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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549

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FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 1997

OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to _________

Commission File No. 000-21501

COAST DENTAL SERVICES, INC.
(Exact name of registrant as specified in its charter)


DELAWARE 59-3136131
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

2502 ROCKY POINT DRIVE NORTH, SUITE 1000, TAMPA, FLORIDA 33607
(Address of principal executive offices) (Zip Code)


(813)288-1999
(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
NONE

Securities registered pursuant to section 12(g) of the Act:
COMMON STOCK, PAR VALUE $.001 PER SHARE
(Title of Class)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No .
--- ---

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [ ]

The aggregate market value of the voting stock held by non-affiliates of the
Registrant on March 6, 1998, was approximately $125 million based upon the
closing price of such shares on such date on the NASDAQ Stock Market's National
Market. As of March 6, 1998, there were 7,622,401 shares of outstanding Common
Stock.

DOCUMENTS INCORPORATED BY REFERENCE
-----------------------------------

Portions of the Registrant's definitive Proxy Statement to be used in
connection with the Registrant's Annual Meeting of Shareholders, which will be
filed on or before April 9, 1998, are incorporated by reference in Part III,
Items 10-13 of this Form 10-K. Except with respect to information specifically
incorporated by reference in this Form 10-K, the Proxy Statement is not deemed
to be filed as a part hereof.
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COAST DENTAL SERVICES, INC.
1997 ANNUAL REPORT ON FORM 10-K
TABLE OF CONTENTS



PART I PAGE
----

Item 1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Item 2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

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

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

PART II
Item 5. Market of Registrant's Common Equity and Related Stockholder
Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Item 6. Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . 8

Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . 9

Item 7A. Quantitative and Qualitative Disclosures About Market Risk . . . . . 14

Item 8. Financial Statements and Supplementary Data . . . . . . . . . . . . . 15

Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure . . . . . . . . . . . . . . . . . . . . . . 29

PART III
Item 10. Directors and Executive Officers of the Registrant . . . . . . . . . 29

Item 11. Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . 29

Item 12. Security Ownership of Certain Beneficial Owners and Management . . . 29

Item 13. Certain Relationships and Related Transactions . . . . . . . . . . . 29

PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K . . . 29






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INTRODUCTION

Unless the context otherwise requires, references in this document to
"Coast Dental" or the "Company" refer to Coast Dental Services, Inc. and its
predecessor; "Dental Centers" refer to dental offices managed or to be managed
by the Company pursuant to a services and support agreement; "Coast Florida
P.A." and "Coast Georgia, P.A." refer to the Florida and Georgia professional
associations, respectively, which employs the dentists and hygienists providing
dental services at the Dental Centers pursuant to a services and support
agreement with the Company; "Coast P.A." refer collectively to the Coast
Florida P.A. and Coast Dental Services of Georgia, P.C. and any professional
association or corporation, with which the Company has entered, or may enter,
into a services and support agreement ("Services and Support Agreement");
"internally developed Dental Centers" refer to Dental Centers which are
initially opened, developed and managed by the Company pursuant to a Services
and Support Agreement with a Coast P.A.; "acquired Dental Centers" refer to
Dental Centers resulting from the acquisition of an existing dental facility by
the Company, combined with the acquisition by a Coast P.A. of the existing
dental practice located at that facility; "Coast Dentists: refers to the
licensed dentists employed by a Coast P.A. who provide dental services at the
Dental Centers; and "Coast Dental Network" refer collectively to the Dental
Centers and the Coast Dentists.

PART I

ITEM 1. BUSINESS

GENERAL

Coast Dental Services, Inc. (the "Company") was incorporated in August
1992 as Sunshine Health Services, Inc., a Florida corporation, and changed its
name to Coast Dental, Inc. in August 1994. Effective March 31, 1996, Coast
Dental, Inc. was merged into Coast Dental Services, Inc., a Delaware
corporation, for the purpose of reincorporating the Company in the State of
Delaware and changing its corporate name. The Company obtains its revenue from
Coast Florida P.A. and Coast Dental Services of Georgia, P.C. ("Coast Georgia
P.A.") (collectively, the "Coast P.A."), for providing management services and
support to the general dentistry practices at the Dental Centers.

As of December 31, 1997, the Company provided management services to
58 Dental Centers located in central and northern Florida and Atlanta, Georgia.
Of the 58 Dental Centers, 21 were internally developed and 37 were acquired by
the Company. As of December 31, 1997, 70 Coast Dentists were employed by the
Coast P.A., serving over 400,000 patients.

The United States dental industry is highly fragmented, consisting of
more than 110,000 dental practices with approximately 88% of these practices
operated by dentists working alone or with one other dentist. According to the
Health Care Financing Administration, expenditures for all dental services in
the United States were an estimated $45.2 billion in 1995 and are expected to
grow at a rate of 6.6% per year through the year 2000. Based upon a 1990
Survey by the American Dental Association ("ADA"), general dentistry was
estimated to represent approximately 83% of all dental services performed in
the United States. The Company believes several factors are driving the
overall industry growth. First, as the "baby boom" generation ages, the demand
for many higher priced dental maintenance products and procedures (such as
crowns, bridges and dentures) will increase relative to the demand for other
more routine, lower priced dental products and procedures (such as cleanings
and fillings). Second, increasing attention to dental health and, in
particular, to personal appearance has increased the demand for general
dentistry services and cosmetic dental products and procedures (such as bonding
and whitening). Finally, a greater percentage of the population is now covered
by private or government funded dental health insurance thereby facilitating
increased dental office visits and a greater utilization of general dentistry
services.

The Company's goal is to develop a leadership position in the
management of general dentistry practices throughout Florida, Georgia and the
southeastern United States. The Company derives its revenue through fees
earned from the Coast P.A. for providing management services and support to the
Dental Centers. Pursuant to the Services and Support Agreement, the Company
receives a percentage of a Coast P.A.'s gross patient revenue, net of refunds
and discounts. A uniform operating model (the "Coast Operating Model")
developed by the Company is utilized at the Dental Centers to increase
productivity and maintain the low cost delivery of quality general dentistry
services. The key elements of the Coast Operating Model are: (i) affiliating
with general dental providers that focus on the most common, high volume dental
products and procedures which lend themselves to cost-effective delivery; (ii)
centralizing management and administrative responsibilities, thus allowing the
Dentists to concentrate on delivering high quality dental care; (iii)
facilitating the training of the Dental Center staff, including Dentists and
hygienists, in the most efficient techniques for managing the delivery of high
volume, quality dental services; and (iv) assisting with the implementation
of marketing programs designed to meet the needs of each Dental Center. The
Company plans to expand the Coast Dental Network to maximize economies of scale
in management and administration, material procurement and marketing, and to
facilitate contracting with managed care companies. The Company plans to


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increase penetration in currently served regions and to expand into new
contiguous markets in the southeastern United States through the addition of
internally developed and acquired Dental Centers.

As the Coast Dental Network has grown, an increasing percentage of the
Coast Dentist's patient revenue has been derived from a growing managed care
patient base. The Company believes that managed care companies are presently
focused on increasing their revenue and gaining market share by offering a full
range of health insurance options, including dental insurance. As a result,
managed care companies are aggressively seeking to contract with dental
providers that offer extensive regional coverage, have the ability to deliver
dental services at managed care pricing levels, and possess the necessary
management information systems and contract administration expertise.
Accordingly, the Company believes that it is well positioned to gain an
increased state of the managed cared market as compared to sole practitioners
and small dental group practices that generally do not have the resources to
develop such capabilities or managed care relationships.

The Company expects to continue to expand into new contiguous markets
in the southeastern United States through the continued addition of internally
developed and acquired Dental Centers. Of the 58 Dental Centers currently
managed by the Company, 21 were internally developed and 37 were acquired by
the Company. When the Company acquires an existing dental office, the Company
acquires the assets to the extent permitted by law. Typically, the Company
acquires the dental office lease as well as all dental and office equipment.
The Coast P.A. acquires the patient lists and related assets, and typically
enters into employment agreements with the acquired practice's dentists and
hygienists to staff the Dental Center. When the Company internally develops
Dental Centers, the Company provides the dental office location and the
necessary equipment and support staff while the Coast P.A. provides dentists
and dental hygienists. The patient lists are the property of the Coast P.A.

ACQUISITIONS AND DEVELOPMENTS

The Company opened two internally developed Dental Centers both in 1992
and 1993, four in 1994, three in 1995, one in 1996 and nine in 1997 in Florida
and Georgia. During 1996, the Company and the Coast Florida P.A. added 17
acquired Dental Centers located in central and northern Florida. The combined
purchase price for these acquired Dental Centers was $5.3 million, consisting
of $1.2 million in cash and $4.1 million in promissory notes. During 1997, the
Company and the Coast Florida P.A. added 20 acquired Dental Centers located in
central and northern Florida. The combined purchase price for these acquired
Dental Centers was $7.1 million, consisting of $4.6 million in cash, $2.2
million in promissory notes, $231,000 in assumed liabilities and $100,000 of
the Company's common stock (5,979 shares).

SERVICES AND OPERATIONS

The Company is primarily responsible for the management and
administrative functions of its Dental Centers, but does not provide dental
care. The Company provides financial, accounting, billing, training, marketing
assistance and collection services for a Coast P.A. and employs the Dental
Center's management and administrative personnel. A Coast P.A. maintains full
control over the dental practices of the Coast Dentists, employs the Coast
Dentists and their hygienists and set standards of care in order to promote the
provision of quality dental care. A Coast P.A. is also responsible for
compliance with state and local regulations of the practice of dentistry and
with license or certification requirements. Each Coast Dentist is responsible
for acquiring and maintaining professional liability insurance.

The Company has entered into a Services and Support Agreement with the
Coast Florida P.A. and the Coast Georgia P.A. pursuant to which the Company is
the exclusive business manager, to the extent allowable by law, of the Dental
Centers. As Dental Centers are acquired or internally developed by the Company
and the Coast P.A., the Dental Centers are generally expected to be governed by
the existing Services and Support Agreement, subject to possible future
modifications or amendments. The compensation paid to the Company under its
existing Services and Support Agreement is 76% and 74% of the gross revenue,
net of refunds and discounts, of the Coast Florida P.A. and the Coast Georgia
P.A., respectively.

As compensation for its management services under the current Services
and Support Agreement, the Coast P.A. pays the Company a monthly services and
support fee ranging from 76% to 74%, of the gross revenue, net of refunds and
discounts, of the Dental Center. Effective June 1997, the Company has agreed
to pay the Coast P.A. the sum of $50,000 in connection with each internally
developed Dental Center opened as inducement to the Coast P.A. to extend the
Services and Support Agreement as each internally developed Dental Center is
opened. Dental Center expenses paid by the Company from the services and
support fee include all operating and non-operating expenses incurred at the
Dental Center except for the salaries and benefits of the Coast Dentists and
dental hygienists, federal and state income taxes, bad debt and any other
expenses designated as an expense of the Coast P.A. The Coast P.A. is owned
and managed by Dr. Adam Diasti, a major shareholder, director and executive
officer of the Company. See Item 10. "Directors and Executive Officers of the
Registrant." Future modifications, amendments or revisions to the Services and
Support Agreement will be approved in advance by the Audit Committee of the
Company's Board of


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Directors, a majority of which consist of the independent outside directors of
the Company.

The Company plans to continue to use the current form of its Services
and Support Agreement to the extent possible and marketable, as it enters into
new states or into arrangements with other dental practices. However, the
terms of future agreements may differ according to market conditions and the
statutory or regulatory requirements of the particular state in which the
dental practice is located.

