UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

                                   (Mark One)

             [ X ]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended March 31, 2000

                                       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 number 0-12050

                       SAFEGUARD HEALTH ENTERPRISES, INC.
             (Exact name of registrant as specified in its charter)


           DELAWARE                               52-1528581
   (State  or  other  jurisdiction            (I.R.S.  Employer
        of  incorporation)                     Identification  No.)

                                  95 ENTERPRISE
                          ALISO VIEJO, CALIFORNIA 92656
                    (Address of principal executive offices)
                                   (Zip Code)

                                 (949) 425-4300
              (Registrant's telephone number, including area code)



Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities 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
                                       --     --

The  number  of  shares  of registrant's common stock, par value $.01 per share,
outstanding  at  April  30,  2000, was 4,747,498 shares (not including 3,274,788
shares  of  common  stock  held  in  treasury).


<PAGE>
                       SAFEGUARD HEALTH ENTERPRISES, INC.
                                AND SUBSIDIARIES

                                    FORM 10-Q

                      FOR THE QUARTER ENDED MARCH 31, 2000

                         INFORMATION INCLUDED IN REPORT

                                                                            Page
                                                                            ----

Part  I.              Financial  Information  (unaudited)
--------              -----------------------------------
         Item  1.     Consolidated  Financial  Statements                      1
         --------     -----------------------------------
                      Consolidated  Balance  Sheets                            1
                      -----------------------------
                      Consolidated  Statements  of  Operations                 2
                      ----------------------------------------
                      Consolidated  Statements  of  Cash  Flows                3
                      -----------------------------------------
                      Notes  to  Consolidated  Financial  Statements           4
                      ----------------------------------------------
          Item  2.    Management's  Discussion  and  Analysis
                      of Financial Condition and Results  of  Operations       9
          -------     --------------------------------------------------
          Item  3.    Quantitative  and  Qualitative
                      Disclosures about Market Risk                           11
          -------     -----------------------------
Part  II.             Other  Information                                      12
---------             ------------------
          Item  1.    Legal  Proceedings                                      12
          --------    ------------------
          Item  2.    Recent  Sales  of  Unregistered  Securities             12
          --------    -------------------------------------------
          Item  3.    Defaults  upon  Senior  Securities                      12
          --------    ----------------------------------
          Item  5.    Other  Information                                      12
          --------    ------------------
          Item  6.    Exhibits  and  Reports  on  Form  8-K                   12
          --------    -------------------------------------
SIGNATURES                                                                    13
----------

                                     i
<PAGE>
               SAFEGUARD HEALTH ENTERPRISES, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                                  (IN THOUSANDS)
<TABLE>
<CAPTION>
                                                                                MARCH 31,     DECEMBER 31,
                                                                                   2000           1999
                                                                               ------------  --------------
ASSETS                                                                         (unaudited)
Current assets:
<S>                                                                            <C>           <C>
Cash and cash equivalents                                                      $     2,022   $       1,639
Investments available-for-sale, at estimated fair value                              9,585           3,361
Accounts receivable, net of allowances                                               2,872           2,978
Income taxes receivable                                                                 --             480
Prepaid expenses and other current assets                                              628             641
                                                                               ------------  --------------
    Total current assets                                                            15,107           9,099

Property and equipment, net of accumulated depreciation                              4,168           4,816
Restricted cash and investments available for sale, at estimated fair value          3,483           3,454
Investments available-for-sale, at estimated fair value                                547             515
Notes receivable, net of allowances                                                  3,150           3,505
Assets of discontinued operations transferred under contractual arrangements         2,500           2,500
Intangible assets, net of accumulated amortization                                   4,689           4,437
Other assets                                                                           250             251
                                                                               ------------  --------------

    Total assets                                                               $    33,894   $      28,577
                                                                               ============  ==============

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
  Accounts payable                                                             $     3,772   $       5,771
  Accrued expenses                                                                   4,089           3,691
  Claims payable and claims incurred but not reported                                6,792           6,437
  Short-term debt                                                                      180             255
  Deferred revenue                                                                   2,288           1,975
                                                                               ------------  --------------
     Total current liabilities                                                      17,121          18,129

Long-term debt                                                                      47,545          39,545
Other long-term liabilities                                                          3,298           2,517
                                                                               ------------  --------------
     Total liabilities                                                              67,964          60,191
                                                                               ------------  --------------

Stockholders' equity (deficit):
  Preferred stock                                                                       --              --
  Common stock                                                                      21,829          21,829
  Retained earnings (accumulated deficit)                                          (37,763)        (35,302)
  Accumulated other comprehensive income (loss)                                        (13)            (18)
  Treasury stock, at cost                                                          (18,123)        (18,123)
                                                                               ------------  --------------
     Total stockholders' equity (deficit)                                          (34,070)        (31,614)
                                                                               ------------  --------------

     Total liabilities and stockholders' equity (deficit)                      $    33,894   $      28,577
                                                                               ============  ==============
</TABLE>

          See accompanying Notes to Consolidated Financial Statements.


