subordinate to the pledge of assets of the practice and the guarantee of the
P.A. and its owner) a portion of the financing ($450,000) related to the
Managed Dental Center which is owned and controlled by one of the P.A.s.

13. COMMITMENTS AND CONTINGENCIES

The Company has entered into employment agreements with three of its
officers, one of whom is also the majority shareholder of the Company. The
terms of the agreements are from four to five years and initially expire in
1998 and 2001.

The Company has entered into a staff leasing agreement whereby all of the
Company's corporate employees and, on behalf of the Managed Dental Centers, all
of the non-dental employees of the Dental Centers are leased. The lease
provides for a 30 day cancellation period by the Company.

14. SUBSEQUENT EVENTS

NON-DENTAL ASSET ACQUISITIONS AND MANAGEMENT CONTRACTS

In April 1997, the Company acquired approximately $200,000 of non-dental
assets and executed a 25 year Administrative Services Agreement with a dental
practice located in Temple Terrace, Florida. As part of the debt guaranty for
the P.A. owner, the Company has pledged as collateral the non-dental assets
acquired. Unaudited net practice revenue of the dental practice was
approximately $950,000 for the year ended December 31, 1996. The Management
Agreement executed is a net revenue contract. The P.A. owner had eleven P.A.s
under contract with the Company at the date of this transaction. In connection
with the execution of this Management Agreement, the Company has agreed to
issue options of common stock to the P.A. owner in the amount of $82,000, at an
exercise price equal to the IPO price, when and if an Offering is completed,
exercisable for a period of six months.

In July 1997, the Company's President and controlling shareholder acquired
approximately $2.4 million of non-dental assets and concurrently, the Company
executed a 25 year Management

F-22
<PAGE>

DENTAL CARE ALLIANCE, INC.
(SUCCESSOR TO GOLDEN CARE HOLDINGS L.C.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

14. SUBSEQUENT EVENTS--(CONTINUED)

Agreement with the dental practice located in Flint, Michigan. Unaudited net
practice revenue of the dental practice was approximately $4 million for the
period ended December 31, 1996. The Management Agreement executed is under the
net revenue contract. On September 30, 1997, the Company's President and
controlling shareholder sold his interest in the Flint practice to the minority
shareholder of the Flint P.A.

In July 1997, the Company acquired four Management Agreements for
$846,000, including settlement of outstanding receivables for consulting
services of $300,000, wherein it will provide management services to the
related practices for 8 years. The P.A.s were previously subject to consulting
and licensing agreements. The acquired Administrative Service Agreements are
executed under the net revenue contract. Unaudited net practice revenue of the
dental practice was approximately $3.4 million for the period ended December
31, 1996. The Company had previously recognized revenue of $40,000 in 1994,
$160,000 in 1995, $160,000 in 1996 and $53,000 for the six months ended June
30, 1997 for consulting and licensing services. The Company has agreed to
subcontract the day to day management of these four practices for eighty
percent of the net profits of the P.A., subject to certain adjustments to a
Michigan based company owned by the P.A. owner resulting, in effect, in the
acquisition of a 20% interest in the "net profits," as defined. The Company
will continue to receive license fees of $40,000 per year. The owner of the
P.A. does not own any other P.A.s currently under Management Agreements. The
subcontracting arrangement had no effect on the revenues and net profits
recognized from the related P.A.s.

In August 1997, the Company acquired approximately $175,000 of non-dental
assets and executed a 25 year Management Agreement with a dental practice
located in Tallahassee, Florida. Unaudited net practice revenue of the dental
practice was approximately $900,000 for the year ended December 31, 1996. The
P.A. owner had 12 P.A.s under contract with the Company at the date of this
transaction. The Management Agreement executed is a net revenue contract. In
connection with the execution of this Management Agreement, the Company has
agreed to issue options for common stock to the P.A. owner in the amount of
$131,250 at an exercise price equal to the IPO price, when and if an Offering
is completed, exercisable for a period of six months.