GOVERNMENTAL AND STATE REGULATIONS

The Company's operations and relationships are subject to a variety of
governmental and regulatory requirements relating to the conduct of its
business and business corporations in general. The Company believes that it
exercises care in an effort to structure its practices and arrangements with
dental practices 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.

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 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. Under Georgia law, dentists may be
employed by corporations only if the entity is organized as a professional
corporation or association whose shareholders or members licensed dentists.
Georgia dentists must maintain patient records that document the course of
treatment and may not waive co-payment or bill a third party for more than the
usual fee. The Company does not employ dentists or dental hygienists and does
not exercise control over any prohibited areas. While Dr. Adam Diasti, a sole
shareholder of Coast P.A., is also a major shareholder, director and officer of
the Company, he acts independently when making decisions in these areas on
behalf of the Coast P.A. and the Company has no control over his decisions in
these areas.

Some states, including Florida and Georgia, 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
controlled as to clinical matters by the party supplying facilities and
non-professional services. Florida law specifically requires that dentists or
their professional corporations maintain complete care, custody and control of
all equipment and materials used in the practice of dentistry. The Services
and Support Agreement between the Company and the Coast Florida P.A. expressly
provides that the Company shall not exercise control over any matters that
would violate the requirements of the applicable state law.

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 fee-splitting law prohibits 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. According to Florida court of appeals
decision interpreting this law, it does not prohibit a management fee that is
based on a percentage of gross income of a professional practice if the manager
does not refer patients to the practice. Regulatory boards can come to
different conclusions than those reached by a judicial body in analyzing laws.
For example, the Florida Board of Medicine has recently made a preliminary
determination in applying the Florida fee-splitting law, that under certain
circumstances, a management fee based upon a percentage of revenue will be
found by them to be illegal. The Florida Board of Medicine, however, does not
have jurisdiction over dentistry.

Many states, including Florida, 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. The Services and Support Agreement
provides that all advertising shall conform to these requirements. Florida law
also requires all advertising to identify the Florida dentist who assumes total
responsibility for the advertisement and may not include the name of a person
who is not either actually involved in the practice of dentistry at the
advertised location or an owner of the practice being advertised. Georgia Law
requires that advertising must contain the name of at least one dentist
practicing at the location unless the Georgia Board of Dentistry has approved
the use of a trade name. All of the advertisements include the name of Dr.
Adam Diasti who owns the dental practices through the Coast P.A.


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These laws have civil and criminal penalties and 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 review of the Company's business
arrangements or the operation of the Dental Centers will not result in
determinations that adversely affect the Company's operations or that the
long-term Services and Support Agreement or certain of its provisions will not
be held invalid and unenforceable.

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.

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,
if necessary, as the business and regulatory environment change. However,
there can be no assurance that any such changes will not adversely affect the
ability of the Company to operate as it currently does or to remain profitable
in doing so.

COMPETITION

The Company is aware of several other companies which are actively
engaged in the consolidation of existing dental practices and providing
management services to dental practices, some of which may have longer
operating histories than the Company. The Company assumes that additional
companies with similar objectives may enter the Company's markets and compete
with the Company. The primary basis of competition between dental PPMs are the
extent of the dental care network, management expertise and experience,
sophistication of management information systems, the elements of its
operating system, the availability of managed care business, opportunity for
career enhancement agreements, degrees of control required by the merger and
the size of operations.

The business of providing dental services is highly competitive in
each of the markets in which the Dental Centers operate. The primary basis of
competition within the dental services industry are price of services,
marketing exposure, convenience of location and traffic flow of location, hours
of operation, reputation, managed care contracts, quality of care and
appearance and usefulness of facility and equipment. Coast Dentists compete
with other dentists who maintain group practices or operate in multiple
offices. Many of those dentists have more established practices in their
markets.

SEASONALITY

The Company has traditionally experienced its highest volume of
patient visits during the first and last quarters of the year and its lowest
volume of patient visits in the summer. Individual Dental Centers typically
experience increased patient visits during the period from October through
March, when the population of Florida increases for the winter, and decreased
patient visits during the summer months. Seasonality for the period since
January 1, 1995 has been mitigated by the increase in monthly capitation
revenue from managed care contracts to the Coast P.A., which represented 9.4%
and 14.2% of total revenue to the Coast P.A. for the year ended December
31,1996 and 1997, respectively.

SERVICE MARKS

The Company believes its service marks are important to the Company.
The Company has registered the service marks "Coast Dental" and the Company
logo with the United States Patent and Trademarks Office.

EMPLOYEES

As of March 6, 1998, the Company had approximately 455 full-time and
part-time employees, of which approximately 40 were employed at the Company's
headquarters and 415 employed at the Dental Centers. None of the Company's
employees are employed under a collective bargaining agreement. The Company
believes that its relationship with its employees is good.

ITEM 2. PROPERTIES.

The Company presently leases an average of 2,100 square feet of office
space for each of the Dental Centers. The typical lease for office space is
for a term of approximately five years and generally provides for renewal
options for additional years. The average rental payments for a leased Dental
Center are approximately $2,560 per month. The Company plans to continue to
lease rather than purchase space for the Dental Centers to preserve the
Company's


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available capital.

The Company leases 10,000 square feet of office space in Tampa,
Florida for its corporate headquarters. This lease is for a term of five
years.

The Company anticipates no future problems in renewing or obtaining
suitable leases for its principal properties. The Company believes that its
principal leased properties are adequate for the purposes for which they are
used and are suitably maintained for such purposes. The Company will enter
into new leases as it expands.



CURRENT LOCATIONS NUMBER OF LOCATIONS
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Tampa, Florida . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
St. Petersburg/Clearwater Florida . . . . . . . . . . . . . . . . . . 14
Orlando, Florida . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Daytona, Florida . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Gainesville, Florida . . . . . . . . . . . . . . . . . . . . . . . . . 3
Sarasota/Ft. Myers, Florida . . . . . . . . . . . . . . . . . . . . . 6
Atlanta, Georgia . . . . . . . . . . . . . . . . . . . . . . . . . . . 4


ITEM 3. LEGAL PROCEEDINGS

There are no material pending legal proceedings other than routine
litigation arising in the ordinary course of business. The Company does not
believe that the results of such litigation, even if the outcome were
unfavorable to the Company, would have a material effect on its financial
position.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.
PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.

MARKET INFORMATION

The Common Stock of the Company is quoted on the National Association
of Securities Dealers Automated Quotation System ("Nasdaq"). The Common Stock
of the Company has been trading publicly under the symbol CDEN on the Nasdaq
since the Company's initial public offering on February 11, 1997. The
following table sets forth the high and low closing sale price of the Company's
Common Stock as reported by Nasdaq for the periods indicated:



YEAR HIGH LOW
---- ---- ---

1997
First Quarter (beginning February 11, 1997) . . . . . . $14.750 $ 8.000
Second Quarter . . . . . . . . . . . . . . . . . . . . . 16.875 12.000
Third Quarter . . . . . . . . . . . . . . . . . . . . . 30.000 14.000
Fourth Quarter . . . . . . . . . . . . . . . . . . . . . 31.750 20.500


The bid prices reported for these periods reflect inter-dealer prices,
without retail markup, markdown or commissions, and may not represent actual
transactions.

The closing bid price per share as of March 6, 1998 was $25.375 and
there were approximately 68 shareholders of record as of that date. The number
of record holders was determined from the records of the Company's transfer
agent and does not include beneficial owners of Common Stock whose shares are
held in the names of various securities brokers, dealers and registered
clearing agencies.

The Company has never paid cash dividends on its Common Stock. The
Company presently intends to retain all future earnings for the operation and
expansion of its business and, accordingly, the Company does not anticipate
that any dividends will be declared or paid on the Common Stock for the
foreseeable future. In addition, the Company's existing bank credit facility
restricts the Company's ability to declare or pay cash dividends on its Common
Stock. Any future determination to pay cash dividends will be at the
discretion of the Board of Directors and will be dependent upon the Company's
financial condition, results of operations, capital requirements and such other
factors as the Board of Directors deem relevant.


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SALES OF UNREGISTERED SECURITIES

In October, November and December 1996 and January 1997, the Company
granted options to purchase approximately 196,000 shares of Common Stock under
the Plans to certain employees, executive officers and affiliated
professionals. These transactions are exempt from the registration
requirements of the Securities Act pursuant to Rule 701. On July 11, 1997, the
Company issued $100,000 of the Company's Common Stock (approximately 5,797
shares) as consideration for an acquisition of a dental practice.

During 1997, the Company had issued non-negotiable promissory notes in
aggregate sum of $995,750 to 11 sellers as part of the purchase price in
connection with the Company's purchase of the allowable assets of certain
dental practices.

The Company does not believe that the promissory notes issued in these
transactions are a "security" as defined by Section 2(1) of the Securities Act.
However, in the event the promissory notes are deemed to be a security these
transactions were exempt from the registration requirements of the Securities
Act pursuant to Section 4(2) because they did not involve any public offering.

ITEM 6. SELECTED FINANCIAL DATA

The following selected financial data with respect to the Company's
statements of operation's for the years ended December 31, 1993, 1994, 1995,
1996 and 1997 and the balance sheet data as of December 31, 1993, 1994, 1995,
1996 and 1997 are derived from the Financial Statements of the Company which
have been audited by Deloitte & Touche LLP, independent accountants. The
following data should be read in conjunction with the Financial Statements of
the Company and the related notes thereto and Item 7. "Management's Discussion
and Analysis of Financial Condition and Results of Operations."



DECEMBER 31,
--------------------------------------------------------
1993 1994 1995 1996 1997
---- ---- ---- ---- ----
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

STATEMENT OF OPERATIONS DATA FOR THE YEAR:
Net revenue . . . . . . . . . . . . . . . . . . $1,194 $1,868 $3,325 $8,128 $20,035
Net income (loss) . . . . . . . . . . . . . . . 6 (182) 225 1,403 3,409
Pro forma net income (loss)(1) . . . . . . . . 4 (109) 135 856 3,267

Basic earnings per common share(2) . . . . . . $ .57
Diluted earnings per common share(2) . . . . . .56
Pro forma basic earnings per share(2) . . . . . .55
Pro forma diluted earnings per common
share(2) . . . . . . . . . . . . . . . . . . .54
Weighted average shares outstanding:
Basic(2) . . . . . . . . . . . . . . . . . . 5,935
Diluted(2) . . . . . . . . . . . . . . . . . 6,051


BALANCE SHEET DATA AT YEAR END:
Total assets . . . . . . . . . . . . . . . . . $ 583 $ 914 $1,198 $ 7,969 $64,819
Long-term debt, including current maturities . 210 385 608 4,649 1,495


(1) Pro forma adjusted to reflect a 39% income tax rate as if the Company were
taxed as a C Corporation during the periods presented.
(2) The Company's initial public offering of stock was on February 11, 1997,
accordingly, earnings per share and average share data are only provided
for the year ended December 31, 1997.


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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.

A. OVERVIEW

The Company opened its first Dental Center in May 1992 and since then,
has added 20 internally developed and 37 acquired Dental Centers. The Company
derives its revenue through fees earned from the Coast P.A. for providing
management services and support at the Dental Centers, located in central and
northern Florida and Georgia. As of December 31, 1997, 70 Coast Dentists were
employed by the Coast P.A., serving over 400,000 patients. The Company expects
to expand the Coast Dental Network in new and existing markets through the
addition of internally developed and acquired Dental Centers.