                                        1
<PAGE>
               SAFEGUARD HEALTH ENTERPRISES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                   THREE MONTHS ENDED MARCH 31, 2000 AND 1999
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)
                                   (UNAUDITED)
<TABLE>
<CAPTION>
                                                            2000           1999
                                                        -------------  -------------
                                                                       (As restated)
                                                                        (see Note 6)
<S>                                                     <C>            <C>
Premium revenue                                         $     24,463   $     23,863

Health care services expense                                  17,505         16,518
Selling, general and administrative expense                    8,646          9,111
                                                        -------------  -------------

Operating loss                                                (1,688)        (1,766)

Investment and other income                                      259          1,503
Interest expense                                              (1,032)          (947)
                                                        -------------  -------------

Loss before income taxes                                      (2,461)        (1,210)
Income tax benefit                                                --           (350)
                                                        -------------  -------------

Net loss                                                $     (2,461)  $       (860)
                                                        =============  =============

Basic and diluted loss per share                        $      (0.52)  $      (0.18)

Weighted average basic and diluted shares outstanding          4,747          4,747
</TABLE>

             See accompanying Notes to Consolidated Financial Statements.


                                        2
<PAGE>
<TABLE>
<CAPTION>
                 SAFEGUARD HEALTH ENTERPRISES, INC. AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF CASH FLOWS
                     THREE MONTHS ENDED MARCH 31, 2000 AND 1999
                                   (IN THOUSANDS)
                                     (UNAUDITED)
                                                                   2000        1999
                                                                 --------  -------------
                                                                           (As restated)
                                                                            (see Note 6)
<S>                                                              <C>       <C>
Cash flows from operating activities:
  Net loss                                                     $  (2,461)  $       (860)
  Adjustments to reconcile net loss to net
     cash provided by (used in) operating activities:
     Depreciation and amortization                                   752          1,112
     Deferred income taxes                                            --            226
  Changes in operating assets and liabilities:
     Accounts receivable                                             106           (994)
     Income taxes receivable                                         480            130
     Prepaid expenses and other assets                                14           (245)
     Accounts payable and accrued expenses                        (1,601)           214
     Deferred revenue                                                313            (22)
     Claims payable and claims incurred but not reported             355            546
     Noncurrent assets and liabilities                               425             90
                                                                 --------  -------------
     Net cash provided by (used in) operating activities          (1,617)           197

Cash flows from investing activities:
  Purchase of investments available-for-sale                      (8,850)        (13,695)
  Proceeds from sales/maturity of investments available for sale   2,570          12,497
  Purchases of property and equipment                                 --            (225)
  Payments received on notes receivable                              355              --
                                                                 --------  --------------
     Net cash provided by (used in) investing activities          (5,925)         (1,423)

Cash flows from financing activities:
  Borrowings on long-term debt                                     8,000              --
  Payments on notes payable and long-term debt                       (75)           (199)
                                                                 --------  --------------
     Net cash provided by (used in) financing activities           7,925            (199)
                                                                 --------  --------------
Net increase (decrease) in cash                                      383          (1,425)
Cash balance at beginning of period                                1,639           2,978
                                                                 --------  --------------
Cash balance at end of period                                  $   2,022   $       1,553
                                                                 ========  ==============
</TABLE>
           See  accompanying  Notes  to  Consolidated  Financial  Statements.


                                        3
<PAGE>
               SAFEGUARD HEALTH ENTERPRISES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE  1.  BASIS  OF  REPORTING
------------------------------

The accompanying unaudited consolidated financial statements of SafeGuard Health
Enterprises,  Inc.  and  subsidiaries (the "Company") for the three months ended
March  31,  2000  and  1999,  have  been  prepared in accordance with accounting
principles  generally  accepted  in  the United States of America, applicable to
interim  periods.  The accompanying financial statements reflect all adjustments
that, in the opinion of management, are necessary for a fair presentation of the
Company's  financial position and results of operations for the interim periods.
The  financial  statements have been prepared in accordance with the regulations
of the Securities and Exchange Commission, and omit certain footnote disclosures
and  other information necessary to present the Company's financial position and
results  of  operations  in  accordance  with  accounting  principles  generally
accepted  in the United States of America.  These financial statements should be
read in conjunction with the Consolidated Financial Statements and Notes thereto
contained  in  the  Company's  Annual  Report  on  Form  10-K for the year ended
December  31,  1999.  Management believes the disclosures herein are adequate to
make  the  accompanying  financial  statements  not  misleading.