In September 1997, the Company acquired non-dental assets of $120,000 and
executed a 25 year Management Agreement with a dental practice located in St.
Petersburg, Florida. Unaudited practice revenue of the dental practice was
approximately $400,000 for the year ended December 31, 1996. The new PA owner
had 13 P.A.s under contract with the Company at the date of the transaction.
The Management Agreement executed is a net revenue contract.

FINANCING

In August 1997, the Company entered into two revolving lines of credit
with a financial institution which provides for an aggregate of $1.2 million.
The Company may use up to $600,000 for the purchase of non-dental assets of
dental centers provided each borrowing is repaid within 45 days of draw down.
The remaining $600,000 may be used for general working capital needs. The
revolving lines of credit bear interest at prime plus .75% and is payable on
June 1, 1998, and contain limitations on acquisition activity without prior
approval.

F-23
<PAGE>

DENTAL CARE ALLIANCE, INC.
(SUCCESSOR TO GOLDEN CARE HOLDINGS L.C.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

14. SUBSEQUENT EVENTS--(CONTINUED)

OMNIBUS EXECUTIVE INCENTIVE COMPENSATION PLAN.

Concurrent with the consummation of an Offering the Company anticipates
establishing an Omnibus Executive Incentive Compensation Plan (the "Plan")
which is designed to attract and retain executives, directors, and independent
contractors ("Participants"). However the Company is under no obligation to
establish such a plan. Management anticipates that any such options granted to
non-employees will be accounted for under FAS No. 123.

NON-QUALIFIED STOCK OPTION PLAN

Concurrent with the consummation of the Offering, the Company anticipates
establishing a stock option plan which is designed to assist the P.A.s in
attracting, retaining and properly motivating dentists and other employees of
P.A.s under contract. However the Company is under no obligation to establish
such a plan. Management anticipates that all such options will be accounted for
under FAS No. 123.

In connection with entering into the Temple Terrace, Florida and
Tallahassee, Florida Management Agreements the Company has agreed to issue to
the P.A. physician employees options to purchase 10,000 shares of stock, in the
aggregate, vesting over a 5 year period, expiring 10 years from grant date at
an exercise price equal to the IPO price, when and if an offering is completed
and certain performance based award of shares as determined at varying levels
of collected revenue, as set forth in the employment agreement. Issuance of all
such options are conditioned on the Company establishing the non-qualified
stock option plan.

F-24
<PAGE>

===============================================================================

NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THIS OFFERING, AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY, THE SELLING STOCKHOLDERS OR THE UNDERWRITERS. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES
OTHER THAN THE REGISTERED SECURITIES TO WHICH IT RELATES, OR AN OFFER TO SELL
OR SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES IN ANY JURISDICTION WHERE,
OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL,
UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE
IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION
CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
------------
TABLE OF CONTENTS

PAGE
---------

Prospectus Summary ........................ 3
Risk Factors .............................. 8
The Company .............................. 18
Relationship Between the Company
and the PAs ........................... 18
Use of Proceeds ........................... 20
Dividend Policy ........................... 20
Dilution ................................. 21
Capitalization ........................... 22
Selected Consolidated Financial Data ...... 23
Management's Discussion and Analysis
of Financial Condition and Results
of Operations ........................... 25
Business ................................. 32
Management ................................. 46
Principal and Selling Stockholders ......... 51
Certain Transactions ..................... 52
Description of Capital Stock ............... 54
Shares Eligible for Future Sale ............ 58
Underwriting .............................. 59
Legal Matters .............................. 62
Experts .................................... 62
Available Information ..................... 62
Index to Financial Statements ............ F-1
------------
UNTIL NOVEMBER 29, 1997 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATIONS OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.

2,000,000 SHARES

[GRAPHIC OMITTED]

COMMON STOCK

------------
P R O S P E C T U S
------------

RAYMOND JAMES &
ASSOCIATES, INC.

WILLIAM BLAIR & COMPANY

NOVEMBER 4, 1997

===============================================================================