Pursuant to the Services and Support Agreement with a Coast P.A., the
Company provides management services and support to facilitate the development
and growth of Dental Centers. Operating expenses at the Dental Centers, with
the exception of compensation paid to the Coast Dentists and dental hygienists,
are expenses of the Company and are recognized as incurred. Prior to October
1, 1996, the services and support fee paid to the Company by Coast Florida P.A.
averaged 78.5% of the Dental Centers' gross revenue. Since October 1, 1996,
the services and support fees paid to the Company by the Coast P.A. has ranged
from 76.0% of the Dental Centers' gross revenue, net of refunds and discounts
to 74.0%. The Company is dependent upon the future success of the Coast P.A.
and the ability of the Coast P.A. to grow with the Company. The services and
support fees between the parties may be revised from time to time due to
changes in anticipated financial results of the contracting parties. The
Company pays, out of the services and support fee, all of the operating and
non-operating expenses incurred by a Coast P.A. at the Dental Centers, except
for the salaries and benefits of the Coast Dentists and dental hygienists,
federal and state income taxes, bad debts and other expenses designated as an
expense of a Coast P.A. Effective June 1, 1997, the Company agreed to pay a
Coast P.A. the sum of $50,000 in connection with each internally developed
Dental Center it commits to open, in consideration for a Coast P.A.'s agreement
to expand the Services and Support Agreement to include the new internally
developed Dental Centers.

The Company opened three internally developed Dental Centers in 1995,
one in 1996 and nine in 1997 in Florida and Georgia. The average cost to the
Company of an internally developed Dental Center has been approximately
$200,000, which includes the cost of equipment, leasehold improvements, working
capital and an agreed upon $50,000 payment (per Dental Center) to the Coast
P.A. to open the additional Dental Centers thus expanding the Services and
Support Agreement to include the new internally developed Dental Centers. At
internally developed Dental Centers, profitability to the Company has been
attained in an average of three to four months from opening. The Company's
growth strategy will continue to include acquisitions in select areas, however,
the percentage of internally developed Dental Centers, as a percentage of all
Dental Centers, is expected to increase in 1998. While this strategy is
expected to result in slightly lower targeted revenue in the short run, the
Company does not expect that the same would adversely impact its targeted per
share income. Management believes that this strategy is an effective use of
its working capital and provides for low cost expansion.

During 1996, the Company and the Coast Florida P.A. added 17 acquired
Dental Centers located in central and northern Florida. The combined purchase
price for these acquired Dental Centers was $5.3 million, consisting of $1.2
million in cash and $4.1 million in promissory notes. On a pro forma basis,
had these acquisitions occurred at the beginning of 1996, the additional net
revenue earned by the Company would have been $3.8 million for 1996.

During 1997, the Company and the Coast Florida P.A. added 20 acquired
Dental Centers located in central and northern Florida. The combined purchase
price for these acquired Dental Centers was $7.1 million, consisting of $4.6
million in cash, $2.2 million in promissory notes, $231,000 in assumed
liabilities and $100,000 of the Company's common stock (5,979 shares). On a
pro forma basis, had these acquisitions occurred at the beginning of 1997, the
additional net revenue earned by the Company would have been $3.8 million for
1997.

The Coast P.A. derives the majority of its revenue from a combination
of sources, including fees paid by private patients, indemnity insurance
reimbursements and capitation payments from managed care companies.


9
10

The following table outlines the payor mix for the Coast P.A.'s revenue
for the periods presented:



Years Ended December 31,
----------------------------------------
1995 1996 1997
----------------------------------------

Self-pay . . . . . . . . . . . . . . . . . . . . . . 65% 55% 36%
HMOs . . . . . . . . . . . . . . . . . . . . . . . . 22 26 43
Private insurers . . . . . . . . . . . . . . . . . . 12 17 19
Medicaid . . . . . . . . . . . . . . . . . . . . . . 1 2 2
--- --- ---
Total . . . . . . . . . . . . . . . . . . . . . . 100% 100% 100%
=== === ===


B. RESULTS OF OPERATIONS

The following table sets forth, as a percentage of net revenue
(consisting of management fees derived pursuant to the Services and Support
Agreement), certain items in the Company's statements of operations for the
years indicated. The performance of the Company during these years are not
indicative of future financial results or conditions.


Years Ended December 31,
------------------------------------------
1995 1996 1997
------------------------------------------

Net revenue . . . . . . . . . . . . . . . . . . . . . . . 100.0% 100.0% 100.0%
Dental Center expenses:
Staff salaries . . . . . . . . . . . . . . . . . . . . 26.0 28.6 31.1
Dental supplies and lab fees . . . . . . . . . . . . . 16.7 14.8 14.2
Advertising . . . . . . . . . . . . . . . . . . . . . . 10.6 8.3 5.9
Rent . . . . . . . . . . . . . . . . . . . . . . . . . 8.9 10.0 10.6
Depreciation . . . . . . . . . . . . . . . . . . . . . 4.1 2.5 2.7
Other . . . . . . . . . . . . . . . . . . . . . . . . . 4.5 2.9 2.2
----- ----- -----
Total Dental Center expenses . . . . . . . . . . . . 70.8 67.1 66.7
----- ----- -----
Gross profit . . . . . . . . . . . . . . . . . . . . 29.2 32.9 33.3
General and administrative . . . . . . . . . . . . . . . 21.0 13.4 11.2
----- ----- -----
Operating profit . . . . . . . . . . . . . . . . . . 8.2 19.5 22.1
Interest income (expense) . . . . . . . . . . . . . . . . (1.5) (2.3) 3.5
----- ----- -----
Income before income tax expense . . . . . . . . . . . . 6.7 17.2 25.6
Income tax expense . . . . . . . . . . . . . . . . . . . -- -- 8.6
----- ----- -----
Net income . . . . . . . . . . . . . . . . . . . . . . . 6.7 17.2 17.0
===== ===== =====

Pro forma income tax expense . . . . . . . . . . . . . . 2.7 6.7 0.7
----- ----- -----
Pro forma net income . . . . . . . . . . . . . . . . . . 4.0% 10.5% 16.3%
===== ===== =====



YEAR ENDED DECEMBER 31, 1997 COMPARED TO YEAR ENDED DECEMBER 31, 1996

Net Revenue. Net revenue increased 146.5% from $8.1 million for the
year ended December 31, 1996 to $20.0 million for the year ended December 31,
1997. This increase was caused by a 24.8% increase in net revenue attributable
to the 12 comparable Dental Centers (Dental Centers that were open throughout
the periods being compared), which accounted for $1.0 million of the increase;
the 17 acquired Dental Centers added in 1996, which accounted for $3.4 million
of the net revenue increase; the 20 acquired Dental Centers added in 1997,
which accounted for $3.2 million of the increase and the nine internally
developed Dental Centers opened in 1997, which accounted for $.5 million of the
increase. Increases in net revenue are primarily driven by increases in
patient visits. Patient visits increased 129.5% from 100,949 for the year ended
December 31, 1996 to 231,681 for the year ended December 31, 1997. This
increase was caused by an increase of 14,968 patient visits at the 12
comparable Dental Centers, an increase of 58,858 patient visits at the 17
acquired Dental Centers in 1996, and increase of 49,611 patient visits at the
20 acquired Dental Centers in 1997 and an increase of 7,295 patient visits at
the nine internally developed Dental Centers in 1997.

Staff Salaries. Staff salaries increased 168.0% from $2.3 million
for the year ended December 31, 1996 to


10
11

$6.2 million for the year ended December 31, 1997. This increase in staff
salaries was caused by an increase in salaries of $.6 million for the 12
comparable Dental Centers, an increase of $1.6 million at the 17 acquired
Dental Centers in 1996, an increase of $1.4 million at the 20 acquired Dental
Centers in 1997 and an increase of $.3 million for the nine internally
developed Dental Centers. Staff salaries include the compensation paid to the
administrative staff at each Dental Center, including the dental assistants,
office managers, sterilization technicians and front desk managers. As a
percentage of net revenue, staff salaries increased from 28.6% for the year
ended December 31, 1996 to 31.1% for the year ended December 31, 1997. The
increase was caused primarily by the increase in staffing due to the addition
of internally developed and acquired Dental Centers which was somewhat offset
by staff levels at the 12 comparable Dental Centers remaining relatively
constant, while net revenue increased. While an internally developed Dental
Center can operate with a relatively limited dental staff in the early stages
of its development, the services of a dentist, dental hygienist, dental
assistant and front desk manager are still necessary. As a result, staff
salaries as a percentage of net revenue will typically be higher in the first
six months of operation until patient visits are increased. In addition, for
acquired Dental Centers, staff salaries as a percentage of net revenue will
typically be higher in the first three to six months following acquisition as
the Company implements the Coast Operating Model to increase productivity and
efficiency.

Dental Supplies and Lab Fees. Dental supplies and lab fees
increased 136.4% from $1.2 million for the year ended December 31, 1996 to $2.8
million for the year ended December 31, 1997. This increase was caused by the
increase in patient visits and dental services provided at the 58 Dental
Centers. As a percentage of net revenue, dental supplies and lab fees
decreased from 14.8% for the year ended December 31, 1996 to 14.2% for the year
ended December 31, 1997. This decrease was caused primarily by the expansion
into new markets and the changing demographics have caused crowns and dentures
as a percentage of total product mix to decrease. Crowns and dentures result
in lab fees not incurred with other dental products and procedures.

Advertising. Advertising expense increased 76.6% from $.7 million
for the year ended December 31, 1996 to $1.2 million for the year ended
December 31, 1997. This increase was caused primarily by implementation of a
more aggressive advertising program during 1997. As a percentage of net
revenue, advertising expense decreased from 8.3% for the year ended December
31, 1996 to 5.9% for the year ended December 31, 1997. This decrease was
caused primarily by an increase in market penetration by comparable Dental
Centers while advertising expenses remained relatively constant for those
Centers.

Rent. Rent expense increased 160.3% from $.8 million for the year
ended December 31, 1996 to $2.1 million for the year ended December 31, 1997.
This increase was caused primarily by the addition of the nine internally
developed Dental Centers and the 37 acquired Dental Centers. As a percentage
of net revenue, rent expense increased from 10.0% for the year ended December
31, 1996 to 10.6% for the year ended December 31, 1997. This increase was
caused primarily by higher rent expense associated with the 37 acquired Dental
Centers.

Depreciation. Depreciation expense at the Dental Centers increased
167.9% from $.2 million for the year ended December 31, 1996 to $.5 million for
the year ended December 31, 1997. The increase was primarily associated with
the addition of the nine internally developed Dental Centers and the 37
acquired Dental Centers. As a percentage of net revenue, depreciation expense
increased from 2.5% for the year ended December 31, 1996 to 2.7% for the year
ended December 31, 1997.

Other Expenses. Other expenses increased 85.0% from $.2 million for
the year ended December 31, 1996 to $.4 million for the year ended December 31,
1997. This increase was caused primarily by increases in insurance costs,
credit card discounts and other costs. As a percentage of net revenue, other
expenses decreased from 2.9% for the year ended December 31, 1996 to 2.2% for
the year ended December 31, 1997. This decrease was caused primarily by
increased economies of scale associated with the increasing number of patient
visits.