The  accompanying  financial  statements  have  been prepared on a going concern
basis,  which  contemplates  the  realization  of assets and the satisfaction of
liabilities  in  the  normal course of business. The financial statements do not
include  any  adjustments  related  to  the recoverability and classification of
assets,  or  to  the  amounts  and  classification of liabilities, that might be
necessary  should  the  Company be unable to continue as a going concern. During
the  quarter  ended  March  31,  2000, and the years ended December 31, 1999 and
1998,  the  Company  incurred net losses of $2.5 million, $52.0 million and $9.9
million,  respectively,  and  net  cash  used  by  operating activities was $1.6
million,  $0.6 million and $2.0 million, respectively. As of March 31, 2000, the
Company  was in violation of certain financial covenants contained in the credit
agreements  related  to  its revolving credit facility and senior notes payable.
However,  both  lenders  have  agreed  not to demand or accept any payment under
these  credit  agreements,  and  not to take any enforcement actions of any kind
under  those  agreements  until  April  30,  2001  (see  Note  4).

As  of  March 31, 2000, and December 31, 1999, the Company's current liabilities
exceeded  its current assets by $2.0 million and $9.0 million, respectively. The
Company believes this negative working capital position will be mitigated by its
plans  to  return  the Company to profitability, as described below. The Company
also  intends  to  sell certain long-term assets during the next several months,
although  there  can  be  no  assurance  it  will  be  successful  in  doing so.

In  March  2000 the Company entered into an agreement with an investor group and
its  primary  lenders,  under  which  the investor group and the primary lenders
agreed to convert all of the Company's outstanding debt to convertible preferred
stock  (see Note 4). This conversion is currently pending regulatory approval of
the  change  in control of the Company that would result from the conversion. In
connection  with  this agreement, the Company obtained a new president and chief
executive  officer,  and  certain  new  directors.

Management believes the Company's ability to continue as a going concern depends
on  its return to profitable operations, its ability to generate sufficient cash
flow  to  meet  its  obligations  on  a  timely basis, and its ability to obtain
additional financing as may be required. To return the Company to profitability,
management  is  taking action to increase premium rates, reduce certain types of
non-standard  provider  payments,  reduce  the  number  of  its  employees  by
consolidating  certain  administrative  functions  in  one  location, reduce the
amount  of  office  space  used,  and  reduce various other selling, general and
administrative  expenses.  Management's plans also include enhanced programs for
customer  retention,  increasing  the  efficiency  of  its provider network, and
streamlining  operations  with  a  focus  toward strengthening customer service.
Management  believes  the  results of its plans will enable the Company to meets
its  ongoing  obligations on a timely basis and return to profitable operations.
The  Company  also  believes  it will be able to obtain additional financing, if
necessary,  to  support  its  operations.


                                        4
<PAGE>
NOTE  2.  INVESTMENTS
---------------------

In accordance with Statement of Financial Accounting Standards ("SFAS") No. 115,
Accounting  for  Certain  Investments  in  Debt  and  Equity  Securities, and in
accordance  with  management's  intent,  the  Company  has classified its entire
investment  portfolio  as  "available-for-sale."  Investments  classified  as
available-for-sale  are  carried  at fair value and unrealized gains and losses,
net  of  applicable  income  taxes,  are  reported  in  a  separate  caption  of
stockholders'  equity. At March 31, 2000, and December 31, 1999, the Company had
net  unrealized  losses of $13,000 and $18,000, respectively, which is reflected
in  stockholders'  equity under "Accumulated other comprehensive income (loss)."

NOTE  3.  ASSETS  OF  DISCONTINUED  OPERATIONS  TRANSFERRED  UNDER  CONTRACTUAL
-------------------------------------------------------------------------------
ARRANGEMENTS
------------

During  the  three  months  ended  September  30, 1997, the Company sold several
general dental practices to a single purchaser (the "Purchaser") in exchange for
$8.0  million of long-term promissory notes. In April 1998 the Company also sold
several  orthodontic practices to the Purchaser in exchange for $15.0 million of
long-term  promissory notes. During 1997 and 1998, other entities that purchased
four other general dental practices from the Company conveyed those practices to
the  Purchaser  in  exchange  for the assumption of the related promissory notes
payable to the Company. At the time of the conveyances of these practices to the
Purchaser,  the  related promissory notes had an aggregate outstanding principal
balance  of  $1.9  million.  During 1997 and 1998, the Company loaned a total of
$1.6  million  to  the Purchaser, which was used for working capital purposes by
the  Purchaser.

Due  to uncertainty about the Purchaser's ability to meet its commitments to the
Company  under  the  promissory  notes,  the  Company  did  not  treat  the sale
transactions  with  the Purchaser as sales for accounting purposes. Accordingly,
the  related promissory notes and the working capital loans are not reflected in
the  accompanying  financial statements. Instead, the historical cost of the net
assets  of  the  related  general  dental  and  orthodontic  practices, less the
interest  payments  received  from  the Purchaser, is reflected on the Company's
balance  sheet  under the caption "Assets of discontinued operations transferred
under  contractual  arrangements."  The  Company's  financial  statements do not
reflect  any  gains  on these sale transactions, and do not reflect any interest
income  on  the related promissory notes. In addition, the carrying value of the
promissory  notes  related  to  the  four practices that were transferred to the
Purchaser  was  reduced  to the historical cost of the net assets of the related
dental practices. These assets are also reflected on the Company's balance sheet
under  the  caption  "Assets  of  discontinued  operations  transferred  under
contractual arrangements." The working capital loans were treated as expenses at
the  time  the  loans  were  made. In the opinion of management, this accounting
treatment  appropriately reflects the economic substance of the transactions, as
distinct  from  the  legal  form  of  the  transactions.