General and Administrative Expenses. General and administrative
expenses, including corporate depreciation and amortization, increased 107.0%
from $1.1 million for the year ended December 31, 1996 to $2.3 million for the
year ended December 31, 1997. This increase was caused primarily by
professional fees increasing due to the change from a private to a
publicly-held company and corporate administrative salaries, rent and insurance
costs due to the growth of the Company. As a percentage of net revenue,
general and administrative expenses decreased from 13.4% for the year ended
December 31, 1996 to 11.2% for the year ended December 31, 1997. General and
administrative expenses primarily consist of expenses incurred at the corporate
office.

Income Taxes. Income taxes increased $1.7 million. This increase
was attributable to the change in corporate status. The Company was an S
Corporation until February 11, 1997 and, therefore, income taxes were paid by
the individual shareholders. The Company automatically became a C Corporation
upon the consummation of its public offering. See Item 8. Financial Statements
and Supplementary Data, Notes to the Financial Statements, Note 7.


11
12

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

Net Revenue. Net revenue increased 144.5% from $3.3 million for the
year ended December 31, 1995 to $8.1 million for the year ended December 31,
1996. This increase was caused primarily by a 38.7% increase in net revenue
attributable to the eight comparable Dental Centers (Dental Centers that were
open throughout the periods being compared), which accounted for $1.1 million
of the net revenue increase; the three internally developed Dental Centers
opened in 1995, which accounted for $1.0 million of the increase; and the 17
acquired Dental Centers added in 1996, which accounted for $2.7 million of the
increase. Capitation payments received from 11 managed care contracts during
the year ended December 31, 1996 accounted for $1.0 million of this increase.
Increases in net revenue are primarily driven by increases in patient visits.
Patient visits increased 140.3% from 42,005 for the year ended December 31,
1995 to 100,949 for the year ended December 31, 1996. This increase was caused
primarily by an increase of 13,457 patient visits at the eight comparable
Dental Centers, an increase of 13,291 patient visits at the three internally
developed Dental Centers and 32,085 patient visits at the 17 acquired Dental
Centers.

Staff Salaries. Staff salaries increased 169.3% from $.9 million for
the year ended December 31, 1995 to $2.3 million for the year ended December
31, 1996. This increase in staff salaries was caused primarily by an increase
in salaries of $.3 million for the eight comparable Dental Centers, $.3 million
increase for the three internally developed Dental Centers and $.9 million for
the 17 acquired Dental Centers. Staff salaries include the compensation paid
to the administrative staff at each Dental Center, including the dental
assistants, office managers, sterilization technicians and front desk managers.
As a percentage of net revenue, staff salaries increased from 26.0% for the
year ended December 31, 1995 to 28.6% for the year ended December 31, 1996.
The increase was caused primarily by the increase in staffing due to the
addition of internally developed and acquired Dental Centers which was somewhat
offset by staff levels at the eight comparable Dental Centers remaining
relatively constant, while net revenue increased. While an internally developed
Dental Center can operate with a relatively limited dental staff in the early
stages of its development, the services of a dentist, dental hygienist, dental
assistant and front desk manager are still necessary. As a result, staff
salaries as a percentage of net revenue will typically be higher in the first
six months of operation until patient visits are increased. In addition, for
acquired Dental Centers, staff salaries as a percentage of net revenue will
typically be higher in the first three to six months following acquisition as
the Company implements the Coast Operating Model to increase productivity and
efficiency.

Dental Supplies and Lab Fees. Dental supplies and lab fees
increased 116.1% from $.6 million for the year ended December 31, 1995 to $1.2
million for the year ended December 31, 1996. This increase was caused
primarily by the increase in patient visits and dental services provided at the
eight comparable Dental Centers and the three internally developed and the 17
acquired Dental Centers. As a percentage of net revenue, dental supplies and
lab fees decreased from 16.7% for the year ended December 31, 1995 to 14.8% for
the year ended December 31, 1996. This decrease was caused primarily by the
Company changing suppliers in October 1995 and negotiating a more favorable
supply agreement. In addition, as the Coast Dental Network expands into new
markets, changing demographics have caused crowns and dentures as a percentage
of total product mix to decrease. Crowns and dentures result in lab fees not
incurred with other dental products and procedures.

Advertising. Advertising expense increased 92.5% from $.4 million
for the year ended December 31, 1995 to $.7 million for the year ended December
31, 1996. This increase was caused primarily by implementation of a more
aggressive advertising program for the 17 acquired Dental Centers. As a
percentage of net revenue, advertising expense decreased from 10.6% for the
year ended December 31, 1995 to 8.3% for the year ended December 31, 1996.
This decrease was caused primarily by an increase in market penetration by
comparable Dental Centers while advertising expenses remained relatively
constant for those Centers.

Rent. Rent expense increased 174.1% from $.3 million for the year
ended December 31, 1995 to $.8 million for the year ended December 31, 1996.
This increase was caused primarily by the addition of the three internally
developed Dental Centers and the 17 acquired Dental Centers. As a percentage
of net revenue, rent expense increased from 8.9% for the year ended December
31, 1995 to 10.0% for the year ended December 31, 1996. This increase was
caused primarily by higher rent expense associated with the 17 acquired Dental
Centers.

Depreciation. Depreciation expense increased 57.6% from $.1
million for the year ended December 31, 1995 to $.2 million for the year ended
December 31, 1996. As a percentage of net revenue, depreciation expense
decreased from 4.1% for the year ended December 31, 1995 to 2.5% for the year
ended December 31, 1996.

Other Expenses. Other expenses increased 52.7% from $.1 million for
the year ended December 31, 1995 to $.2 million for the year ended December 31,
1996. This increase was caused primarily by increases in insurance costs,
credit card discounts and other costs, which accounted for $85,000 of the
increase, and depreciation expense, associated with the addition of the
eighteen Dental Centers, which accounted for $66,000 the increase. As a
percentage of net revenue, other expenses decreased from 8.6% for the year
ended December 31, 1995 to 5.4% for


12
13

the year ended December 31, 1996. This decrease was caused primarily by
increased economies of scale associated with the increasing number of patient
visits.

General and Administrative Expenses. General and administrative
expenses increased 39.3% from $.7 million for the year ended December 31, 1995
to $1.1 million for the year ended December 31, 1996. This increase was caused
primarily by corporate administrative salaries increasing, which accounted for
$.3 million of the increase, and a decrease in other general and administrative
expenses of $65,000. As a percentage of net revenue, general and
administrative expenses decreased from 20.5% for the year ended December 31,
1995 to 11.7% for the year ended December 31, 1996. This decrease was caused
primarily by economies of scale realized through the centralization of Dental
Center management. General and administrative expenses primarily consist of
expenses incurred at the corporate office.

C. LIQUIDITY AND CAPITAL RESOURCES

On February 11, 1997, the Company completed its initial public
offering of Common Stock. The net proceeds to the Company from the sale of the
2,200,000 shares of Common Stock offered by the Company were approximately
$15.1 million (after deducting underwriting discounts and commissions and
offering expenses). On September 22, 1997, the Company completed its secondary
public offering of Common Stock. The net proceeds to the Company from the sale
of 1,900,000 shares of Common Stock offered by the Company were approximately
$41.9 million (after deducting underwriting discounts and commissions and
offering expenses). As of March 6, 1998, the Company used a portion of the
net proceeds from the two offerings for the repayment of: (i) $3.9 million for
notes payable utilized and issued as consideration for acquisitions by the
Company prior to the initial public offering; (ii) $449,000 for equipment
lease and working capital; (iii) $4.6 million for acquisitions during the year
ended December 31, 1997; and (iv) $1.3 million for internally developed Dental
Centers during the year ended December 31, 1997. As of December 31, 1997, the
Company had net proceeds of approximately $46.8 million remaining from the two
offerings.

The Company has a revolving credit facility with Barnett Bank of
Florida ("Barnett") which provides an aggregate of $15.0 million for general
working capital needs and expansion of Dental Centers. As of March 6, 1998,
the Company had available the entire $15.0 million for borrowing.

During 1996, the Company and the Coast Florida P.A. added 17 acquired
Dental Centers located in Florida. The combined purchase price for these
acquired Dental Centers was $5.3 million, consisting of $1.2 million in cash
and $4.1 million in promissory notes. Had these acquisitions occurred at the
beginning of 1996, the additional net revenue earned by the Company during 1996
would have been $3.8 million for the period.

During 1997, the Company and the Coast Florida P.A. added 20 acquired
Dental Centers located in Florida. The combined purchase price for these
acquired Dental Centers was $7.1 million, consisting of $4.6 million in cash,
$2.2 million in promissory notes, $231,000 in assumed liabilities and $100,000
of the Company's common stock (5,979 shares). Had these acquisitions occurred
at the beginning of 1997, the additional net revenue earned by the Company
would have been $3.8 million for 1997.

The Company added one internally developed Dental Center in 1996 and
nine in 1997 in Florida and Georgia at an average cost of approximately
$200,000, which includes the cost of equipment, leasehold improvements, working
capital and an agreed upon $50,000 payment (per Dental Center) to the Coast
P.A. to open the additional Dental Centers thus expanding the Services and
Support Agreement to include the new internally developed Dental Centers.

The cost of an acquired Dental Center is typically based upon in part
a negotiated percentage of the Dental Center's historical gross revenue.
Acquired Dental Centers typically generate sufficient cash flow to fund their
operations. The Company plans to finance the addition of internally developed
and acquired Dental Centers for the foreseeable future through a combination of
bank financing, seller financing, issuance of Common Stock, cash flow from
operations and net proceeds from the initial and secondary public offerings of
the Company's Common Stock.

On March 6, 1998, the Company announced that it had reached an
agreement with Mid Coast Dental Services, Inc., a Virginia corporation ("MCDS")
to provide financing for the development of Dental Centers in Virginia. In
exchange for providing financing for the building and acquisition of Dental
Centers, the Company received an option to acquire MCDS beginning on December
31, 1999. The purchase price under the option agreement is to be based on an
agreed upon formula which is expected to approximate the fair value of MCDS.

The Company does not believe inflation has had a material impact on
earnings during the past three years. Substantial increases in future costs
could have a significant impact on the Company. If operating expenses
increase, management believes it can recover increased costs by increasing
prices to the extent deemed advisable considering


13
14

competition.

Many computer systems in use today were designed and developed using
two digits, rather than four, to specify the year. As a result, such systems
will recognize the year 2000 as "00". This could cause many computer
applications to fail completely or to create erroneous results unless
corrective measures are taken. The Company utilizes software and related
computer technologies essential to its operations that will be affected by the
Year 2000 issue. The Company has implemented a plan of action which it
believes will make its computer systems Year 2000 compliant. The Company
believes that the expense associated with these actions is immaterial in
respect to the Company's financial condition.

Based upon the Company's anticipated capital needs for operations of
its business, general corporate purposes, the addition of Dental Centers and
repayment of certain debts, management believes that the combination of the
funds expected to be available under the Company's current cash reserves,
revolving line of credit and cash flow from operations should be sufficient to
meet the Company's funding requirements to conduct its operations and for
further implementation of its growth strategy and current plans through at
least 1999. Thereafter, it is anticipated by the Company that through at least
such time future acquisitions and expansion will be funded primarily with cash
on hand, cash flow from operations and borrowings under the revolving line of
credit. Thereafter, or in the event the Company expands at a more rapid rate,
the Company would finance growth through other credit sources, and where
desirable, funding from the sale of debt or equity securities.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.


SPECIAL NOTICE REGARDING FORWARD LOOKING STATEMENTS

This Form 10-K, press releases and certain information provided
periodically in writing or orally by the Company's officers or its agents
contain statements which constitute "forward-looking statements" within the
meaning of Section 27A of the Securities Act, as amended and Section 21E of the
Securities Exchange Act of 1934. The words "expect", "believe", "goal",
"plan", "intend", "estimate" and similar expressions and variations thereof if
used are intended to specifically identify forward-looking statements. Those
statements appear in a number of places in this Form 10-K and in other places,
particularly, "Management's Discussion and Analysis of Financial Condition and
Results of Operations," and include statements regarding the intent, belief or
current expectations of the Company, its directors or its officers with respect
to, among other things: (i) the successful expansion of the Coast Dental
Network in new and existing markets through the addition of internally
developed and acquired Dental Centers in accordance with the Company's growth
strategy; (ii) the Company's liquidity and capital resources; (iii) the
Company's financing opportunities and plans and (iv) the Company's future
performance and operating results. Investors and prospective investors are
cautioned that any such forward-looking statements are not guarantees of future
performance and involve risks and uncertainties, and that actual results may
differ materially from those projected in the forward-looking statements as a
result of various factors. The factors that might cause such differences
include, among others, the following: (i) any material inability of the
Company to successfully identify, consummate and integrate acquisitions at
reasonable and anticipated costs to the Company; (ii) any material inability
of the Company to successfully internally develop Dental Centers; (iii) any
adverse effect or limitations caused by Governmental regulations; (iv) any
adverse effect on the Company's continued positive cash flow and abilities to
obtain acceptable financing in connection with its growth plans; (v) any
increased competition in business and in acquisitions; (vi) any inability of
the Company to successfully conduct its business in new markets; (vii) any
adverse impacts on the Company's margins due to an expected increase of
internally developed Dental Centers, or to costs associated with increased
growth or increased managed care business having lower margins (viii) the
continued relationship with and success of the Company's professional
association customers and their continued ability to grow in conjunction with
the Company's growth; (ix) any inability of the Company to meet or exceed
analysts expectations in any future period and (x) any decrease in overall
average Dental Center revenue of the Company resulting from increased
internally developed Dental Centers. The Company undertakes no obligation to
publicly update or revise the forward looking statements made in this Form 10-K
to reflect events or circumstances after the date of this Form 10-K or to
reflect the occurrence of unanticipated events.


14
15

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

COAST DENTAL SERVICES, INC.
INDEX TO FINANCIAL STATEMENTS



PAGE
----

Independent Auditors' Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Statements of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Statements of Stockholders' Equity (Deficit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21




15
16

INDEPENDENT AUDITORS' REPORT

Coast Dental Services, Inc.
Board of Directors

We have audited the accompanying balance sheets of Coast Dental
Services, Inc. (the "Company") as of December 31, 1997 and 1996, and the
related statements of operations, stockholders' equity (deficiency) and cash
flows for each of the three years in the period ended December 31, 1997. 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 in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, such financial statements present fairly, in all
material respects, the financial position of Coast Dental Services, Inc. as of
December 31, 1997 and 1996 and the results of operations and its cash flows for
each of the three years in the period ended December 31, 1997 in conformity
with generally accepted accounting principles.



Deloitte & Touche LLP
Tampa, Florida

February 9, 1998
(March 6, 1998 as to Note 12)


16
17

COAST DENTAL SERVICES, INC.
BALANCE SHEETS



- ------------------------------------------------------------------------------------------------------------
December 31,
----------------------------------
1996 1997
- ------------------------------------------------------------------------------------------------------------

ASSETS

Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . $ 540,790 $46,343,591
Management fee receivable from Coast P.A. . . . . . . . . . . . 818,370 2,418,689
Notes receivable Manrique and Coast P.A. . . . . . . . . . . . 354,568 --
Supplies, inventory and small tools . . . . . . . . . . . . . . 106,500 799,869
Prepaid expenses and other assets . . . . . . . . . . . . . . . 26,560 268,253
----------- -----------
Total current assets . . . . . . . . . . . . . . . . . . . . 1,846,788 49,830,402
Property and equipment, net . . . . . . . . . . . . . . . . . . . 1,802,285 6,047,993
Notes receivable from stockholders . . . . . . . . . . . . . . . 177,898 --
Non-compete agreement, net of amortization of $82,778
and $208,763, respectively . . . . . . . . . . . . . . . . . . 1,028,622 949,393
Dental services agreement, net of amortization of $18,363
and $228,140, respectively . . . . . . . . . . . . . . . . . . 2,117,742 7,744,098
Capitalized offering costs . . . . . . . . . . . . . . . . . . . 938,481 --
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . 57,410 246,989
----------- -----------
Total assets . . . . . . . . . . . . . . . . . . . . . . . . $ 7,969,226 $64,818,875
=========== ===========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . $ 664,050 $ 1,053,310
Accrued offering costs . . . . . . . . . . . . . . . . . . . . 787,981 --
Other accrued expenses . . . . . . . . . . . . . . . . . . . . 403,747 699,778
Current maturities of debt . . . . . . . . . . . . . . . . . . 807,001 454,330
----------- -----------
Total current liabilities . . . . . . . . . . . . . . . . . . 2,662,779 2,207,418
Long-term debt, excluding current maturities . . . . . . . . . . 3,842,296 1,040,623
Deferred tax liability . . . . . . . . . . . . . . . . . . . . . -- 176,742
----------- -----------
Total liabilities . . . . . . . . . . . . . . . . . . . . . . 6,505,075 3,424,783
Stockholders' equity:
Preferred stock, $.001 par value; 2,000,000 shares authorized,
none issued . . . . . . . . . . . . . . . . . . . . . . . . . -- --
Common stock, $.001 par value; 50,000,000 shares authorized,
3,500,000 and 7,613,354, shares issued and outstanding,
respectively . . . . . . . . . . . . . . . . . . . . . . . . 3,500 7,613
Additional paid-in capital . . . . . . . . . . . . . . . . . . 25,174 58,322,926
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . 1,435,477 3,065,953
----------- -----------
1,464,151 61,396,492
Less: treasury stock . . . . . . . . . . . . . . . . . . . . -- 2,400
----------- -----------
Total stockholders' equity . . . . . . . . . . . . . . . . . 1,464,151 61,394,092
----------- -----------
Total liabilities and stockholders' equity . . . . . . . . . $ 7,969,226 $64,818,875
=========== ===========


See Notes to Financial Statements.


17
18

COAST DENTAL SERVICES, INC.
STATEMENTS OF OPERATIONS



- ---------------------------------------------------------------------------------------------------------
YEARS ENDED DECEMBER 31,
------------------------------------------------------
1995 1996 1997
- ---------------------------------------------------------------------------------------------------------

Net revenue . . . . . . . . . . . . . . . . . $3,324,668 $8,128,148 $20,034,536
Dental Center expenses:
Staff salaries . . . . . . . . . . . . . . 863,142 2,324,496 6,228,923
Dental supplies and lab fees . . . . . . . 556,574 1,202,986 2,844,118
Advertising . . . . . . . . . . . . . . . . 350,659 674,918 1,191,887
Rent . . . . . . . . . . . . . . . . . . . 295,982 811,210 2,112,019
Depreciation . . . . . . . . . . . . . . . 138,213 203,753 545,859
Other . . . . . . . . . . . . . . . . . . . 148,506 234,130 433,168
---------- ---------- -----------
Total Dental Center expenses . . . . . . 2,353,076 5,451,493 13,359,846
---------- ---------- -----------
Gross profit . . . . . . . . . . . . . . 971,592 2,676,655 6,674,690
General and administrative expenses . . . . . 696,942 1,089,401 2,255,397
---------- ---------- -----------
Operating profit . . . . . . . . . . . . 274,650 1,587,254 4,419,293
Interest income (expense) . . . . . . . . . . (50,339) (184,290) 704,807
---------- ---------- -----------
Income before income taxes . . . . . . . . . 224,311 1,402,964 5,124,100
Income tax expense . . . . . . . . . . . . . -- -- 1,715,218
---------- ---------- -----------
Net income . . . . . . . . . . . . . . . . . $ 224,311 $1,402,964 $ 3,408,882
========== ========== ===========

Pro forma income tax expense . . . . . . . . 89,725 547,156 142,021
---------- ---------- -----------
Pro forma net income . . . . . . . . . . . . $ 134,586 $ 855,808 $ 3,266,861
========== ========== ===========

Basic earnings per share . . . . . . . . . . $ .57
===========
Pro forma basic earnings per share . . . . . $ .55
===========

Diluted earnings per share . . . . . . . . . $ .56
===========
Pro forma diluted earnings per share . . . . $ .54
===========

Weighted average number of shares outstanding:
Basic . . . . . . . . . . . . . . . . . . . 5,934,701
===========
Diluted . . . . . . . . . . . . . . . . . . 6,051,011
===========


See Notes to Financial Statements.


18
19

COAST DENTAL SERVICES, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)



- ----------------------------------------------------------------------------------------------------------------
ADDITIONAL
COMMON STOCK PAID-IN CAPITAL RETAINED TOTAL
---------------------- COMMON EARNINGS TREASURY STOCKHOLDERS'
SHARES AMOUNT STOCK (DEFICIT) STOCK EQUITY(DEFICIT
- ----------------------------------------------------------------------------------------------------------------

Balance on December 31,
1994. . . . . . . . . . . . 3,360,000 $ 336 $ 664 $ (50,652) -- $ (49,652)
Net income for the year ended
December 31, 1995 . . . . . -- -- -- 224,311 -- 224,311
--------- ------ ----------- ----------- ------- -----------
BALANCE ON DECEMBER 31,
1995. . . . . . . . . . . . 3,360,000 336 664 173,659 -- 174,659
Change in par value of common
stock . . . . . . . . . . . -- 3,150 (3,150) -- -- --
Issuance of common stock . . 140,000 14 27,660 -- -- 27,674
Distribution to stockholders -- -- -- (141,146) -- (141,146)
Net income for the year ended
December 31, 1996 . . . . . -- -- -- 1,402,964 -- 1,402,964
--------- ------ ----------- ----------- ------- -----------
BALANCE ON DECEMBER 31,
1996. . . . . . . . . . . . 3,500,000 3,500 25,174 1,435,477 -- 1,464,151
Net proceeds from issuance of
common stock from initial
offering . . . . . . . . . 2,200,000 2,200 15,104,762 -- -- 15,106,962
Net proceeds from issuance of
common stock from secondary
offering. . . . . . . . . . 1,900,000 1,900 41,909,036 -- -- 41,910,936
Issuance of common stock upon
exercise of stock options . 7,557 7 60,452 -- -- 60,459
Issuance of common stock upon
acquisition . . . . . . . . 5,797 6 99,994 -- -- 100,000
Purchase of common stock . . -- -- -- -- (2,400) (2,400)
Undistributed retained earnings
from S corporation . . . . -- -- 1,435,477 (1,435,477) -- --
Net income for the year ended
December 31, 1997 . . . . . -- -- -- 3,408,882 -- 3,408,882
Net income from S corporation
prior to February 11,
1997. . . . . . . . . . . . -- -- 342,929 (342,929) -- --
Distributions to
stockholders. . . . . . . . -- -- (654,898) -- -- (654,898)
--------- ------ ----------- ----------- ------- -----------
BALANCE ON DECEMBER 31, 1997 7,613,354 $7,613 $58,322,926 $ 3,065,953 $(2,400) $61,394,092
========= ====== =========== =========== ======= ===========


See Notes to Financial Statements.