NOTE  4.  SHORT-TERM  AND  LONG-TERM  DEBT
------------------------------------------

Short-term  and  long-term  debt  consisted  of  the  following  (in thousands):

<TABLE>
<CAPTION>
                              MARCH 31,    DECEMBER 31,
                                2000           1999
                             -----------  --------------
<S>                          <C>          <C>
  Investor senior loan       $    8,000   $          --
  Revolving credit facility       7,045           7,045
  Senior notes payable           32,500          32,500
  Other notes payable               180             255
                             -----------  --------------
    Total debt                   47,725          39,800
  Less - current portion           (180)           (255)
                             -----------  --------------

  Long-term debt             $   47,545   $      39,545
                             ===========  ==============
</TABLE>

On  March  1, 2000, the Company entered into an agreement (the "Agreement") with
an investor group (the "Investors"), the holder of the senior notes payable (the
"Senior  Note  Holder"),  and the revolving credit facility lender (the "Bank").
Under  the  Agreement,  the  Investors loaned $8.0 million to the Company in the
form of an investor senior loan, which is due April 30, 2001, and bears interest
at  10%  annually. The Investors, the Senior Note Holder, and the Bank agreed to
convert the $8.0 million investor senior loan, the $32.5 million of senior notes
payable,  and the outstanding balance of $7.0 million under the revolving credit
facility  to  convertible preferred stock, subject to regulatory and shareholder
approval,  as  described  below.


                                        5
<PAGE>
The  convertible  preferred  stock  would  not accrue dividends of any kind, and
would  be  convertible  into  common  stock  at  the  option  of the holder. The
convertible  preferred stock would entitle the holder to one vote for each share
of  common  stock into which the preferred stock is convertible, with respect to
all  matters  voted on by the common stockholders of the Company. The conversion
of  the  Company's  outstanding debt to convertible preferred stock is currently
pending  regulatory  approval of the change in control of the Company that would
result  from this conversion. After regulatory approval of the change in control
is obtained, and the conversion of the Company's outstanding debt to convertible
preferred stock is completed, the existing stockholders of the Company would own
approximately  14%  of  the  common  stock  interests  of  the  Company.

Under  the  Agreement,  both  the  Senior Note Holder and the Bank agreed not to
demand  or  accept any payment under their respective credit agreements, and not
to  take  any enforcement actions of any kind under those agreements until April
30,  2001.  The Company agreed to place new directors on its board of directors,
who  represent  the  Investors,  the  Senior  Note Holder and the Bank, and who,
collectively,  will  constitute  a  majority  of  the  board  of  directors.

In  May 1999 the Company executed restructured credit agreements with respect to
both  the  revolving  credit  facility  and  the  senior  notes  payable.  The
restructured  agreements  include  revisions  of  various  terms and conditions,
including  interest  rates,  financial  covenants,  reporting  requirements, and
principal  payments. Under the restructured agreements, the senior notes payable
are  due  in annual installments of $6.5 million each September 30, beginning in
2001,  with  a  final  maturity  date  of  September  30,  2005.  Also under the
restructured  agreements,  the  outstanding  balance  under the revolving credit
facility  is  payable  in full as of January 29, 2000. The Company is subject to
various  financial  covenant requirements under the restructured agreements. The
Company  was  not  in  compliance  with those requirements as of March 31, 2000.
However,  due to the transaction completed on March 1, 2000, as set forth in the
Agreement  described  above,  the  outstanding  balances  under the senior notes
payable  and  the  revolving  credit  facility are classified as long-term as of
March  31,  2000.

In  connection  with  the  restructured  credit  agreements,  the Company issued
warrants  to  purchase 382,000 shares of its common stock for $4.51 per share to
the Senior Note Holder. However, the Senior Note Holder has agreed to cancel the
warrants  upon  conversion  of  the  Company's outstanding debt into convertible
preferred  stock,  as  set  forth  in  the  Agreement  described  above.

The  expected  effect  of  the conversion of the Company's outstanding debt into
convertible  preferred  stock on the Company's capital structure is shown in the
recapitalization table below, as though the conversion had occurred on March 31,
2000  (in  thousands).

<TABLE>
<CAPTION>
                                                          ACTUAL AS OF      EFFECT OF          AFTER
                                                         MARCH 31, 2000    TRANSACTION    RECAPITALIZATION
                                                        ----------------  -------------  ------------------
<S>                                                     <C>               <C>            <C>
  Current liabilities                                   $        17,121   $         --   $          17,121
  Long-term debt                                                 47,545        (47,545)                 --
  Other long-term liabilities                                     3,298         (2,107)              1,191
                                                        ----------------  -------------  ------------------
Total liabilities                                                67,964         49,652              18,312
                                                        ----------------  -------------  ------------------

  Preferred stock                                                    --         51,000              51,000
  Common stock                                                   21,829             --              21,829
  Accumulated deficit                                           (37,763)        (1,348)            (39,111)
  Accumulated other comprehensive income (loss)                     (13)            --                 (13)
  Treasury stock                                                (18,123)            --             (18,123)
                                                        ----------------  -------------  ------------------
  Total stockholders' equity (deficit)                          (34,070)        49,652              15,582
                                                        ----------------  -------------  ------------------
  Total liabilities and stockholders' equity (deficit)  $        33,894   $         --   $          33,894
                                                        ================  =============  ==================
</TABLE>


                                        6
<PAGE>
Pursuant  to  the  Agreement  described  above,  it  is expected that all of the
Company's  long-term  debt  ($47.5  million  at  March 31, 2000) and the accrued
interest  on  the  revolving  credit facility and the senior notes payable ($2.1
million  at  March 31, 2000) will be converted into convertible preferred stock.
In  exchange  for the outstanding debt and accrued interest, it is expected that
the  Company  will  issue  300,000  shares  of  convertible preferred stock. The
convertible  preferred  stock  has been valued at $170 per share for purposes of
the above information, which is the Company's estimate of its market value as of
March  31,  2000. Each share of convertible preferred stock would be convertible
into  100  shares of common stock, and the closing price of the Company's common
stock on March 31, 2000 was $1.70 per share. As a result of this conversion, and
based  on  the  estimated  preferred  stock value of $170 per share, the Company
would  record  an  extraordinary  loss  of  $1.3  million  from  the conversion.

The  transaction  illustrated  in the above table is contingent upon shareholder
approval  of an increase in the number of authorized shares of common stock, and
regulatory  approval  of  the change in control of the Company that would result
from  this  transaction.  The  purpose of the above recapitalization table is to
show  what  the  significant  effects  of the above-described transaction on the
Company's  capital  structure  might be if the transaction had been completed on
March  31,  2000.  The  above  information  is not necessarily indicative of the
results  of  the  transaction  or  related  effects  on  the Company's financial
position  that would result if the above-described transaction is completed on a
different  date,  with a different valuation of the convertible preferred stock.

NOTE  5.  INCOME  TAXES
-----------------------

The  Company's  deferred tax assets have been fully reserved since September 30,
1999,  due  to  uncertainty  about  whether they will be realized in the future,
primarily  due  to operating losses incurred by the Company in 1998 and 1999 and
the existence of significant net operating loss carry-forwards. Accordingly, the
Company  recorded no income tax expense or benefit during the three months ended
March  31,  2000.

NOTE  6.  RESTATEMENT
---------------------

Subsequent  to  the issuance of the Company's financial statements for the three
months  ended  March 31, 1999, the Company determined that it would be necessary
to restate its revenue and earnings for that period. The Company also determined
that  various  other  amounts  in  its balance sheet and statement of operations
related to that period, including accounts receivable, deferred income taxes and
deferred  revenue,  required modification. This information was disclosed in the
Company's  1999  Annual Report on Form 10-K. The statement of operations for the
three months ended March 31, 1999, has been restated from the amounts previously
reported,  as  shown  below  (in  thousands):

<TABLE>
<CAPTION>
                                                       THREE  MONTHS  ENDED
                                                         MARCH  31,  1999
                                                       =====================
                                                            AS
                                                         PREVIOUSLY    AS
                                                          REPORTED   RESTATED
                                                         ==========  ========

<S>                                                      <C>         <C>
  Premium revenue                                        $  24,755   $23,863

  Health care services expense                              16,442    16,518
  Selling, general and administrative expense                7,712     9,111
                                                          ---------  --------
  Operating income (loss)                                      601    (1,766)
  Investment and other income                                1,552     1,503
  Interest expense                                            (947)     (947)
                                                          ---------  --------
  Income (loss) before income taxes                          1,207    (1,210)
  Income tax expense (benefit)                                 422      (350)
                                                          ---------  --------

  Net income (loss)                                       $    785   $  (860)
                                                          =========  ========

  Basic and diluted earnings (loss) per share             $   0.17   $ (0.18)

  Weighted average basic and diluted shares outstanding      4,747     4,747
</TABLE>


                                        7
<PAGE>
NOTE  7.  LITIGATION
--------------------

In  December  1999,  a  shareholder lawsuit against the Company was filed, which
alleges that the Company and certain of its officers violated certain securities
laws  by  issuing a series of alleged false and misleading statements concerning
the  Company's  publicly reported revenues and earnings during a specified class
period.  The  Company has directors and officers liability insurance and intends
to  vigorously  defend  this  litigation.  In  the  opinion  of  the  Company's
management, the ultimate outcome of this matter will not have a material adverse
effect  on  the  Company's  financial  position  or  results  of  operations.