19
20

COAST DENTAL SERVICES, INC.
STATEMENTS OF CASH FLOWS



- ---------------------------------------------------------------------------------------------------------------
YEARS ENDED DECEMBER 31,
-----------------------------------------------
1995 1996 1997
- ---------------------------------------------------------------------------------------------------------------

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income . . . . . . . . . . . . . . . . . . . . . . $ 224,311 $ 1,402,964 $ 3,408,882
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation . . . . . . . . . . . . . . . . . . . . 153,341 238,504 594,647
Amortization . . . . . . . . . . . . . . . . . . . . -- 101,141 335,762
Compensation in the form of common stock . . . . . . -- 27,674 --
Forgiveness of notes receivable from stockholders . . -- -- 177,898
Deferred income tax expense . . . . . . . . . . . . . -- -- 176,742
Changes in operating assets and liabilities:
Increase in management fee receivable from P.A. . . (130,113) (688,257) (1,502,611)
Decrease (increase) in notes receivable from P.A. . -- (354,568) 224,041
Increase in supplies, inventory and small tools . . (11,250) (65,250) (693,369)
Decrease (increase) in prepaid expenses and
other assets . . . . . . . . . . . . . . . . . . . 8,862 (23,774) (241,693)
(Decrease) increase in accounts payable and
accrued expenses . . . . . . . . . . . . . . . . . (14,189) 1,440,965 685,291
--------- ----------- ------------
NET CASH PROVIDED BY OPERATING ACTIVITIES . . . . 230,962 2,079,399 3,165,590

CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures . . . . . . . . . . . . . . . . . (119,770) (466,119) (3,560,355)
Acquired assets, including intangible assets . . . . . (37,008) (5,158,586) (7,162,889)
Increase in other assets . . . . . . . . . . . . . . . -- (3,059) (156,760)
----------- ----------- ------------
NET CASH USED IN INVESTING ACTIVITIES . . . . . . (156,778) (5,627,764) (10,880,004)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from initial offering . . . . . . . . . . . . -- -- 16,368,000
Proceeds from secondary offering . . . . . . . . . . . -- -- 42,655,000
Payment of capitalized costs . . . . . . . . . . . . . -- -- (1,854,602)
Proceeds from long-term debt . . . . . . . . . . . . . 231,500 4,418,813 --
Payments on long-term debt . . . . . . . . . . . . . . (44,225) (327,213) --
Proceeds from exercise of stock options . . . . . . . . -- -- 60,459

Proceeds from issuance of common stock upon
acquisition . . . . . . . . . . . . . . . . . . . . . -- -- 100,000
Proceeds from notes payable . . . . . . . . . . . . . . -- -- 995,750
Payments on notes payable . . . . . . . . . . . . . . . (150,000) -- (4,182,198)
Proceeds from capital leases . . . . . . . . . . . . . 8,065 -- 143,343
Payments on capital leases . . . . . . . . . . . . . . (24,036) (50,383) (111,239)
Decrease (increase) in notes receivable stockholders . 24,512 (52,319) --
Purchase of treasury stock . . . . . . . . . . . . . . -- -- (2,400)
Distribution to stockholders . . . . . . . . . . . . . -- (141,146) (654,898)
----------- ----------- ------------
NET CASH PROVIDED BY FINANCING ACTIVITIES . . . . 45,816 3,847,752 53,517,215
----------- ----------- ------------
INCREASE IN CASH AND CASH EQUIVALENTS . . . . . . . . . . 120,000 299,387 45,802,801
Cash and cash equivalents at beginning of period . . . . 121,403 241,403 540,790
----------- ----------- ------------
Cash and cash equivalents at end of period . . . . . . . $ 241,403 $ 540,790 $ 46,343,591
=========== =========== ============

Supplemental schedule of cash flow information:
Cash paid for interest . . . . . . . . . . . . . . . . $ 70,554 $ 108,460 $ 157,795
=========== =========== ============
Cash paid for income taxes . . . . . . . . . . . . . . $ -- $ -- $ 1,450,000
=========== =========== ============

See Notes to Financial Statements.


20
21

COAST DENTAL SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS

NOTE 1 - DESCRIPTION OF BUSINESS

Sunshine Health Services, Inc. was incorporated in August 1992, as a
Florida corporation and subsequently changed its name to Coast Dental, Inc.
Effective March 31, 1996, Coast Dental, Inc. was merged into Coast Dental
Services, Inc. (the "Company"), a Delaware corporation. The Company's sole
business is to provide practice management services to the Coast Florida, P.A.
and Coast Dental Services of Georgia, P.C. ("Coast Georgia P.A.) (collectively,
the "Coast P.A."). The Company has entered into a services and support
agreement with each Coast P.A. whereby the Company provides certain management
support services to the Coast P.A. in return for a management fee. The Coast
P.A. employs the Coast dentists and the dental hygienists and provides all of
the dental services to the patients. As of December 31, 1997, the Company
operated 58 dental centers in Florida and Georgia.

The Company provides administrative and technical support for
professional services rendered by the dental professionals under its Services
and Support Agreements and receives management fees from the Coast P.A. The
Company does not employ dentists and hygienists and, accordingly, "Dental
Center Staff Salaries" presented on the face of the Statement of Operations do
not include the salaries of dentists and hygienists. The fee is equal to a
defined percentage of gross patient revenue, net of refunds and discounts,
currently ranging from 76.0% to 74.0%. The costs incurred by the Coast P.A.
include primarily dentists and hygienists salaries and benefits, interest and
bad debts.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation. The accompanying financial statements have
been prepared on the accrual basis of accounting. The Company does not own any
interests in or control the activities of the Coast P.A. Accordingly, the
financial statements of the Coast P.A. are not consolidated with those of the
Company.

Cash Equivalents. The Company considers all highly liquid investments
with an original maturity of 90 days or less to be cash equivalents.

Management Fee Receivable. The management fee receivable represents
the indebtedness of the Coast P.A. for services and support fees payable to the
Company in accordance with the Services and Support Agreement. Also, the
Company may, from time to time, advance funds under the Services and Support
Agreement for purposes of funding the payment of expenses or for the Coast
P.A.'s acquisitions of existing dental practices.

Supplies, Inventory and Small Tools. Supplies, inventory and small
tools are stated at the lower of FIFO cost or market.

Property and Equipment. Property and equipment are stated at cost.
Equipment held under capital leases is stated at the present value of minimum
lease payments at the inception of the related leases. Depreciation of
property and equipment is calculated using the straight-line method over the
estimated useful lives of the assets ranging from 5 to 7 years. Equipment held
under capital leases and leasehold improvements are amortized on a
straight-line basis over the shorter of the lease term or estimated useful life
of the assets.

When assets are retired or otherwise disposed of, the costs and related
accumulated depreciation are removed from the accounts. The difference between
the net book value of the assets and proceeds from disposition is recognized as
a gain or loss. Routine maintenance and repairs are charged to expense as
incurred, while costs of improvements and renewals are capitalized.

Non-Compete Agreement. Costs incurred in connection with the
non-compete agreements are being amortized over their estimated life of three
to nine years on a straight line basis.

Dental Service Agreement. Costs of acquisitions in excess of the
estimated fair value of property and equipment and any non-compete agreements
are allocated to the dental services agreement because the Company has
effectively acquired the right to manage the practice for the Coast P.A. The
dental services agreement with the Coast Florida P.A. represents the Company's
exclusive right to operate the Dental Centers during the term of the agreement.
The assigned value of the dental services agreement is amortized using the
straight-line method over its estimated life of twenty-five years.

Capitalized Offering Costs. The Company has capitalized all costs
related to the initial and secondary public offerings. Upon completion of the
offerings, such costs were netted against the offering proceeds.


21
22

COAST DENTAL SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS-CONTINUED

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 amounts of assets and
liabilities and disclosures of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenue and expenses
during the reporting period. Actual results could differ from those estimated.

Relationship with the Coast P.A. and the Coast Dentists. The Company
receives fees for services provided to the Coast P.A. under its Services and
Support Agreements, but does not employ dentists or hygienists or control the
practices of the Coast Dentists. The Company's revenue is dependent on revenue
generated by the Coast Dentists and, therefore, effective and continued
performance of the Coast Dentists during the term of the Services and Support
Agreements is essential to the Company's long term success. Under the Services
and Support Agreements, the Company receives a monthly fee ranging from 76.0%
to 74.0% from the Coast P.A. of the Dental Centers' gross revenue, net of
refunds and discounts. The Company paid all of the operating and nonoperating
expenses incurred at the Dental Centers, except for the salaries and benefits
of the Coast Dentists and hygienists, federal and state income taxes, bad debts
and other expenses designated as an expense of the Coast P.A.

Stock-Based Compensation. In October 1995, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards No. 123,
Accounting for Stock-Based Compensation ("Statement 123"), which is effective
for fiscal years beginning after December 15, 1995. Under Statement 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 and disclose in the financial statements the effects of Statement 123
as if the recognition provisions were adopted. The Company has not adopted the
recognition provisions of Statement 123.

Fair Value of Financial Instruments. The estimated fair value of
amounts reported in the financial statements has been determined by using
available market information and appropriate valuation methodologies. The
carrying value of all current assets and current liabilities approximates the
fair value because of their short-term nature. The fair value of long-term
debt approximates its carrying value.

Pro Forma Income Taxes. The Company was an S Corporation until
February 11, 1997 and, therefore income taxes were paid by the individual
shareholders. The Company automatically became a C Corporation upon the
consummation of its public offering.

The pro forma income tax adjustment represents a provision for federal
and state income taxes at the statutory rate in effect for the periods
presented as if the Company had not been treated as an S Corporation.

Earnings Per Common Share. The Company has adopted Statement of
Financial Accounting Standards No. 128, Earnings per Share ("Statement 128").
Statement 128 requires that the primary and fully diluted earnings per share be
replaced by basic and diluted earnings per share, respectively. The basic
calculation computes earnings per share based only on the weighted average
number of shares outstanding as compared to primary earnings per share which
included common stock equivalents. The diluted earnings per share calculation
is computed similarly to fully diluted earnings per share.

The basic earnings per common share is based on the weighted average
number of common shares outstanding during each period adjusted for actual
shares issued during the period. The weighted average number of shares
outstanding reflects all shares issued within one year of the initial public
offering as though the shares were issued on January 1, 1996.

The diluted earnings per common share is equal to the basic shares plus
the incremental shares outstanding as if all issued options were exercised as
of the end of the period. The number of incremental shares is determined using
the treasury stock methodology described in Statement 128.

NOTE 3 - NET REVENUE

Revenue for all Dental Centers is recorded at established rates reduced
by amounts retained by the Coast P.A. The Company has 40 year evergreen dental
services agreements with the Coast P.A. whereby the Company receives fees for
services provided to the Coast P.A. Net revenue represents the aggregate fees
charged to the Coast P.A. under the agreements during the year. Prior to
October 1, 1996, the fee was based on revenues earned by the Coast P.A. reduced
by certain costs incurred by the Coast P.A. and a negotiated return to the
Coast Florida P.A. The costs incurred by the Coast P.A. include primarily
dentists and hygienist salaries, see Note 1. All arrangements for fees to


22
23

COAST DENTAL SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS-CONTINUED

date have been agreed between the principal and sole owner of the Coast P.A.,
Dr. Adam Diasti, (who is also a major shareholder and the President of the
Company) and the Chief Executive Officer of the Company, Terek Diasti. The
factors considered in setting those fees included the Company's evaluation of
the services it provides, the costs incurred by the Company in connection with
providing the services and the Company's negotiated return, balanced against
the Coast P.A.'s requirement for a retained amount which ensured its financial
viability, contemplated an anticipated long-term relationship with the Company
and reflected the future business opportunity related thereto.