                                        8
<PAGE>
ITEM  1.     MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF FINANCIAL CONDITION AND
             RESULTS  OF  OPERATIONS

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995

The  Private  Securities  Litigation Reform Act of 1995 provides a "safe harbor"
for  forward-looking  statements,  as long as those statements are identified as
forward-looking  and  are  accompanied  by  meaningful  cautionary  statements
identifying  important  factors  that  could  cause  actual  results  to  differ
materially  from  those discussed in the statements. The Company desires to take
advantage  of  these  safe  harbor  provisions. The statements contained in this
Management's  Discussion  and  Analysis  of  Financial  Condition and Results of
Operations  concerning  expected  growth,  the  outcome  of business strategies,
future  operating results and financial position, economic and market events and
trends,  future  premium  revenue,  future  dental  health  care  expenses,  the
Company's  ability  to  control health care, selling, general and administrative
expenses, items discussed under the heading "Year 2000" and all other statements
that  are  not  historical  facts, are forward looking statements. Words such as
expects, projects, anticipates, intends, plans, believes, seeks or estimates, or
variations  of  such words and similar expressions are also intended to identify
forward-looking  statements.  These  forward-looking  statements  are subject to
significant  uncertainties  and  contingencies,  many  of  which  are beyond the
control  of  the  Company.  Actual  results  may  differ  materially  from those
projected  in the forward-looking statements, which statements involve risks and
uncertainties.  The  Company's  ability  to  expand  its business is affected by
competition,  not only in benefit program choices, but also the number of dental
plan  competitors  in  the  markets in which the Company operates. Certain large
employer  groups and other purchasers of dental health care services continue to
demand  minimal  premium  rate  increases,  while limiting the number of choices
offered  to  employees.  In  addition,  securing  cost  effective contracts with
dentists  may  become  more  difficult  in part due to the increased competition
among  dental plans for dentist contracts. There is a risk that the Company will
be unable to obtain waivers and/or extensions from its lenders, in the event the
conversion  of its outstanding debt to preferred stock does not occur. There are
also  risks  associated  with  changes  in  the Company's operating or expansion
strategy,  and  the possible inability to complete the proposed resale of dental
office  assets  and/or promissory notes. The Company's profitability depends, in
part,  on  its ability to maintain effective control over its health care costs,
while  providing  members  with  quality  dental care. Factors such as levels of
utilization  of dental health care services, possible increases in reserves, new
technologies,  the  cost  of  services delivered by referral specialists, claims
expenses,  and  numerous  other  external  influences  may  affect the Company's
operating  results.  Any  critical unresolved Year 2000 issues at the Company or
its  vendors  could  have  a material adverse effect on the Company's results of
operations, liquidity or financial condition. The Company's expectations for the
future  are  based  on  current  information  and  its  evaluation  of  external
influences.  Changes  in  any  one  factor could materially impact the Company's
expectations  related  to  premium  rates,  benefits  plans  offered, membership
enrollment,  the  amount of health care expenses incurred, and profitability and
therefore,  affect  the forward-looking statements which may be included in this
report.  In  addition,  past financial performance is not necessarily a reliable
indicator  of  future  performance.  An  investor  should  not  use  historical
performance  alone  to  anticipate  future  results  or  future  period  trends.


                                        9
<PAGE>
Summary  of  Results  of  Operations
<TABLE>
<CAPTION>
The following table shows the Company's results of operations as a percentage of
revenue,  and  is  used  in  the  period-to-period  comparisons discussed below.

                                             THREE MONTHS ENDED
                                                   MARCH 31,
                                             ====================
                                               2000      1999 (1)
                                             =========  =========
<S>                                          <C>        <C>
Premium revenue                                 100.0%    100.0%

Health care services expense                     71.6      69.2
Selling, general and administrative expense      35.3      38.2
                                             ---------  ---------

Operating loss                                   (6.9)     (7.4)

Investment and other income                       1.0       6.3
Interest expense                                 (4.2)     (4.0)
                                             ---------  ---------

Loss before income taxes                        (10.1)     (5.1)
Income tax benefit                                 --      (1.5)
                                             ---------  ---------

Net loss                                        (10.1)%    (3.6)%
                                             =========  =========
<FN>
(1)      As  restated.  See  Note  6  to  the accompanying financial statements.
</TABLE>

Three  Months Ended March 31, 2000 Compared to Three Months Ended March 31, 1999

Premium  revenue  increased  by $600,000, or 2.5%, from $23.9 million in 1999 to
$24.5  million  in  2000.  The average membership for which the Company provided
dental coverage decreased by approximately 13,000 members, or 1.5%, from 872,000
members  during  1999 to 859,000 during 2000. The decrease in the average number
of  members  is  primarily due to the loss of a single customer, which accounted
for  approximately  8,000  members,  effective  January 1, 2000. Premium revenue
increased  by  2.5%  even  though average membership decreased by 1.5%. This was
primarily  due  to a shift in the product mix toward indemnity plans, which have
higher  premium rates than managed care plans, increases in premium rates, and a
shift  in  the  product mix toward managed care plans with higher benefit levels
and  higher  premium  rates.