Only the fees earned by the Company for its services to the Coast P.A.
and the actual expenses of the Company are reflected in the financial
statements of the Company. Neither the Coast P.A. nor any of the amounts
retained by the Coast P.A. are reflected in the financial statements of the
Company. Prior to October 1, 1996, the services and support fee paid by the
Coast P.A. to the Company varied, but averaged 78.5% of the Coast P.A. gross
revenue for the entire period. The fee was based on revenues earned by the
Coast P.A. reduced by certain costs incurred by the Coast P.A. and an agreed
upon payment to the Coast P.A. Since October 1, 1996, the Company receives a
monthly fee ranging from 76.0% to 74.0% from the Coast P.A. of the Dental
Centers' gross revenue, net of refunds and discounts. Any future changes to
the Services and Support Agreements and the related fees must be approved in
advance by the independent outside directors of the Company's Audit Committee.

NOTE 4 - ACQUISITIONS AND DEVELOPMENTS

The Company and the Coast Florida P.A. periodically have jointly
entered into asset purchase agreements with existing dental practices. In all
cases, the Coast Florida P.A. acquires the patient lists and any other
professional assets and the Company acquires certain tangible assets,
principally the dental equipment and assumes certain liabilities such as the
lease agreement for the facility. The fair value of the patient lists is
determined based upon general market information received from an independent
dental practice transition consultant regarding traditional dental practice
acquisitions. In addition to the purchase price allocations for tangible
assets, there are allocations for identifiable intangible assets and
unidentifiable intangible assets. The identifiable intangible asset allocation
relates to non-compete agreements which are partially allocated to the Company
and partially allocated to the Coast Florida P.A. The total value of the
non-compete agreements is based upon arms-length negotiations between the
sellers and the Company and Coast Florida P.A. as buyers. The value of such
acquired identifiable intangible asset is allocated between the Coast Florida
P.A. and the Company. The non-compete protection acquired by the Company
typically relates to agreements between the selling professional association
and its dentist(s) jointly, and the Company, whereby the selling professional
association and its dentist(s) agree not to engage in competition with the
Company's practice management business or utilize any other practice management
group, in the immediate vicinity of the acquired Dental Center; and also
relates to the Company's third party contractual rights refraining the selling
professional association and its dentist(s) from competing with the Coast
Florida P.A. within a specified area surrounding the acquired Dental Office.
The amount allocated to the Coast Florida P.A., on the other hand, is limited
to the value of the Coast Florida P.A.'s right to prohibit the selling
professional association and its dentist(s) from competing in the dental
business within the specified area surrounding the acquired Dental Office. The
Company policy is that the allocation for the purchase price attributable to
the non-compete agreements, unless unique circumstances dictate otherwise, is
approximately 76.0% to the Company and Coast Florida P.A, respectively. After
a determination of the value of the tangible assets and identifiable intangible
assets acquired, the total remaining purchase price representing unidentifiable
intangible assets will also be allocated on the above mention percentage to the
Company and the Coast Florida P.A. (value of the Service and Support Agreement
attributable to the Dental Center). All acquisitions are purchases of assets
and the operating results of the Company only include the effects of the
operations of the acquired assets from the date of acquisition.

During 1996, the Company and the Coast Florida P.A. added 17 acquired
Dental Centers located in Florida. The Company's portion of the purchase price
for these 17 acquired Dental Centers was $5.3 million, consisting of $1.2
million in cash and $4.1 million in promissory notes. Had these acquisitions
occurred at the beginning of 1996, the additional net revenue earned by the
Company would have been $3.8 million for 1996.

During 1997, the Company and the Coast Florida P.A. added 20 acquired
Dental Centers located in Florida. The Company's portion of the purchase price
for these 20 acquired Dental Centers was $5.9 million, consisting of $4.6
million in cash and $1.0 million in promissory notes, $231,000 in assumed
liabilities and $100,000 of the Company's common stock (5,979 shares). Had
these acquisitions occurred at the beginning of 1996, the additional net
revenue earned by the Company would have been $2.9 million and $3.8 million for
1996 and 1997,respectively.


23
24

COAST DENTAL SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS-CONTINUED

NOTE 5 - PROPERTY AND EQUIPMENT

The Company's property and equipment consists of the following:


DECEMBER 31,
---------------------------
1996 1997
---------------------------

Furniture, fixtures and equipment . . . . . . . . . . . . . . $1,711,005 $ 4,802,982
Leasehold improvements . . . . . . . . . . . . . . . . . . . . 365,871 1,411,336
Leased equipment . . . . . . . . . . . . . . . . . . . . . . . 305,905 300,599
---------- -----------
2,382,781 6,514,917
Less accumulated depreciation . . . . . . . . . . . . . . . (580,496) (1,173,039)
---------- -----------
1,802,285 5,341,878
Construction in progress . . . . . . . . . . . . . . . . . . -- 706,115
---------- -----------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,802,285 $ 6,047,993
========== ===========


Depreciation expense was approximately $96,445, $151,452 and $594,647
for the years ended December 31, 1995, 1996 and 1997, respectively.

NOTE 6 - LONG-TERM DEBT AND CAPITAL LEASES

The Company's long-term debt consists of the following:


DECEMBER 31,
------------------------------
1996 1997
------------------------------

Notes payable in varying monthly installments at interest rate
ranging from 7.75% to 13%. Collateralized by
dental equipment . . . . . . . . . . . . . . . . . . . . . . . . . $ 13,746 $ --

Notes payable to banks in varying monthly installments at
interest rates ranging from 7.75% to 10.25%. Collateralized by
bank accounts, a portion of which guaranteed by the majority
stockholders of the Company . . . . . . . . . . . . . . . . . . . 524,700 --

Notes payable issued in connection with various acquisitions
with varying installments at interest rates ranging from 8.0%
to 9.0% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,112,127 1,259,125

Revolving line of credit agreement for $5 million and $15 million,
respectively, at an interest rate of Barnett Bank of Tampa's prime
rate or LIBOR + 1.75%, payable on demand. These agreements contain
covenants requiring maintenance of certain financial ratios and
restrictions on distributions of assets, capital expenditures and
payment of dividends . . . . . . . . . . . . . . . . . . . . . . . 795,000 --
---------- ----------
Total debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,445,573 1,259,125
Less current maturities . . . . . . . . . . . . . . . . . . . . . 731,127 375,446
---------- ----------
Long-term debt, excluding current maturities . . . . . . . . . . . $3,714,446 $ 883,679
========== ==========


The Company's capital lease obligations are as follows:



DECEMBER 31,
----------------------------
1996 1997
----------------------------

Capital lease obligations, at varying interest rates of imputed
interest from 15% to 21%, collateralized by lease equipment,
with an amortized cost of approximately $148,000 and $80,000
at December 31, 1996 and 1997, respectively. . . . . . . . . . . . $ 203,724 $ 235,828

Less current portion . . . . . . . . . . . . . . . . . . . . . . . 75,874 78,884
---------- ----------
Capital lease obligations, net of current portion . . . . . . . . $ 127,850 $ 156,944
========== ==========



24
25

COAST DENTAL SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS-CONTINUED

Scheduled maturities of long-term debt and payments on capital lease
obligations as of December 31, 1997 are as follows:



LONG-TERM CAPITAL LEASE
DEBT OBLIGATIONS
------------ ------------

1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 375,446 $ 88,697
1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 242,990 84,172
2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 255,107 40,450
2001 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 244,977 34,559
2002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140,605 5,110
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- --
---------- ----------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,259,125 $ 252,988
==========
Less amount representing interest . . . . . . . . . . . . . . . . 17,160
----------
$ 235,828
==========


NOTE 7 - INCOME TAXES

Upon completion of the initial public offering, the Company terminated
its status as an S Corporation.

The Pro forma income tax adjustment represents a provision for federal
and state income taxes at the statutory rate in effect for the periods
presented (at an effective rate of 39%) as if the Company had not been treated
as an S Corporation.

On February 11, 1997, the Company completed its initial public
offering of Common Stock and automatically converted from a S Corporation to a
C Corporation becoming obligated to pay federal and state income taxes.

The Company is required to use Statement of Financial Accounting
Standards No. 109 ("Statement 109"), Accounting for Income Taxes. Under
Statement 109, the asset and liability method is used in accounting for income
taxes. Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax purposes, and
are measured using the enacted tax rates and laws that will be in effect when
the differences are expected to reverse.

For the year ended December 31, 1997, the provision for income taxes
consisted of the following:



Current:
Federal . . . . . . . . . . . . . . . . . . . $1,313,611
State . . . . . . . . . . . . . . . . . . . . 224,864
----------
Total current income tax expense . . . . . . 1,538,475

Deferred:
Federal . . . . . . . . . . . . . . . . . . . 150,910
State . . . . . . . . . . . . . . . . . . . . 25,833
----------
Total deferred income tax expense . . . . . 176,743
----------
Total current and deferred-actual . . . . 1,715,218
Pro forma income tax expense . . . . . . . 142,021
----------
Total income tax expense-pro forma . . . . $1,857,239
==========



25
26

COAST DENTAL SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS-CONTINUED

The components of deferred tax assets (liabilities) as of December 31,
1997 are as follows:



Deferred tax asset:
State taxes . . . . . . . . . . . . . . . . . $ 8,783
Other accrued expenses . . . . . . . . . . . . 9,538
----------
Total deferred tax asset . . . . . . . . . . 18,322

Deferred tax liability:
Basis difference in fixed
assets and intangibles . . . . . . . . . . . . (195,064)
----------
Total deferred tax liability . . . . . . . . $ (176,742)
==========


As a reconciliation of statutory federal income tax rate with the
Company's effective income tax rate as of December 31, 1997 is as follows:



Statutory federal rate . . . . . . . . . . . . . 34.00%
State income taxes, net of federal income tax
benefit . . . . . . . . . . . . . . . . . . . 3.13
Miscellaneous . . . . . . . . . . . . . . . . . (.89)
-----
Effective tax rate (utilizing pro forma income tax
expense . . . . . . . . . . . . . . . . . . . 36.24%
=====


NOTE 8 - RELATED PARTY TRANSACTIONS

The Company periodically advanced funds to/from the majority
stockholders and the Coast P.A. The Coast P.A. is wholly-owned by a majority
shareholder and director of the Company. See Notes 1 and 3 for a further
description of the relationship with the Coast P.A. Any advances are reflected
on the balance sheet as notes receivable from stockholders for $177,898 and $0
at December 31, 1996 and 1997, respectively. Interest income relating to these
amounts was insignificant for all periods presented.

As of December 31, 1997, the balance of the management fee receivable
from the Coast P.A. was approximately $2.4 million. This amount is directly
attributable to patient revenues earned by the Coast P.A. for which the Company
is due its management fee ranging from 76.0% to 74.0%. The management fee
receivable is unsecured and represents a concentration of credit risk and
exposes the Company to risk of loss for these amounts should a Coast P.A. be
unable to pay its debts.