Health  care services expense increased by $987,000, or 6.0%, from $16.5 million
in  1998  to $17.5 million in 1999. Health care services expense as a percentage
of  premium  revenue (the "loss ratio") increased from 69.2% in 1999 to 71.6% in
2000.  This  increase  is  primarily  due to an increase in premium revenue from
indemnity  dental plans, as a percentage of total premium revenue. The Company's
indemnity dental business has a significantly higher loss ratio than its managed
care  dental  business, but the indemnity business has a higher amount of margin
per  insured  individual,  and  the  Company believes it has significantly lower
selling,  general and administrative expenses than its managed care business, as
a  percentage  of  premium  revenue.

Selling,  general and administrative ("SG&A") expenses decreased by $465,000, or
5.1%,  from  $9.1  million  in  1999 to $8.6 million in 2000. SG&A expenses as a
percentage  of  premium  revenue  decreased from 38.2% in 1999 to 35.3% in 2000.
This  decrease is partially due to a decrease in amortization expense related to
intangible  assets.  During  the  third  quarter of 1999, the Company recorded a
$24.9  million  impairment  loss to reduce the carrying values of its intangible
assets  to  their  estimated  realizable  values,  which  caused  a  decrease in
amortization  expense  in  2000. The decrease in SG&A expenses is also partially
due to a decrease in computer programming expenses, as the Company has completed
several  enhancements to its proprietary management information system that were
in  process  during  1999.

Investment  and  other  income  decreased  by  $1.2 million, or 82.8%, from $1.5
million  in  1999  to  $259,000  in 2000. This decrease is primarily due to $1.2
million  of  realized gains on the sale of investments in 1999, compared to none
in  2000.


                                       10
<PAGE>
Interest  expense  increased  by  $85,000,  or  9.0%,  from  $947,000 in 1999 to
$1,032,000  in  2000.  This increase is primarily due to interest expense on the
$8.0  million  borrowing on March 1, 2000, which was done in connection with the
transaction  described  in  Note  4  to  the  accompanying financial statements.

The  loss  before  income  taxes increased by $1.3 million, from $1.2 million in
1999  to  $2.5  million in 2000. The loss before income taxes as a percentage of
premium  revenue  increased  from 5.1% in 1999 to 10.1% in 2000. The increase in
the  loss  was  primarily  due  to $1.2 million of realized gains on the sale of
investments  in  1999, and an $85,000 increase in interest expense, as discussed
above.

Income  tax expense decreased from $350,000 in 1999 to zero in 2000. The Company
recorded no income tax expense or benefit in 2000 due to the valuation allowance
against  its  deferred  tax  assets  (see  Note  5 to the accompanying financial
statements).

Liquidity  and  Capital  Resources

Net  cash  used by operating activities was $1.6 million during the three months
ended  March  31, 2000, compared to net cash provided by operating activities of
$197,000  during  the  same  period  in  1999.  This  change of $1.8 million was
primarily due to a $1.6 million reduction in accounts payable in 2000, which was
financed  through the sale of investments. Net cash used in investing activities
was $6.0 million during 2000, compared to $1.4 million during 1999. The increase
in  cash  used  by  investing  activities  is  primarily  due to the purchase of
investments  with the $8.0 million proceeds of the investor senior loan obtained
in connection with the transaction completed on March 1, 2000 (see Note 4 to the
accompanying  financial  statements).  This was partially offset by the proceeds
from  the sale of investments that were used to reduce accounts payable in 2000,
as  noted  above.  Net  cash  provided  by financing activities was $7.9 million
during  2000,  compared  to  net  cash  used by financing activities of $199,000
during  1999.  This  change of $8.1 million was primarily due to $8.0 million of
proceeds  from  the  investor  senior  loan  obtained  on  March  1,  2000.

The  Company's  total short-term and long-term debt increased from $39.8 million
at December 31, 1999, to $47.7 million at March 31, 2000, due to an $8.0 million
borrowing on March 1, 2000, in connection with the Agreement described in Note 4
to  the  accompanying  financial  statements.

Year  2000  Compliance

The  Year  2000  issue results from computer programs that use two digits rather
than  four to define the applicable year. The Company believes it has adequately
modified  its  information  systems  so that dates in the year 2000 are properly
recognized  by  all  of its significant applications.  As of April 30, 2000, the
Company  has  experienced  no  significant impact on its business related to the
Year  2000  issue,  from  either  its  own information systems or those of third
parties  with  which  it  does  business.