NOTE 9 - COMMITMENTS AND CONTINGENCIES

The Company primarily leases space for operation of its Dental Centers
under non-cancelable operating leases, generally a five to seven year term with
renewal options. Rental expense for the years ended December 31, 1995, 1996
and 1997 was $195,664, $489,827 and $1,200,028, respectively.

Future minimum payments under non-cancelable leases are as follows:



Years Ended
December 31,
------------

1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,787,128
1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,328,745
2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,146,527
2001 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,099,167
2002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 902,411
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,390,047
----------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $7,654,025
==========


The Company has entered into employment agreements with four of its
officers, three of whom are the majority shareholders of the Company. The
terms of the agreements are from three to five years.


26
27

COAST DENTAL SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS-CONTINUED

NOTE 10 - STOCKHOLDERS' EQUITY

Effective April 1, 1996, the Board of Directors adopted, and the
stockholders of the Company approved, two stock incentive plans: the Employee
Stock Option Plan (the "Incentive Plan") and the Affiliated Professionals Stock
Plan (the "Professionals Plan," together, the "Plans"). The purpose of the Plans
is to provide directors, officers, key employees, advisors and dental
professionals employed by the Coast P.A. (subject to approval and reimbursement
by the Coast P.A.) with additional incentives by increasing their proprietary
interest in the Company or tying a portion of their compensation to increases in
the price of the Company's common stock. The aggregate number of shares of
Common Stock subject to both plans is 450,000 shares and 450,000 shares,
respectively.

The following tables summarize the stock option transactions for the
Professional Plan and the Incentive Plan for the two years ended December 31,
1997:

PROFESSIONAL PLAN:
WEIGHTED


AVERAGE
NUMBER OF RANGE PER EXERCISE
SHARES SHARE PRICE
-------- ----------- ----------

Outstanding as of January 1, 1996 . . . . . . . 0
Granted . . . . . . . . . . . . . . . . . . . 148,296 $8.00 $ 8.00
-------
Outstanding as of December 31, 1996 . . . . . . 148,296 $8.00 8.00
Granted . . . . . . . . . . . . . . . . . . . 113,425 $8.00-$29.75 16.99
Exercised . . . . . . . . . . . . . . . . . . (3,759) $8.00 8.00
-------
Outstanding as of December 31,1997 . . . . . . . 257,962 $8.00-$29.75 12.13
=======
Exercisable as of December 31, 1997 . . . . . . 101,052
=======




INCENTIVE PLAN: WEIGHTED
AVERAGE
NUMBER OF RANGE PER EXERCISE
SHARES SHARE PRICE
--------- ----------- --------

Outstanding as of January 1, 1996 . . . . . . . 0
Granted . . . . . . . . . . . . . . . . . . . 39,250 $8.00 $ 8.00
-------
Outstanding as of December 31, 1996 . . . . . . 39,250 $8.00 8.00
Granted . . . . . . . . . . . . . . . . . . . 99,287 $8.00-$30.50 16.39
Exercised . . . . . . . . . . . . . . . . . . (300) $8.00 8.00
Forfeited . . . . . . . . . . . . . . . . . . (26,015) $8.00 8.00
-------
Outstanding as of December 31,1997 . . . . . . . 112,222 $8.00-$30.50 14.86
=======
Exercisable as of December 31, 1997 . . . . . . 13,069
=======


The options generally vest over three years. The weighted average
remaining contractual life for the shares outstanding as of December 31, 1997
for both plans is approximately 9 years. The effect on compensation expense
and net income had compensation costs for the Company's stock option plans been
determined based on the fair value at the grant date consistent with the
provisions of Statement of Financial Standards No. 123, is not material. The
Company estimated the fair value of options utilizing an option pricing model
assuming a market price and exercise price ranging from $8.00 to $29.75 per
share, a risk free interest rate of 7.5%, a four year expected life, a range of
0% to 51.3% expected volatility, and no dividends. The fair value of the
options, totaling $168,400, issued to the dental professionals employed by the
Coast P.A. are charged to the Coast P.A. and reimbursed to the Company from the
Coast P.A.

In February 1996, the Company reached a mutual understanding with an
officer that the officer would be entitled to 105,000 shares as compensation
and in January 1996 reached a mutual understanding with certain other employees
of the Company that they would be entitled to an aggregate of 35,000 shares as
compensation for which the Company recognized compensation expense of $27,674.
The fair market value of the Common Stock used to determine compensation
expense recorded was determined based on an independent valuation of the
Company's stock as of February 11, 1996. The above described shares were
formally issued in May and April, respectively.

On October 1, 1996 and December 29, 1996, the Company approved stock
splits resulting in an exchange of 1 share or option for approximately 3.86
shares of Common Stock or options issued and outstanding. Simultaneously, the
par value of the common stock was changed from $.00001 to $.001. All share and
per share amounts have been


27
28

COAST DENTAL SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS-CONTINUED

retroactively adjusted for these splits. Additionally, the Company increased
the authorized number of common shares to 50,000,000.

On February 11, 1997, the Company completed its initial public
offering of Common Stock. The Company offered 2,200,000 shares of Common Stock
for $8.00 per share. The net proceeds to the Company were approximately $15.1
million (after deducting underwriting discounts and commissions and offering
expenses).

The Company made a distribution to existing shareholders of $654,898
which constitutes the income tax attributed to each individual shareholder of
the S Corporation earnings. Additionally, the Company forgave by way of
dividend, the notes receivable from shareholders of $177,898. The remaining
undistributed S Corporation retained earnings of $1,123,508 was reclassified as
additional paid-in-capital.

On September 22, 1997, the Company completed its secondary public
offering of Common Stock. The Company offered 1,900,000 shares of Common Stock
for $23.75 per share. The net proceeds to the Company were approximately $41.9
million (after deducting underwriting discounts and commissions and offering
expenses).

NOTE 11 - BENEFIT PLANS

The Company has a 401(k) Retirement Savings Plan (the "401(k) Plan")
covering substantially all employees. Matching employer contributions, if any,
are set at the discretion of the Board of Directors or the applicable committee
thereof. As of December 31, 1997, there have not been any Company matched
contributions.

NOTE 12 - SUBSEQUENT EVENTS

During January and February 1998, the Company opened two internally
developed Dental Centers one in Florida and one in Georgia at an estimated cost
of approximately $200,000 each. This cost includes the cost of equipment,
leasehold improvements, working capital and an agreed upon $50,000 payment (per
Dental Center) to the Coast P.A. to open the additional Dental Centers thus
expanding the Services and Support Agreements to include the new internally
developed Dental Centers.

On February 25, 1998, the Company and Coast Florida P.A. entered into
a purchase agreement with a dental practice in Brooksville, Florida whereby the
Company acquired all of the tangible assets of the dental practice and the
Coast Florida P.A. acquired the professional assets, principally patient lists,
of the practice for a combined purchase price of $252,000. The Company's
portion of the purchase price is approximately $215,000 of which $60,000 has
been allocated to the tangible assets acquired and $155,000 has been allocated
to the Services and Support Agreement.

On March 6, 1998, the Company announced that it had reached an
agreement with Mid Coast Dental Services, Inc., a Virginia corporation ("MCDS")
to provide financing for the development of Dental Centers in Virginia. In
exchange for providing financing for the building and acquisition of dental
centers, the Company received an option to acquire MCDS beginning on December
31, 1999. The purchase price under the option agreement is to be based on an
agreed upon formula which is expected to approximate the fair value of MCDS.


28
29

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
DISCLOSURE

None.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information required by this Item is incorporated herein by
reference to the information under the headings "Management - Directors and
Executive Officers" in the Company's definitive Proxy Statement to be used in
connection with the Company's Annual Meeting of Shareholders, which will be
filed with the Securities and Exchange Commission on or before April 30, 1998.

ITEM 11. EXECUTIVE COMPENSATION

The information required by this Item is incorporated herein by
reference to the information under the headings "Management - Compensation of
Executive Officers and Directors" in the Company's definitive Proxy Statement
to be used in connection with the Company's Annual Meeting of Shareholders,
which will be filed with the Securities and Exchange Commission on or before
April 30, 1998.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT

The information required by this Item is incorporated herein by
reference to the information under the headings "Management - Security
Ownership of Management and Others" in the Company's definitive Proxy Statement
to be used in connection with the Company's Annual Meeting of Shareholders,
which will be filed with the Securities and Exchange Commission on or before
April 30, 1998.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONSITEM 13.

The information required by this Item is incorporated herein by
reference to the information under the headings "Certain Relationships and
Related Transactions" in the Company's definitive Proxy Statement to be used in
connection with the Company's Annual Meeting of Shareholders, which will be
filed with the Securities and Exchange Commission on or before April 30, 1998.

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM
8-K

(A) EXHIBITS

See Exhibit Index.

(B) REPORTS ON FORM 8-K.

None.


29
30

COAST DENTAL SERVICES, INC.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of Tampa,
State of Florida on March 27, 1998.



COAST DENTAL SERVICES, INC.



By: /s/ DR. TEREK DIASTI, DVM
-------------------------------------------------
DR. TEREK DIASTI, DVM
Chief Executive Officer, Chairman of the Board
Officer (Principal Executive Officer)
(Principal Executive Officer)

By: /s/ DR. ADAM DIASTI, DDS
-------------------------------------------------
DR. ADAM DIASTI, DSD
President and Director
Officer (Principal Executive Officer)

By: /s/ JOSEPH R. SMITH
-------------------------------------------------
JOSEPH R. SMITH
Chief Financial Officer, Secretary, Treasurer
and Director (Principal Accounting Officer)

By: /s/ DONALD R. MILLARD
-------------------------------------------------
DONALD R. MILLARD
Director

By: /s/ JOHN H. KANG
-------------------------------------------------
JOHN H. KANG
Director


30
31

EXHIBIT INDEX



EXHIBIT NUMBER EXHIBIT DESCRIPTION
- -------------- -------------------

3.1* Restated Certificate of Incorporation of Coast Dental Services, Inc. (1)

3.2* Bylaws of Coast Dental Services, Inc. (2)

4.1* Specimen of Coast Dental Services, Inc. Common Stock Certificate (2)

4.2* Business Loan Agreement dated August 15,1996 between Coast Dental Services, Inc.
and Barnett Bank N.A. (2)

4.3* First Amendment to Business Loan Agreement dated March 7, 1997 between Coast Dental
Services, Inc. and Barnett Bank N.A. (3)

4.4* Loan Commitment Letter dated August 1, 1997 between Coast Dental Services, Inc. and
Barnett Bank N.A. (4)

10.13* First Amendment to Business Loan Agreement dated March 7, 1997 between Coast Dental Services, Inc. and
Barnett Bank, N.A. (3)

10.16* Loan Commitment Letter dated August 1, 1997 between Coast Dental Services, Inc.
and Barnett Bank, N.A. (4)

10.17* First Amendment effective June 1997 to Services and Support Agreement between the
Company and Coast Florida P.A. (3)

23 Consent of Deloitte & Touche LLP, independent certified public accountants

27 Financial Data Schedule for the year ended December 31, 1997 (for SEC use only)



(*) previously filed as an exhibit with the same exhibit number
in the following Company filings with the Commission identified in the
footnote following the Exhibit Description and incorporated herein by
reference.
(1) Form S-1 Registration Statement filed on October 7, 1996 (File No.
333-13613) (the "1996 S-1").
(2) Amendment No. 1 to 1996 S-1 filed on November 12, 1996.
(3) Form 10-K filed on March 31, 1997.
(4) Form S-1 Registration Statement filed on August 26, 1997 (File No.
333-34385).
31