Impact  of  Inflation

The Company's operations are potentially impacted by inflation, which can affect
premium  rates,  health  care  services  expense,  and  selling,  general  and
administrative  expenses.  The  Company  expects  that  its  earnings  will  be
positively  impacted  by  inflation  in premium rates, because premium rates for
dental  benefit plans in general have been increasing due to inflation in recent
years.  The  Company  expects  that  its earnings will be negatively impacted by
inflation  in  health care costs, because fees charged by other dental providers
have  been  increasing due to inflation in recent years. The impact of inflation
on  the  Company's  health care expenses is mitigated to some extent by the fact
that  45-50% of total health care services expense is comprised of capitation or
fixed payments to providers. In addition, most of the Company's selling, general
and  administrative  expenses  are impacted by general inflation in the economy.

ITEM  2.     QUANTITATIVE  AND  QUALITATIVE  DISCLOSURES  ABOUT MARKET RISK

The  Company  is  not subject to a material amount of risk related to changes in
interest  rates  or  foreign  currency  exchange  rates.


                                       11
<PAGE>
PART  II.    OTHER  INFORMATION

ITEM  1.     LEGAL  PROCEEDINGS

The  Company  is  subject  to  various  claims and legal actions in the ordinary
course  of  business.  The  Company  believes that all pending claims either are
adequately covered by insurance maintained by its contracted dental providers or
by  the  Company,  or  will  not have a material adverse effect on the Company's
results  of  operations  or  financial position. In December 1999, a shareholder
lawsuit  against  the  Company  was  filed,  which  alleges that the Company and
certain  of its officers violated certain securities laws by issuing a series of
alleged  false  and  misleading  statements  concerning  the  Company's publicly
reported  revenues and earnings during a specified class period. The Company has
directors and officers liability insurance and intends to vigorously defend this
litigation.  In the opinion of the Company's management, the ultimate outcome of
this  matter  will not have a material adverse effect on the Company's financial
position  or  results  of  operations.

ITEM  2.     RECENT  SALES  OF  UNREGISTERED  SECURITIES

On  March 1, 2000, the Company entered into an agreement with the Investors, the
Senior Note Holder, and the Bank. Under the Agreement, the Investors loaned $8.0
million  to  the  Company  in  the form of an investor senior loan, which is due
April  30,  2001,  and bears interest at 10% annually. The Investors, the Senior
Note  Holder,  and  the  Bank agreed to convert the $8.0 million investor senior
loan,  the $32.5 million of senior notes payable, and the outstanding balance of
$7.0 million under the revolving credit facility to convertible preferred stock,
subject  to  regulatory  approval.  See  Note  4  to  the accompanying financial
statements.

ITEM  3.     DEFAULTS  UPON  SENIOR  SECURITIES

See  Note  4  to  the  accompanying  consolidated  financial  statements herein.

ITEM  5.     OTHER  INFORMATION

None.

ITEM  6.     EXHIBITS  AND  REPORTS  ON  FORM  8-K

(a)     EXHIBITS

    EXHIBIT                     DESCRIPTION
-------------------  -----------------------------------------------------------

      10.26              Term  Sheet  Agreement  dated  as  of March 1, 2000 (1)
      27.1               Financial  Data  Schedule

(1)     Incorporated by reference herein to the Exhibit of the same number filed
        as  an  Exhibit  to  the  Company's  1999  Annual  Report  on Form 10-K.

(b)     REPORTS  ON  FORM  8-K.

A  Report  on  Form 8-K was filed with the Securities and Exchange Commission on
March  17,  2000,  to report that the Company had entered into an agreement (the
"Agreement")  with an investor group (the "Investors"), the holder of the senior
notes  payable  (the  "Senior  Note  Holder"), and the revolving credit facility
lender  (the  "Bank"). Under the Agreement, the Investors loaned $8.0 million to
the Company in the form of an investor senior loan, which is due April 30, 2001,
and  bears  interest at 10% annually. The Investors, the Senior Note Holder, and
the  Bank  agreed  to  convert  the $8.0 million investor senior loan, the $32.5
million  of  senior  notes  payable, and the outstanding balance of $7.0 million
under  the  revolving credit facility to convertible preferred stock, subject to
regulatory approval. This Report on Form 8-K is hereby incorporated by reference
in  this  Quarterly  Report  on  Form 10-Q for the quarter ended March 31, 2000.


                                       12
<PAGE>
                                   SIGNATURES

Pursuant  to  the requirements of Section 13 or 15(d) of the Securities Exchange
Act  of  1934,  the  Registrant  has duly caused this report to be signed on its
behalf  by  the  undersigned,  thereunto  duly  authorized, in the City of Aliso
Viejo,  State  of  California,  on  the  15th  day  of  May,  2000.

                              SAFEGUARD  HEALTH  ENTERPRISES,  INC.

                              By:  /s/  James  E.  Buncher
                                   -----------------------
                                   James  E.  Buncher
                                   President and Chief Executive Officer
                                   (Principal Executive Officer)


                              By:  /s/  Dennis  L.  Gates
                                   ----------------------
                                   Dennis  L.  Gates
                                   Senior Vice President and
                                   Chief Financial Officer
                                   (Chief  Accounting  Officer)


                                       13
<PAGE>